Funding Group Scam

[TinaForce]

New Jersey

Im in the process of starting a business. I signed up with an agency that was supposed to find funding for start up companies.

I Googled them first, there were no bad reviews. The guy in charge has a social media following ... etc ...it looked legitimate.
So I signed the paperwork. They take my info and they start looking for funding.

What they did was they signed me up for credit cards.
These are credit cards that I could have applied for and gotten on my own. In fact I get offers for the cards all the time.

According to the agency, they got me funding because they signed me up for credit cards. Roughly 40K credit limit.

They sent me a bill claiming that they got me 40K in funding and they want almost 4K as their service charge.
I called them and told them that this wasn't the type of funding I wanted, and that I want the cards cancelled.
Ther said even if I cancel the cards, I still need to pay their $4,000 fee because they did the work of getting them for me.

Is there anything I can do?
I don't want these cards. Especially since I'd need to pay $4,000 to them for it.

I'd appreciate any advice.

 

[quincy]

I am pretty sure I know what company you are talking about. Unfortunately, this company is pretty clear in their terms and conditions what they offer and how they offer it.

Yes. You can do for yourself all that they offer to do for you for a price. But you didn't. You signed up to have them handle the funding for your business.

You can speak to an attorney in your area and/or report the company to your state's attorney general, but I am not sure you have much legal recourse.

Good luck.

 

[TinaForce]

Thanks for the reply.
That really is terrible.
A friend said maybe I could cancel the card and ask a lawyer to write a letter to cancel the contract.
Do you think that would do any good?
And yes, I should report them to the attorney general.

Thanks again.

 

[quincy]

Thanks for the reply.
That really is terrible.
A friend said maybe I could cancel the card and ask a lawyer to write a letter to cancel the contract.
Do you think that would do any good?
And yes, I should report them to the attorney general.

Thanks again.

When you sign a contract, it is assumed that you know exactly what it is you are agreeing to. Once you sign, you are (generally) legally bound by the terms of the contract.

Although I am not sure an attorney can help you get out of the contract without penalty, the attorney could help you negotiate the amount owing - or see if the company's contract has violated any law.

I know there have been complaints about one "business funding" company but the company's contract seems to be pretty solid.

Good luck.

 

[TinaForce]

I'd love to which company you have in mind.

I really wasn't expecting them to be a scam like this.

Even now I'm searching for reviews again, there aren't any bad. Do they hide reviews somehow.

 

[quincy]

You can discuss the company you signed with, with the attorney you contact in your area. You can also check your state's attorney general, consumer protection division, to see if there are any complaints on the company or any investigation into its operations.

Business funding companies are sometimes not exactly what the small business clients expect when they sign up for the services, although what they offer is spelled out.

That said, there could be usury/interest issues that your attorney can discuss with you once the attorney has the chance to personally review the company you signed with, the contract you signed, and the loans you obtained.

Good luck.

 

[adjusterjack]

I really wasn't expecting them to be a scam like this.

Maybe it's not a scam. Did you bother to read the terms of service? Maybe all they do is obtain unsecured credit for customers. Maybe that's what it says in the terms of service. Maybe you overlooked that item.

Post a link to the site and maybe I'll find what you missed.

Meantime, I did find one funding company that proclaims in big words on their home page that they obtain unsecured credit for their customers.

What's another name for unsecured credit? Credit cards.

 

[Mass_Shyster]

Here are some thoughts:

Did the agency have the authority to bind you to the credit card agreements? You really need to compare the agreement you signed with the agency with the agreements they signed on your behalf to see if they exceeded their authority.

Does the agreement with the agency cover the fees that they agreed to on your behalf with the credit card companies?

Does the agreement with the agency restrict the line of credit to purchases at merchants that accept credit cards?

Let's say you want to spend $40,000 on a sign on bonus for your new vice president. Can you actually get $40,000 from the credit card companies to use for that purpose? I suspect the cash advance amount is somewhat lower than $40,000, and that when you max out one with a cash advance, the others will mysteriously shut off your credit.

It may be worth a consultation with a lawyer to review the agreements

 

[quincy]

There was a class action suit filed in the US District Court for the Central District of California, Western Division, in April of this year. The suit was filed against Kabbage, Inc. and Celtic Bank Corporation.

Here is a link to Barnabas Clothing, Inc., et al. v. Kabbage, Inc., et al:
https://www.classaction.org/media/barnabas-clothing-inc-et-al-v-kabbage-inc-et-al.pdf

Kabbage is one of the better known small business funding companies and the one I earlier was referring to. I don't know if this is the funding company of concern here.

Most of the business funding companies state exactly what they offer and their contracts are fairly clear - but an inexperienced (new) business owner might not realize they can do everything by themselves for little to no cost.

 

[TinaForce]

Maybe it's not a scam. Did you bother to read the terms of service? Maybe all they do is obtain unsecured credit for customers. Maybe that's what it says in the terms of service. Maybe you overlooked that item.

Post a link to the site and maybe I'll find what you missed.

Meantime, I did find one funding company that proclaims in big words on their home page that they obtain unsecured credit for their customers.

What's another name for unsecured credit? Credit cards.

I appreciate the reply.

I do see your point. What's hard for me to get over is they packaged their service as though they had so many partnerships with investors, banks, and other agencies and that they could find options that I couldn't find without their connections.

They said they'd look for opportunities such as angel investors, peer to peer lending, small interest loans, busines lines of credit and bank lines of credit.

They did mention credit cards, but I told them I wasn't interested in credit cards. They said that they need to apply for them in order to apply for bank lines of credit. And again I told them that even if I was approved for cards I didn't want them. I already have good credit cards, I didn't need more. I was interested in the other options they mentioned. They kept saying don't worry we'll find the right opportunities for you.

Also, I didn't know that they would charge a fee on everything I was eligible for, instead of only charging a fee on what I accepted. For example, I was approved for $5,000 on one card. I told them I didn't want it and they still charged me $600 because they applied for it. The same thing with another card for $10,000. I didn't want that and they changed me $1,100 for applying for it. ... etc

It honestly felt like a bait and switch.
Maybe what they did wasn't illegal, but I can't imagine that this isn't some kind of scam or con on some level.

They present themselves as this big baller company that has peers and investors at the snap of their fingers, but in reality they just sign you up for stuff you don't want and could have gotten on your own in 5 minutes.

 

[TinaForce]

Here are some thoughts:

Did the agency have the authority to bind you to the credit card agreements? You really need to compare the agreement you signed with the agency with the agreements they signed on your behalf to see if they exceeded their authority.

Does the agreement with the agency cover the fees that they agreed to on your behalf with the credit card companies?

Does the agreement with the agency restrict the line of credit to purchases at merchants that accept credit cards?

Let's say you want to spend $40,000 on a sign on bonus for your new vice president. Can you actually get $40,000 from the credit card companies to use for that purpose? I suspect the cash advance amount is somewhat lower than $40,000, and that when you max out one with a cash advance, the others will mysteriously shut off your credit.

It may be worth a consultation with a lawyer to review the agreements

Hello,

What they signed me up for were regular credit cards. The cash advances are pretty standard. For instance, the limit for a cash advance on that credit card is roughly 2,000, but of course there are major fees when doing that.

Also, I didn't understand this question that you asked, "Does the agreement with the agency cover the fees that they agreed to on your behalf with the credit card companies?"
Which fees are those?
I'm very sure they didn't pay any fees because about a week after I gave them my information someone from their office called me and said -If any banks call me, don't tell them that an agency applied for me because that'll reduce my chances of being approved for anything. They told me to say that I was applying on my own. So I'm sure they weren't charged any fees.

 

[quincy]

The contract you signed with the business funding company probably spells all of that out in their terms and conditions, and you agreed to these terms and conditions.

I recommend you have what you signed looked at personally by an attorney in your area. Your signing up for the service might have been a business mistake but the company you signed with might be operating within the law. A personal review is the only way you will be able to determine this for sure.

Here is a link to the New Jersey Division of Consumer Affairs, where you can file a complaint against the company if the personal review indicates the company might be violating laws: https://www.njconsumeraffairs.gov

Good luck.

 

[TinaForce]

The contract you signed with the business funding company probably spells all of that out in their terms and conditions, and you agreed to these terms and conditions.

I recommend you have what you signed looked at personally by an attorney in your area. Your signing up for the service might have been a business mistake but the company you signed with might be operating within the law. A personal review is the only way you will be able to determine this for sure.

Here is a link to the New Jersey Division of Consumer Affairs, where you can file a complaint against the company if the personal review indicates the company might be violating laws: https://www.njconsumeraffairs.gov

Good luck.

Thank you!

 

[quincy]

Thank you!

You're welcome, TinaForce. I appreciate the thanks.

I hope all can be resolved in your favor.

Good luck with your business.

 

[xylene]

Another angle - look at you business plan. Important point - are you still going ahead with the business?

How much revenue are/were you going to be generating?

What are your year-three goals?

How much equity did you have? How much of your business were you looking to sell? That's how angel investors work.

Your case to not pay or not pay in full is MUCH better if you can argue they did an ineffective job, a disservice to your business, rather claiming they did nothing or something you could have done.