Small business owners have lost $37 million, FTC charges
of ConsumerAffairsThe Federal Trade Commission is taking action against Seek Capital and its founder and CEO, Roy Ferman, for allegedly operating a bogus business finance scheme that cost small business owners more than $37 million.
According to a complaint filed by the FTC, the company has targeted new and aspiring small business owners looking for loans or lines of credit to open or grow their businesses. While the companys advertising implies that business owners would have access to cash, instead Seek charges clients thousands of dollars simply to open credit cards in the owners names.
Starting or growing a small business is no easy task and it is made harder by those who deceive small business owners with false promises of liquid capital, said Samuel Levine, Director of the FTCs Bureau of Consumer Protection.The FTC will ensure that all consumers looking for financial products and services, including small business owners, are protected from those who break the law.
Looking for funding
Business owners find Seek when they are looking online for sources of funding to make payroll, buy vehicles and other ongoing expenses involved in keeping a business up and running.
According to the complaint, Seeks ads call the company the market leader in business loans for small businesses and the companys website advertises the Best Startup Business Loans of 2024.
The complaint points to numerous other ads and marketing materials from Seek and its lead generators that tout the easy availability of tens of thousands of dollars in business loans and business lines of credit, with promises that business owners who apply can be pre-approved in minutes.
When business owners express interest in this type of funding, they are contacted by Seek telemarketers, who have told potential clients that Seek was offering lines of credit with access to cold hard cash, according to the complaint. Seeks telemarketers use high-pressure sales tactics, including follow-up calls that some business owners have described as incessant and harassing.
Once business owners sign the contract, instead of procuring business loans or lines of credit, Seek begins applying for numerous credit cards, typically personal credit cards in the name of the business owner. Seek then charges the business owner 10% of the total credit amount on the cards issuedan amount that can total thousands of dollars, according to the complaint.
No consent
The business owners never see, sign, or approve any credit card applications that Seek submits on their behalf. The complaint charges that the first time many learn that Seek has applied for credit cards in their name is when they receive an alert about a drop in their credit score, an invoice from Seek listing the credit cards Seek obtained in their name, or a letter from a bank approving or denying them for a credit card.
This is also when many business owners first learn of Seeks hefty fees. According to the complaint, the credit cards are ones that the business owners could have applied for on their own.
If a business owner tries to cancel their agreement with Seek, even before Seek has submitted a single application on the business owners behalf, Seek slaps them with an early termination fee of as much as $995, according to the complaint.
The complaint also charges that Seek distorts its online ratings by pressuring consumers to provide five-star reviews of the company before they have received any funding, deletes negative consumer reviews, encourages employees to post positive reviews, and in its contracts illegally prohibits clients from leaving negative reviews about Seek.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-11-15 19:39:27
