FTC Secures $20.3 Million Judgment in Merchant Cash Advance Case

The Federal Trade Commission (FTC) has secured a judgment requiring former merchant cash advance operator Jonathan Braun to pay $20.3 million in monetary relief and civil penalties.

This marks the first trial by jury conducted by the FTC, the agency said in a Wednesday (Feb. 14) press release.

The judgment follows a trial held in January, when a jury found Braun, associated with small-business funding company RCG Advances, guilty of knowingly violating the Gramm-Leach-Bliley Act, according to the release.

The jury found that Braun deceived small businesses about the amount of funding his company would provide and collect from them, leading to a judgment of $3,421,067 to compensate affected small businesses, the release said.

The court also imposed $16,956,000 in civil penalties due to Braun’s “utter disregard and contempt” for consumers and use of threats and profanities against small business owners, per the release.

Samuel Levine, director of the FTC’s Bureau of Consumer Protection, expressed agreement with the court’s assessment. Levine emphasized the FTC’s dedication to protecting small businesses and highlighted that the $20.3 million judgment sends a message that lies and deception will not be tolerated in the marketplace.

The FTC initially filed a lawsuit against Braun in June 2020, along with four other defendants, accusing them of deceiving small businesses and organizations, misrepresenting the terms of merchant cash advances and resorting to unfair collection practices, including threats of physical violence, according to the press release.

The FTC’s lawsuit also alleged that Braun and the other defendants made unauthorized withdrawals from consumers’ accounts and required businesses and their owners to sign confessions of judgment as part of their contracts, the release said. These confessions of judgment allowed the defendants to unlawfully seize consumers’ personal and business assets in case of an alleged default.

In October 2023, the court issued a summary judgment decision and permanent injunction against Braun, including a lifetime ban from the merchant cash advance and debt collection industries, per the release.

The other defendants in the FTC’s case had previously settled, resulting in industry bans and monetary relief exceeding $2 million for affected small businesses.

It was reported in August 2020 that RCG Advances was one of several companies targeted by federal and state authorities for allegedly lending money to small businesses at extreme rates and seeking to collect payments with heavy-handed tactics.