“Strictly Business” Forum

STAFF PERSPECTIVE | FEBRUARY 2020

Introduction

Small businesses act as an important engine in the U.S. economy by providing economic 

opportunity for entrepreneurs and employment for millions of job seekers. They are also woven 

into the commercial and social fabric of local communities, offering the goods and services on 

which consumers rely day-to-day. Like other enterprises, small businesses need financing to 

operate and grow. While many can obtain loans from traditional lenders, like local banks, in 

recent years small businesses have increasingly turned to relatively new sources of financing,

including online loans,1

 lines of credit, and other alternative products. While these forms of 

financing offer some potential benefits for small businesses consumers (for example, broadening 

the availability of credit), they have also raised some consumer protection concerns. 

The Federal Trade Commission (“FTC” or “Commission”) has broad jurisdiction under the 

FTC Act and other laws2

 to stop deceptive, unfair, and other unlawful practices by small 

business financing providers and their marketers, servicers, and collectors. In recent years, the 

Commission has used its authority to bring dozens of actions to protect small businesses from 

frauds, like fake invoice and unordered merchandise scams.3 Additionally, the Commission has 

worked to stop unlawful conduct in the online lending marketplace by bringing actions against 

lenders for allegedly deceiving consumers about key aspects of their loans, like up-front fees, 

consumer savings, and servicing-related features.4 The agency remains committed to protecting 

small businesses, including in the lending marketplace. 

In order to further examine recent trends in small business financing, on May 8, 2019, the FTC 

hosted a public forum, “Strictly Business” (or “Forum”).5 This event brought together a variety 

of stakeholders and experts to discuss consumer protection issues associated with this 

marketplace. This Staff Perspective highlights some of the key issues discussed during the 

Forum, as well as other information gathered through law enforcement and from existing 

research. In particular, we provide background on recent trends in the small business financing 

marketplace, discuss some potential benefits of newer online financing products, and examine 

some of their risks for small businesses.

FTC BUREAU OF CONSUMER PROTECTION FTC.GOV
“Strictly Business” Forum | Staff Perspective

Background on the Small Business

Financing Marketplace

It would be hard to overstate the importance of small businesses in the U.S. economy. They 

employ roughly half of private sector workers in the country6 and have generated an estimated 

two-thirds of new private jobs in recent years.7 Despite their outsized impact on the market, the 

overwhelming majority of these enterprises are very small: According to the Small Business 

Administration, 80% of small businesses have no employees.8 Additionally, research by Federal 

Reserve Banks indicates that, among small businesses that do have employees, roughly half 

employ four or fewer people.9 Our Forum panelists and other experts have also highlighted the 

fact that women- and minority-owned small businesses represent a significant and growing part 

of this marketplace.10

Panelists at our Forum emphasized that small businesses require financing to survive and grow, 

and that they face significant challenges obtaining such financing. Panelists noted that small 

businesses often have relatively little cash on hand to fund their ongoing operating expenses, 

leaving them vulnerable to shortfalls. In fact, as panelists stated, business owners frequently rely 

on their personal funds and credit (like credit cards and home equity loans) in order to finance 

their businesses, as well as contributions from family and friends.11

Beyond tapping their personal finances, small business owners frequently seek business 

financing — typically for relatively small amounts (i.e., $250,000 or less).12 While many small 

enterprises can obtain loans from traditional lenders, like local banks, other businesses may not 

qualify for such loans. Additionally, Forum panelists and research suggest that, in recent years, 

banks frequently have been unable to meet the demand for small business loans,13 in part due to 

wider trends in the banking sector and economy.14 

Perhaps as a result, small businesses have increasingly sought financing from relatively new 

online providers offering loans, lines of credit, and other products. In fact, a survey by several 

Federal Reserve Banks found that, in 2018, 32% of employer small businesses reported applying 

for online financing — up from 24% in 2017 and 19% in 2016.15 

Online financing products can have a broad range of features that vary from product to product. 

Some online lenders offer loan or credit agreements that resemble traditional bank loans or lines 

of credit — accruing interest and requiring monthly payments over a set term length. Other 

finance providers offer products with very different features. For example, in lieu of interest, 

many products charge consumers flat fees — and thus offer no savings for consumers who repay 

early. Some finance providers require weekly or daily repayments. Additionally, many online 

providers cater to higher-risk businesses or owners with low credit scores — typically offering 

them higher-cost products. One such product that has generated particular attention, and some 

concerns detailed below, is the “merchant cash advance” (“MCA”) — a product styled as a 

purchase of a business’ future receivables, that is often repaid daily based on a fixed percentage 

of daily sales.16 

2 
“Strictly Business” Forum | Staff Perspective

In addition to the new diversity of products, there appears to be an expanding variety of finance 

providers offering them. For instance, many online lenders have emerged that employ financial 

technologies and alternative data in new ways to underwrite term loans and lines of credit.

Additionally, some large payment processing companies and technology platforms now leverage 

the information they already collect from small businesses (such as credit card receipts or sales 

information) to offer them loans. Further, nonprofit “microlenders” and other mission-driven 

companies that work to offer affordable loans to underserved borrowers are also increasingly 

relying on financial technologies to do so. 

Potential Benefits of Online Financing

Panelists at our Forum discussed some potential benefits of online financing for small businesses 

and their owners: 

Potential speed and convenience.

Panelists highlighted that online finance providers promote simpler, automated financing 

applications, and faster approvals and funding than traditional loans — in some instances, 

completing these processes within a day or two. In fact, research indicates that many small 

businesses choose online loans as a result of this perceived speed.17 Industry panelists also 

stated that, for many consumers, online financing platforms may be easier and more convenient 

to use than older forms of financing — for example, allowing businesses to seek new funds 

virtually any day or time.

Potentially broadening access to credit. 

Panelists also emphasized that online lenders may increase access to credit by offering financing 

to small business owners who might not qualify for more traditional loans because of low 

personal credit scores or other risk factors.18 Many online providers appear to specialize in highrisk businesses or owners. Some financing providers, like MCA companies, often promote their 

ability to provide financing to almost any business that has generated a few months of revenue 

— regardless of the owner’s personal credit history.19 Some online providers at our Forum stated 

that, instead of relying heavily on business owners’ personal credit scores, they analyze 

alternative data in their underwriting process to predict a business’s health — for example, data 

from linked online financial accounts, real-time payment processing information, and shipping 

records. Further, online lenders also increasingly use algorithms and other automated processes 

to underwrite loans based on this data. 

Potentially flexible financing amounts, terms, and repayment options.

Panelists also stated that the wide array of new products may offer small business owners greater 

latitude in finding specific financing arrangements that closely meet their needs. For instance, 

online providers frequently allow businesses to obtain smaller amounts — as little as a few 

thousand dollars — than those traditionally offered by banks. Additionally, many newer products 

have very short terms that allow for repayment within several months. Further, many online 

products offer flexible repayment options that permit consumers to choose between making 

3 
“Strictly Business” Forum | Staff Perspective

payments monthly, weekly, or daily — sometimes also allowing consumers to make variable 

payments based on their revenue. In the case of MCAs and some other products, businesses’ 

daily payments are variable based on an agreed-upon percentage of daily revenues.

Consumer Protection Concerns

Panelists at our Forum shared a number of concerns regarding the products being offered in the 

evolving business financing marketplace: 

Inconsistent information provided to business owners. 

As discussed above, the current marketplace includes products with a wide variety of key 

features that can differ significantly from product to product. For example, some online lenders 

offer consumers term loans that accrue interest in a manner similar to traditional personal loans, 

and require consumers to make monthly repayments over a specific term. Other products, like 

MCAs, may charge consumers a fixed fee, or “factor,” which consumers repay along with the 

amount of the advance through daily, variable repayments that are supposed to rise or fall with 

the business’s daily revenue. 

Many of the Forum participants expressed concern that finance providers use widely-differing 

methods for calculating and describing the key features of their products — impeding small 

business owners’ ability to make apples-to-apples comparisons. Notably, while the Truth-inLending Act requires the disclosure of annual percentage rate (“APR”) and other key pieces of 

information in personal credit transactions, it generally does not apply to small business 

financing.20 Perhaps as a result, small business finance providers often describe the costs 

associated with their products very differently: While some lenders state the cost of their loans as 

an APR, others instead express it as the “total cost of capital” — i.e., the total overall dollar 

amount consumers will pay in fees or costs beyond repaying the principal. Additionally, other 

finance providers use yet other metrics, like “interest rate,” “fees,” or “factor rate.”21

Small business owner confusion about features.

Both Forum panelists and outside research suggest that, as a result of this wide variation in 

disclosures, small business owners often struggle to understand the central features of financing 

products. In a recent study, Federal Reserve staff found that small business owners expressed 

confusion about the terminology used to describe the costs of financing products — frequently 

underestimating these costs as a result.22 This is particularly concerning because online financing 

products often have relatively high costs, and those costs vary significantly from product to 

product.23 Additionally, Federal Reserve staff found that some small businesses incorrectly 

assumed that they would save money overall by repaying products like MCAs early — when, in 

fact, these products require the payment of fixed fees or costs, regardless of how quickly they 

are repaid.

Several Forum panelists echoed these research findings. They also emphasized that, when faced 

with this wide variety of products with inconsistent disclosures, consumers often lack the 

4 
“Strictly Business” Forum | Staff Perspective

heightened understanding of business financing necessary to effectively comparison shop and 

find the most appropriate products. Some panelists argued that business owners, drawing from 

their more common experiences with personal credit, may be likely to mistakenly assume that 

business financing products share the same characteristics — for example, accruing interest over 

time and offering prepayment savings. 

While Forum panelists generally emphasized the problems posed by non-uniform disclosures, 

they voiced disagreement about which methods for calculating costs would be most relevant and 

understandable. Some panelists, including consumer advocates, argued that business owners 

would be most likely to understand costs and fees expressed as an APR or interest rate.24 On the 

other hand, some industry panelists argued that, for shorter-term financing arrangements that 

consumers repay within several months (as opposed to the years associated with traditional 

loans), business owners may regard the total cost of capital as more useful and understandable 

than annualized metrics. 

In the midst of this public debate, both legislators and industry members have engaged in some 

efforts to standardize the information disclosed to business owners. For example, California 

recently enacted a law that requires small business finance providers to disclose several features 

before consummating a financing agreement, including: the total amount of funds provided; total 

dollar cost of the financing; term or estimated term; method, frequency, and amount of payment; 

a description of prepayment policies; and total cost of the financing expressed as an annualized 

rate.25 Additionally, two prominent industry groups — both of whom had members at the Forum 

— have promulgated self-regulatory codes requiring standardized disclosures of financing costs 

and other key terms.26 Small business consumers would likely benefit from more uniform and 

understandable financing disclosures to help them compare the costs and other features of 

products in this marketplace. 

Given the possibility of consumer confusion in the small business financing marketplace, 

providers should keep in mind that the FTC Act’s prohibition against misleading claims applies 

to these products. Specifically, it prohibits finance providers from making claims that would be 

likely to mislead small business owners acting reasonably in the circumstances. Especially given 

that the overwhelming majority of small businesses are sole proprietorships or very small 

employers,27 finance companies and their marketers should be aware that these consumers’ 

understanding of financing products may often be similar to that of individual consumers in 

personal credit transactions. Thus, small business finance providers should avoid the sorts of 

practices that the Commission has alleged to be deceptive in our enforcement actions involving 

either small business consumers or individual consumers, including our actions involving 

personal loans in which we charged lenders with making misleading claims regarding fees, 

consumer savings, payment amounts, and interest rates.28

Thus, small business finance providers should avoid the sorts of 

practices that the Commission has alleged to be deceptive in our 

enforcement actions involving either small business consumers or 

individual consumers, including our actions involving personal loans... 

5 
“Strictly Business” Forum | Staff Perspective

Concerns regarding MCAs. 

As discussed during the Forum, MCA providers generally offer high-cost, short-term cash 

advances to small businesses to purchase a fixed amount of their future receivables. In exchange, 

the business must repay the advanced amount plus a “factor”— often between 20% to 50% of 

that amount. The MCA provider generally collects a fixed percentage or amount (estimating the 

percentage) of the business’s daily revenue. Thus, the small business’s daily payments are 

supposed to rise or fall to reflect its daily sales. According to MCA providers, the business 

makes these payments until the MCA is repaid, or, alternatively, the business simply fails, in 

which case the repayment obligation is extinguished. Additionally, although MCAs do not 

technically include a set term length, they are typically repaid within a few months to one year. 

Panelists at our Forum and other experts have expressed a variety of concerns about MCAs. First, 

they note that MCAs have very high costs — including, in some cases, estimated APRs in the 

triple digits. As a result, many business owners who obtain MCAs may struggle to successfully 

repay them. One panelist noted that businesses desperate for funding often seek out MCAs in the 

short term because they are quick and easy to obtain, but then suffer negative long-term 

consequences. Such consequences include being forced to renew their advances or take out 

multiple MCAs at the same time, potentially encumbering the same receipts (a phenomenon 

known as “stacking”), in order to both meet their repayment obligations and avoid shutting down. 

Second, observers have expressed concerns that some MCA providers and their marketers may 

engage in aggressive, and potentially misleading, marketing practices. Panelists at our Forum 

noted that MCA providers often rely on large networks of brokers (sometimes referred to as 

“independent sales organizations” or “ISOs”) and lead generators to promote their products 

through telemarketing and other channels, often paying them large commissions for leads. While 

panelists from the MCA industry stated that they take steps to vet and monitor their marketing 

agents for potentially deceptive practices, they acknowledged that some MCA providers may be 

failing to do so sufficiently. The FTC has engaged in significant law enforcement and other 

efforts to stop deceptive and unfair practices by lead generators and the companies that use them 

for marketing.29 Therefore, staff would caution ISOs, brokers, and lead generators that market 

MCAs and other financing products to avoid potentially false or unsubstantiated advertising 

claims. Additionally, finance providers should be aware that their use of these marketing 

intermediaries does not immunize them from liability under the FTC Act. To comply with the 

law, providers should take steps to ensure that their marketers do not engage in deception or 

other unlawful conduct by carefully vetting and monitoring their lead sources for warning signs 

(like consumer complaints), auditing marketers, and requiring and enforcing contractual 

compliance standards with these entities.30 

...finance providers should be aware that their use of these 

marketing intermediaries does not immunize them from 

liability under the FTC Act. To comply with the law, 

providers should take steps to ensure that their marketers 

do not engage in deception or other unlawful conduct... 

6 
“Strictly Business” Forum | Staff Perspective

Third, two MCA providers at the Forum expressed concerns that, during the repayment of 

MCAs, some providers may fail to conduct promised “true-ups” or “reconciliations” to lower 

merchants’ daily payment amounts to reflect drops in their sales. As noted above, MCAs are 

designed to require businesses to repay a fixed percentage of their daily revenues. Accordingly, it 

would be concerning, and potentially unlawful, if MCA providers fail to adjust payment amounts 

to reflect a decrease in sales. 

... it would be concerning, and potentially unlawful, if MCA 

providers fail to adjust payment amounts to reflect a 

decrease in sales.

Fourth, our panelists and other observers have expressed concerns about the use of potentially 

abusive collection tactics by MCA providers and their agents against business owners who 

struggle with repayments. In particular, in recent years, some MCA providers have required that 

business owners execute a “confession of judgment” (“COJ”) — in which the business owner 

waives his or her right to contest any collection lawsuit to obtain the unpaid MCA amount and 

collection-related fees. Although the FTC’s Credit Practices Rule prohibits the use of COJs in 

personal credit contracts, it generally does not apply to contracts with small business.31 The FTC 

Act, however, applies to any deceptive or unfair conduct.32 For example, if an MCA provider is 

required by contract to lower a merchant’s daily payments if revenue falls, but instead simply 

declares the merchant to be in default and files a COJ, this conduct could violate the FTC Act. 

MCA providers should not exercise default remedies – such as enforcing a COJ – in the absence 

of a default condition. 

... if an MCA provider is required by contract to lower a 

merchant’s daily payments if revenue falls, but instead 

simply declares the merchant to be in default and files a 

COJ, this conduct could violate the FTC Act.

While MCA providers at our Forum stated that they rarely or never require COJs, they noted that 

other MCA providers may frequently use them. In fact, there have been reports that some MCA 

providers have aggressively enforced their COJs against merchants in order to freeze or seize 

their assets — often with little or no notice. In response to this conduct, the state of New York — 

where many COJs of this sort have been filed — recently enacted a law that prohibits creditors 

from using COJs against small businesses outside of that state.33 Additionally, a representative of 

one industry trade association that includes MCA providers stated that it prohibits members from 

using COJs in their contracts. 

Beyond the use of COJs, news reports have noted that some MCA providers may engage in other 

problematic collections practices, like making egregious, harassing threats against business owners 

who fall behind on repayments. In light of these reports, it is important to highlight that the FTC 

has the authority under the FTC Act to stop unfair or deceptive debt collection practices, including 

7 
“Strictly Business” Forum | Staff Perspective

by small business finance providers and their collectors.34 The Commission has engaged in 

extensive enforcement efforts to stop unlawful collections practices used to collect personal debts, 

and many of the same protections apply to small businesses. Staff would caution small business 

finance providers and their collectors to avoid the types of conduct we have alleged to be unlawful 

— such as collecting amounts consumers do not owe, making egregious false threats of arrest or 

other severe consequences, disclosing private debt information to third parties (such as family 

members), or harassing consumers with continuous calls or abusive language.35

Staff would caution small business finance providers and 

their collectors to avoid the types of conduct we have 

alleged to be unlawful... 

Conclusion

As the small business financing marketplace continues to evolve, the FTC remains committed

to protecting businesses and their owners from potentially unlawful practices. Through our 

“Strictly Business” Forum, and this Staff Perspective paper, we have worked to engage in a 

dialogue with stakeholders in this marketplace, and to better inform the public understanding 

of these products and our relevant law enforcement work. 

8 
“Strictly Business” Forum | Staff Perspective

Endnotes

1

 This Staff Perspective uses the terms “online financing” and “online lending” generally to describe all of

these new products, despite the fact that some companies may promote and offer them through other channels,

like telemarketing. 

2

 See, e.g., Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681x; Equal Credit Opportunity Act, 15 U.S.C. § 1691

et seq. 

3

 For example, the Commission recently engaged in “Operation Main Street,” a joint effort by the FTC and law 

enforcement partners that brought 24 cases against frauds targeting small businesses. See FTC Press Release, FTC, 

BBB, and Law Enforcement Partners Announce Results of Operation Main Street: Stopping Small Business Scams 

Law Enforcement and Education Initiative (June 18, 2018), at https://www.ftc.gov/news-events/pressreleases/2018/06/ftc-bbb-law-enforcement-partners-announce-results-operation-main.

4

 See, e.g., FTC v Avant, LLC, No 19-cv-02517 (N.D. Ill filed Apr. 15, 2019); FTC Press Release, Online Lending 

Company Agrees to Settle FTC Charges It Engaged in Deceptive and Unfair Loan Servicing Practices

(Apr. 15, 2019), at https://www.ftc.gov/news-events/press-releases/2019/04/online-lending-company-agrees-settleftc-charges-it-engaged; In re Social Finance, No 162-3197 (FTC issued Feb. 22, 2019); FTC Press Release, Online 

Student Loan Refinance Company SoFi Settles FTC Charges, Agrees to Stop Making False Claims About Loan 

Refinancing Savings (Oct. 29, 2019), at https://www.ftc.gov/news-events/press-releases/2018/10/online-studentloan-refinance-company-sofi-settles-ftc-charges; FTC v. LendingClub Corp., No. 18-cv-02454 (N.D. Cal. filed

Apr. 25, 2018); FTC Press Release, FTC Charges Lending Club with Deceiving Consumers (Apr. 25, 2019), at

https://www.ftc.gov/news-events/press-releases/2018/04/ftc-charges-lending-club-deceiving-consumers-0; 

FTC v. AMG Services, 2:12-cv-00536 (D. Nev. Sept. 30, 2016) (Order); FTC Press Release, U.S. Court Finds in 

FTC’s Favor and Imposes Record $1.3 Billion Judgment Against Defendants Behind AMG Payday Lending Scheme

(Oct. 4, 2016), at https://www.ftc.gov/news-events/press-releases/2016/10/us-court-finds-ftcs-favor-imposes-record13-billion-judgment. 

5

 Video and other materials from the Forum are available at https://www.ftc.gov/news-events/eventscalendar/strictly-business-ftc-forum-small-business-financing. 

6

 See Small Business Administration (“SBA”), Frequently Asked Questions About Small Business (Aug. 2017), 

available at https://www.sba.gov/sites/default/files/advocacy/SB-FAQ-2017-WEB.pdf. 

7 See SBA, Small Business Facts (Sept. 2017), available at 

https://www.sba.gov/sites/default/files/Job_Creation_fact_sheet_FINAL_0.pdf. 

8

 See SBA, FAQs, supra note 6. 

9

 See Federal Reserve Banks, Small Business Credit Survey (2019) (hereinafter “SBCS”) at 29, available at

https://www.newyorkfed.org/smallbusiness/small-business-credit-survey-2018. 

 

10 See Bureau of Consumer Financial Protection, Key Dimensions of the Small Business Lending Landscape

(May 2017), at 11-16 (summarizing research estimating that between 2007 and 2016 the number of women-owned 

firms increased by 45%, and between 2007 and 2012 the number of minority-owned businesses increased by 38%), 

available at https://www.consumerfinance.gov/data-research/research-reports/key-dimensions-small-businesslending-landscape/. 

9 
“Strictly Business” Forum | Staff Perspective

11 See also SBCS, supra note 9, at 6 (noting that, out of employer firms that faced financial challenges in prior year, 

over two-thirds used owners’ personal funds to address them).

12 See id. at 10.

13 See id. at 13 (“Funding shortfalls were most acute for firms seeking $100K–$250K”). 

14 See, e.g., Mills, Karen G., FINTECH, SMALL BUSINESS & THE AMERICAN DREAM (2019), at 27-54.

15 See SBCS, supra note 9, at iii.

16 See, e.g., Barbara J. Lipman & Ann Marie Wiersch, Federal Reserve Board & Bank of Cleveland, Browsing to 

Borrow: “Mom & Pop” Small Business Perspectives on Online Lenders (June 2018), at 4, available at

https://www.federalreserve.gov/publications/small-business-perspectives-on-online-lenders.htm. 

17 See SBCS, supra note 9, at 17 (“Speed of decisionmaking and perceived chance of funding were the top reasons 

firms applied to online lenders.”).

18 See also id. at 19 (showing that both low- and higher-credit risk consumers reported higher approval rates for 

online financing when compared to bank credit); Federal Reserve Bank of Cleveland, Click, Submit 2.0: An Update 

on Online Lender Applicants from the Small Business Credit Survey (Dec. 2019), at 1, available at

https://www.clevelandfed.org/en/newsroom-and-events/publications/special-reports/sr-20191216-click-submit2.aspx (“Compared to firms that apply at only traditional lenders, firms that apply at online lenders are more likely

to be smaller, have lower credit scores, report more financial challenges, and be less profitable.”).

19 See SBCS, supra note 9, at 18 (employer firms reporting a 85% approval rate when applying for MCAs).

20 See 15 U.S.C. §§ 1601-1667f. 

21 See also Barbara J. Lipman & Ann Marie Wiersch, Federal Reserve Board & Bank of Cleveland, Uncertain 

Terms: What Small Business Borrowers Find When Browsing Online Lender Websites (Dec. 2019), at 1, available 

at https://www.federalreserve.gov/publications/what-small-business-borrowers-find-when-browsing-online-lenderwebsites.htm (“Online lenders varied significantly in the amount of information provided, especially on costs. 

Lenders that offer term loan products were likely to show costs as an annual rate, while others convey costs using 

terminology that may be unfamiliar to prospective borrowers. Still others, particularly those that offer merchant cash 

advances, provide no information at all.”).

22 See Browsing to Borrow, supra note 16, at 18-19; see also Uncertain Terms, supra note 21, at 17-18.

23 See, e.g., SBCS, supra note 9, at 20 (“Online lender applicants were most dissatisfied with high interest rates” — 

with 53% of employer firms reporting high interest rates to be a challenge associated with online lenders, compared 

with only 19% and 14% reporting the same challenge with large or small banks, respectively).

24 In educational publications regarding personal credit, FTC staff has advised consumers to look for the APR of 

credit products as a key tool for comparison shopping. See, e.g., FTC, Shopping for a Mortgage, available at

https://www.consumer.ftc.gov/articles/0189-shopping-mortgage; Online Payday Loans, available at

https://www.consumer.ftc.gov/articles/0249-online-payday-loans; Car Title Loans, available at 

https://www.consumer.ftc.gov/articles/0514-car-title-loans. 

25 See Cal. Fin. Code § 22800 et seq. (effective Jan. 1, 2019).

10
“Strictly Business” Forum | Staff Perspective

26 See Innovative Lending Platform Association, The SMART BoxTM Model Disclosure – In Depth, available at

https://innovativelending.org/smart-box-model-disclosure-depth/ (requiring disclosure of, among other things, APR, 

total cost of capital, and ramifications of repayment); Responsible Business Lending Coalition, Small Business 

Borrowers’ Bill of Rights, available at http://www.borrowersbillofrights.org/bill-of-rights.html (requiring disclosure 

of, among other things, APR). As FTC staff has noted previously, for self-regulatory programs to be effective, 

industry participants should ensure that such programs include mechanisms for robust monitoring and enforcement, 

such as dismissal from the program and referral to the FTC for companies that fail to comply with the standards 

outlined in the code. See, e.g., FTC Staff Perspective, “Follow the Lead” Workshop (Sept. 2016), at 7, available at

https://www.ftc.gov/reports/follow-lead-workshop-staff-perspective. 

27 See supra notes 8-9 and accompanying text.

28 See supra note 4; infra note 29. 

29 See, e.g., FTC v. Career Education Corp., No. 19-cv-05739 (N.D. Ill. filed Aug, 27, 2019), FTC Press Release, 

Operator of Colorado Technical University and American InterContinental University Will Pay $30 Million to 

Settle FTC Charges it Used Deceptive Lead Generators to Market its Schools (Aug, 27, 2019), at 

https://www.ftc.gov/news-events/press-releases/2019/08/operator-colorado-technical-university-americanintercontinental; FTC v. Edutrek, No. 19-cv-01984 (N.D. Ill. filed Mar. 22, 2019); FTC Press Release, FTC Charges 

Telemarketing Operation with Misleading Job Seekers and Making Millions of Illegal, Unsolicited Calls

(Apr. 12, 2019), at https://www.ftc.gov/news-events/press-releases/2019/04/ftc-charges-telemarketing-operationmisleading-job-seekers-making; FTC v. Sunkey Publishing, No. 18-cv-01444 (N.D. Ala. filed Sept. 6, 2018); FTC 

Press Release, FTC Takes Action against the Operators of Copycat Military Websites (Sept. 6, 2018), at 

https://www.ftc.gov/news-events/press-releases/2018/09/ftc-takes-action-against-operators-copycat-militarywebsites; FTC v. Sequoia One, LLC, No.15-1512 (D. Nev. filed Aug. 7, 2015); FTC Press Release, FTC Puts An 

End to Data Broker Operation that Helped Scam More Than $7 Million from Consumers’ Accounts (Nov. 30, 

2016), at https://www.ftc.gov/news-events/press-releases/2016/11/ftc-puts-end-data-broker-operation-helped-scammore-7-million; FTC v. Intermundo Media, LLC, No. 14-2529 (D. Colo. filed Sept. 12, 2014); FTC Press Release, 

Mortgage Lead Generator Will Pay $500,000 to Settle FTC Charges That It Deceptively Advertised Mortgage 

Refinancing (Sept. 12, 2014), at https://www.ftc.gov/news-events/press-releases/2014/09/mortgage-lead-generatorwill-pay-500000-settle-ftc-charges-it; U.S. v. GoLoansOnline.com, No. 14-1262 (S.D. Tex. filed May 7, 2014); FTC 

Press Release, Mortgage Lead Generator will Pay $225,000 to Settle FTC Charges That It Deceptively Advertised 

Mortgage Rates (May 8, 2014), at https://www.ftc.gov/news-events/press-releases/2014/05/mortgage-leadgenerator-will-pay-225000-settle-ftc-charges-it. 

30 See Andrew Smith, Companies Must Manage Lead Generators Responsibly, Law360 (Sept. 25, 2019), available 

at https://www.law360.com/articles/1202654/companies-must-manage-lead-generators-responsibly; FTC Staff 

Perspective, “Follow the Lead” Workshop (Sept. 2016), available at https://www.ftc.gov/reports/follow-leadworkshop-staff-perspective. 

31 See 16 C.F.R. pt. 444.

32 The Commission recently brought an action, FTC v. Grand Teton Professionals, 19-cv-00933 (D. Conn. filed 

July 17, 2019), alleging that a credit repair scheme unfairly used COJs and other tactics to prevent consumers from 

exercising their rights under the Fair Credit Billing Act to dispute charges placed on their credit cards.

33 See NY CPLR § 3218 (effective Aug. 1, 2019).

34 See, e.g., FTC v. Rumson, Bolling & Assocs., No. 11-7484 (C.D. Cal., filed Sept. 12, 2011) (alleging that debt 

collection operation made false threats and other misrepresentations targeting small business consumers).

11
“Strictly Business” Forum | Staff Perspective

 

35 See, e.g., FTC v. Global Asset Fin. Servs. Group, No. 3:19-cv-55 (W.D.N.C. filed Feb. 4, 2019); FTC v. 

Campbell Capital LLC et al., No. 1:18-cv-01163 (W.D.N.Y. filed Oct. 23, 2018); U.S. v. Consumer Portfolio 

Services, Inc., No. 14-00819 (C.D. Cal. filed May 28, 2014); FTC and State of Nevada v. Cash Today, Ltd., Civ. A.

No. 3:08-CV-590 (D. Nev. filed Nov. 6, 2008). 

Contributors

DIVISION OF FINANCIAL PRACTICES

Evan Zullow 

Sandhya Brown 

Malini Mithal

12