Lending Disruptor, Rocket Mortgage, Announces First eSports Sponsorship
January 22, 2018Rocket Mortgage has thrown its hat into the burgeoning eSports ring, Quicken Loans, its parent company, announced on Friday. The brand has entered into a sponsorship agreement with the 100 Thieves’ League of Legends division.
Citing a synergy between the end-to-end online and on-demand mortgage product and the “disruptive” world of eSports gaming, Quicken Loans CEO, Jay Farner said via release that Rocket Mortgage is “aligning (its) brand with a subculture that embodies what we stand for as a company – industry disrupting and groundbreaking innovation.”
The deal includes the naming rights to The Rocket Mortgage Team House in Venice, California, logo placement on the 100 Thieves team jerseys and integration into the team’s social media presence.
“The Rocket Mortgage Team House gives us the chance to practice constantly, call team meetings in minutes and build synergy both in and outside of gaming as a team,” said Neil “Pr0lly” Hammad, head coach of 100 Thieves, veteran LoL player and most recently the head coach at H2k-Gaming where he was awarded the title for the EU LCS’s Coach of the Split on three separate occasions. “This is crucial for maintaining a competitive environment, and by handing us the keys to this team house, Rocket Mortgage is helping us prepare to destroy the NA LCS.”
The 100 Thieves eSports team as founded in 2016. In addition to League of Legends, the club has also fielded a team for the popular video game title, Call of Duty.
As for Rocket’s parent, Quicken Loans, the Detroit-based lender is the second largest retail home mortgage lender on U.S. soil. The company closed upwards of $400 billion of mortgage volume across the country between 2013 and 2017.
Hard Work, Big Success – The True Story of an MCA Broker
December 15, 2017Sales is a tough field for anyone to break into even if they come from the most ideal of circumstances. At some point, the rubber meets the road for every MCA broker, at which time they must decide whether they’ve got what it takes to make it in this business.
This is what makes Lerry Dore’s story so remarkable, as it seems that the more he got knocked down in life, the higher he was destined to rise. Today he’s employed as an MCA broker at Cresthill Capital. And while education has been paramount to getting him here, evidenced by the fact that during his entire employment he has been in college and he is still one of the funding company’s most successful brokers, Dore more than anything else was trained at the school of hard knocks.
Coming to America
Dore was born in South Florida, but he wouldn’t stay in the United States for long. After his parents split up, his mom was having a tough time making ends meet and made the impossible decision to send him to Haiti to live with extended family.
“My mom had a very hard time supporting us right out of the gate. Soon after I was born, I was sent to Haiti to live with my aunt and cousins,” he said, adding that this gave his mom a chance to get on her feet. “She needed to get a job so that she could provide for us at a basic level.”
Dore would remain in Haiti for the first three years of his life, where his first language would become Haitian Creole. But you wouldn’t detect a hint of an accent talking to him today at the age of 23.
Dore’s mom eventually found a job. She was only earning minimum wage at a hospital, but it was enough to get the wheels in motion to bring her son home.
“She was in a position to provide food, electricity and shelter for us. That’s why I came back,” said Dore, adding that he doesn’t remember much of Haiti with the exception of the plane ride home. “That’s where my memories start,” he said. Perhaps it was somewhere over the Caribbean that young Dore’s dreams began to form.
When he got back to Florida, Dore was able to meet his mom for what felt like the first time for him. He also met his brothers and sisters for the first time ever. He explained how at this point, his mom was still getting adjusted to life in America as an adult immigrant.
“There were a lot of things that I went through as a kid to this point that she couldn’t give me guidance on. She simply didn’t have that experience. That brought a challenge,” he said. Little did he know that these obstacles would help shape him into the resilient person and successful MCA broker he is today.
While getting used to the American culture was a challenge, something that his mother never lost sight of was the importance of education. “She was very big into education,” he said. Dore’s mom discovered Head Start, a government subsidized program that provided a pre-school education for families who couldn’t otherwise afford it. That was where it would all begin for Dore, and come hell or high water his mother was going to enroll him. Without the luxury of an air-conditioned vehicle to drive in the hot Florida heat, the pair set off on foot to sign up. Some 12-15 blocks later they arrived.
“Both of us were sweating bullets. She didn’t know it, but there was a small registration fee. At the time, she didn’t have it,” Dore explained. It was then that fate seems to have stepped in in the form of the woman who was handling registration. She pulled the pair aside and told them that after witnessing the dedication that this mother had toward her son, she was going to waive the fee. In return she only asked that they keep it on the down low.
“That small gesture made a dramatic difference in my life,” Dore said. “If I was not able to attend, I wouldn’t start school until I was seven or 10 years’ old. That was a very important moment in my life.”
Indeed, it was, as it would set in motion a series of events that would lead Dore to where he is today, a successful MCA broker at Cresthill Capital. But before he would join the firm, there were still more hardships waiting for him, not the least of which was the death of a friend in his teenage years. “That could have been me,” Dore exclaimed.
For the average person, life’s setbacks could have held them down forever. For Dore, they seem only to have propelled him further. “The reason why I stayed out of trouble was I was in school and my mother kept us grounded,” he said.
During his teenage years, Dore and his family lived in an apartment complex in a neighborhood of immigrant Haitians where he said the median income was $25,000 to $30,000 per year. He shared a room with his brothers and sisters.
“I focused on athletics,” he said, adding: “That’s where I got my competitive nature. Also, my thick skin,” both of which, incidentally, are characteristics that would serve him well as a broker later in life.
While he excelled at basketball at his Boca Raton high school, Dore wouldn’t be able to pursue those dreams for long. He and his family would be uprooted from their home time and time again amid landlord trouble. This series of setbacks, which involved him sleeping on his brother’s couch for a time, instilled a sense of maturity in Dore at a very young age.
He had a few Division II and Division III offers to play basketball in other states, but he turned them down. Instead of chasing his own dreams, Dore decided to focus on business and find a way to sustain and support his family “Once I graduated, I was not interested in basketball. I wanted to finish college,” said Dore, and lucky for the MCA industry he had his sights set on the field of finance.
Funding Merchants
After High School, the first thing that Dore did was to go online and look for a job. As it so happens, the first ad he saw was at a stock brokerage in Boca Raton. “That’s where I started, in phone sales. I didn’t have a Series 7 license at the time. I was just calling from the Yellow Pages. Once I got someone on the phone, I would transfer the call to someone who had a license,” he explained.
This went on for a couple of months until he heard about a startup company in nearby Delray Beach. “At the time, they were prospecting merchants. That’s how I got into the industry,” he said.
His first job in the MCA niche was with a very small ISO shop. But it was there that he would make a connection to change the course of his career. He was working on a deal that was hard to place and was only getting rejections. That is until he came across Mike Daniels, Cresthill’s No. 1 producer.
“I couldn’t get the deal done anywhere else. The merchant was getting frustrated with the process. I heard of a company that takes chances on merchants with imperfect credit,” he said. That funder was Cresthill Capital. Little did he know at the time, but they would eventually become his employer.
He sent the merchant file over to Daniels, who then reached out to the merchant and got the deal funded. It was at that point, Dore said, that he started to fall in love with Cresthill “because of how [Daniels] was able to treat the merchant with respect and get the deal done.”
For the next six months, Dore would proceed to trust all of his business with Cresthill. He was still employed by the small ISO shop, but he began to outgrow his environment and long for a platform that allowed him to explore his talent and excel. But his pursuit only left him frustrated and thinking about leaving the MCA industry, something he confided in Cresthill Capital’s Daniels, who was turning into a mentor, about.
It was at this point in his life and career that instead of being the rock, Dore needed to lean on someone else. Daniels and Cresthill Capital were there for him. He was invited in for an interview, and as they say the rest is history.
“I was shocked at how diverse the workforce is. There were different types of people with different backgrounds. I liked it right off the bat. And then everyone was very friendly to me from the moment I walked in,” he said. He was greeted at the front door by Cresthill Capital’s Mike Marano, who then proceeded to interview him.
“I’ve actually interviewed and sat with every single person at my company and hired them personally. What I can say about Lerry is that from the moment I looked at his face and saw his eyes, I knew intuitively that he was a good person. And responsible. I had no idea how deep of a person he was, how much humanity he would show. He was a willing student, and we were happy to teach him. And he continues to soak it up like a sponge,” Marano told AltFinanceDaily.
Dore was convinced Cresthill Capital was the right place for him when Marano insisted that Dore stay in school and continue his education. “They said, ‘we will work around your schedule,’ and that really drew me in,” he said, adding that the dog-friendly environment was a bonus.
Dore has been employed by Cresthill Capital for the past 18 months and is graduating from college this week. He is not only supporting himself, but he’s the highest earner in his family, which has allowed him to help support them.
Paying it Forward
As if on cue from the mystery lady that paid his school tuition when he was just a child, Dore is now interested in paying it forward in life. He said that similar to how Cresthill Capital is involved with philanthropy, he’d like to give back to the community. But his vision goes beyond his neighborhood.
“I want to help kids that are similar to me, who are in programs that try to help them excel in this country. I want at some point to work with immigrants that come in from Haiti and work with them to give them a platform, like the lady who gave us a chance,” said Dore.
Since the Haiti earthquake, his extended family has relocated north to Canada. “But I still feel to some degree a responsibility to try and help out the people in that country and the ones who come here through immigration,” he said.
As for Marano, he said all Dore needs to do is exactly what he’s been doing. “When he leaves me, he won’t have to work again. But knowing this kid, he probably will anyway,” Marano said.
The Scoop on iPayment’s MCA Renaissance
August 18, 2017
iPayment, a small business payment processing company, is placing a bet that it could be better the second time around in the MCA industry. iPayment Capital, which is scheduled to launch in the fall, is iPayment’s second foray into the merchant cash advance market. In conjunction with this expansion iPayment tapped Tomo Matsuo as senior vice president to spearhead iPayment Capital.
iPayment’s announcement comes on the heels of industry peers Square Capital’s Q2 loan origination of $318 million and PayPal’s acquisition of Swift Financial. Rather than remain on the sidelines, especially with access to data on some 137,000 small businesses, iPayment is making its move.
“Before Daily ACH loans and MCAs, we all started with the split payment MCA, and it’s exciting to see the recent renaissance of that mechanism with companies like Square and PayPal making it a key product feature. Transaction-based underwriting and variable payback schedules have become much more mainstream thanks to companies like Square and Amazon,” said Matsuo.
iPayment’s timing for getting back into MCAs is apparent but also coincides with the industry being held under a microscope for some questionable practices, not the least of which involves stacking, which can get small businesses in over their heads. Matsuo said the industry has a shared responsibility to fix this.
“I think there’s an opportunity for the industry to clean up some of the stacking and other practices. We all need to do more to better align ourselves with the needs and long-term health of the customers,” said Matsuo.
Meanwhile David O’Connell, senior analyst at Aite Group, offered his thoughts on the future role of MCA in small business funding: “Although we will always have merchant card advances in large volumes and these will be important to SMBs seeking funding, some of this volume will be replaced as the practices of alternative lenders become more entrenched: the provision of capital to an SMB based on a variety of data sets that achieve a fuller view of an SMB’s ability to repay only some of which is related to credit card volume.”
Balance Sheet Funder
Similar to its predecessor product iFunds, iPayment Capital will be a balance sheet MCA origination business. The company has the benefit of hindsight with iFunds, which was before Matsuo’s time there, as well as any missteps by the industry from which to pull.
“My job is to launch and build our own balance sheet MCA product, and we have a management team committed to the initiative,” said Matsuo. “iPayment is in a unique position because of our long history with the product — as a funder, split payment technology provider, and referral partner — and have a lot of experiences to build upon. There’s a great team at iPayment with a ton of institutional knowledge.”
iPayment’s access to customer data and insights certainly gives the company an edge. “It’s a crowded market going after a finite universe of customers. From a customer acquisition standpoint, iPayment has the benefit of having 137,000 customers,” said Matsuo.
iPayment also has solid industry partners including the likes of RapidAdvance with whom the company serves merchant customers. iPayment will continue to work with RapidAdvance and others on MCA. “We recently had the opportunity to strengthen our balance sheet, and we believe investing in iPayment Capital makes great business sense,” said Matsuo.
Matsuo pointed to opportunities within the smaller merchant segment for MCAs. iPayment Capital’s average funding size will be somewhere between Square Capital’s range of $6,000 – $7,000 and that of ACH alternative lenders at about $40,000. “We’ll be right in the middle,” he said.
Matsuo, a Bizfi alum, officially started in his new role on July 1, and he has no interest in looking in the rearview mirror. “At the end of the day, it comes down to pricing risk appropriately and maintaining proper controls,” said Matsuo, adding: “We all want to grow, but there are responsible ways of doing so.”
Is The End Near For This Debt Settlement Firm?
August 11, 2017
Corporate Bailout, a New Jersey based firm that purports to help businesses lower the monthly payments on their debts, is back in the news. This time it’s for allegedly running a sex-fueled office with stripper parties, sex dolls, and sexual harassment, according to the New York Post who published video footage of the debauchery. Warning: the New York Post link is not safe for work.
AltFinanceDaily has written about Corporate Bailout previously, in one case recently where the company is alleged to be robo-dialing out of control. Corporate Bailout never responded to the lawsuit and the court entered a default against the company this past Monday, according to the docket.
Back in April, AltFinanceDaily also received the recording of a call purportedly between a representative of Corporate Bailout and a small business owner. We had the lengthy dialogue transcribed and it appears below with the names between the parties changed.
Of note, the alleged Corporate Bailout representative in the call makes several references to a partner law firm named Protection Legal Group. There are several lawsuits pending against Protection Legal Group, one of which alleges the firm didn’t have a lawyer licensed to practice in the state they claimed to offer defense in. In that situation, a merchant had to hire another lawyer to sue his lawyer at Protection Legal Group.
| Person Answering Phone: | Hello. |
| Robo Agent: | Hello. How are you today? |
| Person Answering Phone: | I’m good. |
| Robo Agent: | Great! Can I speak to the business owner please? |
| Person Answering Phone: | Who is this please? |
| Robo Agent: | This is Alex from Corporate Bailout. Are they available? |
| Person Answering Phone: | Yeah. One second please. One second. |
| Robo Agent: | Thanks. |
| John: | Hello. |
| Robo Agent: | Can I speak to the business owner please? |
| John: | Speaking. |
| Robo Agent: | This is Alex from Corporate Bailout. I know your time is valuable. So, let me get straight to the point. We help small business owners eliminate their unsecured debts. If your business has taken a merchant cash loan or advance, a high interest credit card debt, accounts payable debt, or any other unsecured business debt, you are now able to settle your outstanding balances for just a fraction of what you owe. I just need to ask two qualifying questions. Okay? |
| John: | Sure. |
| Robo Agent: | What type of entity is your business registered as? LLC, Corp, etc.? Hello? |
| John: | LLC. |
| Robo Agent: | Do you have at least $25,000 in unsecured debt? |
| John: | Yes. |
| Robo Agent: | Great! It looks like you may qualify. Hold on one second while I get a specialist on the phone who can explain further. |
| [Phone Ringing] | |
| Derrick: | Hello. Hi. |
| Robo Agent: | Hi, I have someone here that is interested in moving forward. I will let you take it from here. |
| Derrick: | Thank you for that. My name is Derrick by the way. Who am I speaking with? |
| John: | John. |
| Derrick: | John, it’s a pleasure, John. So, John, go ahead and tell me a little bit. What kind of unsecured debt are you experiencing? Is this with cash advances? |
| John: | Yes. |
| Derrick: | All righty. And that’s our cup of tea. So, I wanna give you an example— |
| John: | What exactly— |
| Derrick: | …of exactly how this would work for you. |
| John: | Okay. Perfect. Yeah. |
| Derrick: | All right. Tell me how many advances do you have. Do you have one or a couple out there? |
| John: | I have 3. |
| Derrick: | 3. Okay. And what do you owe approximately in combined balances? |
| John: | About $85,000. |
| Derrick: | Okay. And lastly, what are they charging you daily? |
| John: | Total of about $2,000. |
| Derrick: | At this day? |
| John: | Yeah. |
| Derrick: | Okay. Obviously, they’re overextending you for sure. Now, you open these advances yourself? Is this your business, John? |
| John: | Yes. |
| Derrick: | Okay. What is it that you do? I just wanna get a better grasp of what’s going on. |
| John: | We’re a trucking company. |
| Derrick: | Oh okay. Yeah. Yeah. I work with a lot of trucking clients. All right. So, here’s the deal. I mean, at 85,000, knowing that these are cash advances, we’re able to reduce that down to about 63,000. Saving you well over 21,000 just on principal. |
| John: | How do I do that? |
| Derrick: | That’s very simple. I mean, what we do is we appoint you a power of attorney that represents the association. And what they’ll do is that by power of attorney they’ll contact your creditors in a form of hardship for you. Okay? And that’s the key word there because by law— And it doesn’t matter if it’s a cash advance or a Capital One Visa. Whoever that creditor is, whatever obligations you have to that creditor comes to an immediate halt. That means no more interest accruement. That means that whatever number I’m telling you by the time you hire us let’s say by today, that’s the number. Yeah. |
| John: | One second. Why does it come to a sudden halt if I have a contract with them? Like can’t they sue me for this? I mean, I signed a contract with them and everything. How is it legal to go and say that I can’t pay them? I’m not understanding you. |
| Derrick: | Well, #1, these are cash advances, which is highly unregulated. Everyone knows if you look into it. Okay? Everyone knows— |
| John: | I did. |
| [Crosstalk] | |
| Derrick: | Okay. Yeah. There you go. Well, they’re tiptoeing the line of legalities here by pressing [0:04:55][Inaudible] laws. That’s why we’re able to snatch them and nip them in the butt. Okay? When you are charging on a daily basis an overextended amount way past 25% APR, this is abuse. This comes to abuse now and we have to come at them in a form of hardship. By law, that’s what happens and everything comes to a halt right then and there. Now, they have to settle. Now, here’s the thing. I know you’re saying can they sue you. You know, they can. They can. Probability is very low. |
| John: | Why would I take the risk of getting sued? I mean, I’m just trying to understand. Is what you guys doing also legal? I mean, no offense, it sounds a little— |
| Derrick: | Oh yeah. |
| John: | This sounds a little less legal. What you’re doing sounds a little more illegal than what they’re doing because I really have a contract with them that I signed and I notarized. I mean, that is like legal documents. |
| Derrick: | Yeah. We give you a legal contract. It needs to be notarized and all that too. Okay? But here’s the thing. It is legal here. You’re working with the law firm. Okay? The law firm will then take that responsibility and make sure that they do reduce your debt size. Okay? It’s a cash advance. It’s a slam dunk every time. Who do you work with by the way? |
| John: | [0:06:15][Inaudible] I’ll give it to you in a couple minutes. Where did you get my information from? ‘Cause I usually get calls from them. Like this is the first call I’m getting from this type of company. Where did you guys get my information from? |
| Derrick: | So, we essentially look through UCC filings and UCC filings are only liens that are basic entry companies that normally take out cash advances. Normally. |
| John: | Right. |
| Derrick: | 9 times out of 10 when I see a UCC file that looks like yours and, you know, I’m usually right it’s a cash advance, so yeah. |
| John: | Which business were you referring to though? |
| Derrick: | I don’t know. I don’t know. Your phone call got transferred to me. So, we have several ways of finding new clients and one of them is that we have a database. People make outbound calls. I’m the one on the receiving end. I work with my clients one-on-one to get them enrolled, have them feel good about the program, and then I pass them along to the law firm. That’s my role here. So essentially, it happens like this, John. Right? Let’s say hypothetically today you’re like “You know what? This makes sense. I am in a hardship. I need to get out of this crap. All right, what do I need to do today?” I get you on board today just hypothetically. By Thursday because today is Tuesday— We need at least 48 hours. By Thursday, the law firm contacts you and they say, “You know, John, we reviewed everything. You know, you’re good to go. Let’s now help you stop making those payments so that way your bank no longer honors the ACHs you’re making daily. So essentially, by Thursday, we’ll put a stop, a complete halt to your payments. And then we can culminate maybe a week to 2 weeks before there’s any expense. And by the way, it will be a fraction of that cost. We’re talking at least 50% less in those payments. That’s how overextended they have you on. We don’t have to have that start for at least 2 weeks from today or whenever— |
| John: | So, in essence, I will still have to pay them. Just in a longer period of time you’re saying? |
| Derrick: | Right. Yeah. Well, we can work that out, but the whole point of this program is not to stress anybody. And that’s where the idea of a scam needs to be thrown out of the window. Okay? |
| John: | So, they’re scamming me you’re saying? |
| Derrick: | Yeah. I would say so. You don’t feel like you’re being highway robbed right now paying 2,000 a day? And I can give you even better numbers if I look at— you know, if I take a peek at the contract just to see the real numbers ‘cause on average they’re charging anywhere from 30 to 60 percent on a borrowed amount. That’s an average. I know you’re in that category. |
| [Crosstalk] | |
| John: | I understand, but I didn’t know about it that’s why I’m saying if I knew about all this, I can’t deny in court if they sue me. They do have a legal document against me. I mean, it is an issue. |
| Derrick: | Right. Well, here’s the good thing. I mean, people are in such a worse shape than you, John, that they’ll hire any company who’s gonna promise them that they’ll be able to negotiate, but the greater thing why this is such a more wise decision for you is that you’re not hiring a middle man. As a matter of fact, I can show you, okay, any agreements that we have. We provide litigation defense services on top of the settlement. So, if ever anything should happen, which being at 85,000 likely not, but if ever anything should happen, you have attorneys there that will show up in court for you, that will battle, that will counter lawsuit if we have to, whatever, drag out the process, whatever it takes. Whatever it takes. But at the end of the day if they wanted to sue you, you know how long a sue takes place or takes to convert? |
| [0:09:59] | |
| John: | I know, but— |
| Derrick: | It takes a long time. |
| John: | At the end of the day, I would still be found guilty that I did sign the contract. What defense could I possibly have for that? I’m just trying to understand what the legality is. |
| Derrick: | The defense is #1 it’s a hardship. If you look into that, hardships create a big deal in the law system. So, that’s #1. Number 2 is that this is technically not even a debt that you have. Check in on technicalities. They only purchase future receivables at expect it let’s say 2,000 a day. |
| John: | Yeah. And they also have a judgment against me though. |
| Derrick: | That is all scare tactics. That’s all. Confession of judgments you’re talking about, right? |
| John: | Yeah. Yeah. |
| Derrick: | Confession of judgment that you signed. Yeah. Yeah. Almost everybody signs a confession of judgment now. They just started implementing that the last 3 years. |
| John: | They can’t do anything with that? |
| Derrick: | Not when you have a power of attorney reaching out to them for settlement against the hardship cost. They can’t do that. |
| John: | Oh. |
| Derrick: | And if they use that– |
| John: | And also like with this document, they can like freeze accounts and they can freeze assets and stuff like that. But if you guys trick them and they can’t do that– |
| Derrick: | Yes. They won’t be able to. But if we need to take any preventative actions, your law firm, your adviser there will tell you to possibly change. |
| John: | So, you guys have a lawyer? You are the lawyer then? |
| Derrick: | I’m not the lawyer. I’m not the lawyer. I don’t do the negotiation. I told you my role here is just to get you on board so I can pass you to the law firm. That’s it. That’s my role. Give you the information– |
| John: | what’s your charge? |
| Derrick: | Okay. Good question, John. So, let me look at this number here again. I wanna give you something real. So let’s say it’s 85, right? 85,000 you owe. That gets reduced down to $63,340. That 63,000 is going to cover absolutely everything. That covers paying back your cash advances. That will cover for our services and fees all inclusive. Okay? The only reason why we’re able to do that, John, is because we are a nationwide law firm that does negotiations for cash advances specifically. That’s what Protection Legal Group does. And so, are you familiar with a class action lawsuit? Are you familiar with that? |
| John: | Yeah. |
| Derrick: | Okay. So, we approach settlements in that same format. Class action settlement is what we call it. So, essentially you’re one drop in the ocean. Right? And that’s why I wanted to ask you who you work with so I can give you references. But guaranteed we have, you know, up in the hundreds of clients in those cash advances that we have already control such a large portion of their funds. So, because we’re going to– Who do you have? do you have Swift? [inaudible] |
| John: | I’m not gonna reveal that information yet until I look into your company a little more only because it’s my first time hearing about this. I will look into this. I wanna speak with my lawyer about it and everything. But you were telling me it would be lowered to 63,000. That’s fine. |
| Derrick: | Yeah. That’s at most. |
| John: | What’s your fee? |
| Derrick: | Our fees are inclusive, John. I can’t tell you what it is until we submit everything, until we submit all the hard copies into the law firm |
| John: | What’s the percentage range? I mean, there’s gotta be some sort of number that I can go by. |
| Derrick: | Yeah. Yeah. I can give you a percentage. So, let’s say we reduce it down to 70 cents on the dollar, right? 42 cents of the dollar will go to your creditors. Okay? |
| John: | And the 28? |
| Derrick: | And 28 cents gets [0:13:58][Inaudible] up between the law firm and your attorney. It’s like 4 cents in a dollar to the attorney, 24 cents to the law firm. So, that’s how it works. Normally, that’s what they look to negotiate. |
| John: | So, you’ll get the 24, they get the 4? |
| Derrick: | That’s if they agree to that term. Yeah. The whole point is for your attorney to figure that out with the lender. At the end of the day– |
| John: | Isn’t that 24% on the dollar also? |
| Derrick: | No. No. On the 70 cents on the dollar that we reduce it. So, you have 85,000. Reduce it to 70 cents on the dollar let’s say. In that 70 cents, 42 goes to them. The remainder of the 28 is split. Right? 4 cents to your attorney, 24 to the law firm. So that’s the numerology of how it gets distributed. |
| John: | That’s 40% |
| Derrick: | Right. That’s how it gets– What is? |
| John: | The 28 cents on the 70 cents is 40%. |
| Derrick: | 40%? |
| John: | Yeah. |
| Derrick: | No. No. It’s smaller than that. |
| John: | Do the math. |
| Derrick: | If it were 40%– |
| John: | Do the math. You said 28. Do 28 divided by 70. |
| Derrick: | 28 divided by 70, 0.4. Yeah. 40%. So, what are we getting off here? |
| John: | So basically, you’re charging me 40% and they’re charging me the same 40%. So what’s the difference? I’m just trying to understand why– |
| Derrick: | No. Yeah. We’re making 40– Hold on. We’re making 40% of that 70%. They’re making 60% out of that 70 cents. I mean, if you wanna get in detail, that’s what it works down to. At the end of the day, the whole program cost for you is only 63,000. So, you make the decision whether you pay 63,000 or 85,000. |
| John: | And run the risk of getting sued. |
| Derrick: | No one touches–. No. You have a law firm that will fight and give you the litigation defense. |
| John: | Right. That’s not a–I understand that. I understand they’ll give it to me. But I also run the risk of losing. And if I lose, I would have to pay all their legal fees and that extra money that I know, you know, what trying to get out of. So, here’s what I’m gonna do. I’m gonna have to look into this a little more ’cause I’m not just gonna give all my information in a second. Can you send me some– |
| Derrick: | Yeah, that’s fine. |
| John: | …information so I can look it over? |
| Derrick: | What’s your best email, John? |
| John: | It’s [address redacted] |
| Derrick: | @gmail.com. Do you happen to be in front of a computer now? |
| John: | I do. Yeah. |
| Derrick: | All right. I just wanna make sure that you at least get it. I’m putting in the subject heading, ATTENTION John. This should be easy to find. So, you know, you can loo at– |
| John: | I just wanna make sure what it’s about. what is this for? What’s it called? |
| Derrick: | Debt relief I can put in there. Is that okay? |
| John: | Yeah. That’s fine. |
| Derrick: | I’ll put debt relief as well. Yeah. |
| John: | And this is from Mason & Hanger? |
| Derrick: | Mason & Hanger? |
| John: | Yeah. That’s where you’re calling from? |
| Derrick: | What’s that? No. No. Protection Legal Group is the name of the law firm. Protection Legal Group. |
| John: | Oh, it’s not Mason & Hanger? |
| Derrick: | No. I don’t know where you got that name. |
| John: | From the caller ID |
| Derrick: | Really? Mason & Hanger? I don’t know. That’s strange. You know, when I make calls out of the office, sometimes it comes out like– |
| John: | Are you gonna have your contact number over there or no? |
| Derrick: | Yeah, it’s in the email. Tell me if you have it now ’cause it says that it’s sent |
| John: | [Name redacted]? |
| Derrick: | [Name redacted]. Yup. that’s me. All right. So, there’s a summary of what we went over and then those things in bold would be what we need in order— if you wanna proceed forward, but the very first thing you’ll see in bold is the current cash advance agreement signed or unsigned. Very important. That’s what’s gonna help us approve you or not and see if we can fit you in the program. We have to look over the verbiage in there. You see one document attached. Right? |
| John: | Right. Right. |
| Derrick: | Do you see what’s in bold? Yeah, I have a few things in bold there that we require from you. Okay? The hardship letter is one of them that’s attached in there. But before all of that, we wanna take a look at a copy of the agreements you have with the 3 cash advances. It could be signed or unsigned. Your personal information is not gonna do us any good. We wanna see if we can approve you first. Okay? That’s all. It’s just by procedure. And then what we find in there, which only takes about 20 to 30 minutes to approve you, I can tell you, “Hey, John, you know, here are the real numbers, what we found based on your contract. Here’s what we can offer and here are your options.” And then we can come into an agreement together. The whole point of this is to get you off from paying— You’re paying 10 grand a week, man, you know. To get you off of 10 grand. Maybe down to 5,000. Whatever that number is that’s more comfortable for you and obviously is realistic for the law firm. Okay? |
| John: | You are basically just the broker for the law firm? |
| Derrick: | I’m their spokesman, you know. I’m their marketing arm. Not a broker or anything. If I were a broker, I’d have countless sources of different law firms that does this. |
| John: | I assume you have one law firm that you work with? |
| Derrick: | I only represent them. |
| John: | Who do you work with? |
| Derrick: | What was that? |
| John: | Who is the law firm that you work with? |
| Derrick: | Protection Legal Group. Protection Legal Group. You can put that down. |
| John: | Can you email me that information? I wanna make sure. It is in the email? |
| Derrick: | Yeah. It’s in the email. Yeah. Yeah. It’s all in there. |
| John: | Okay. Protection Legal Group |
| Call trails out into goodbyes… |
In the follow up email that came up from a corporatebailout.com address, Derrick said, “We have teamed up with nationwide law firm, Protection Legal Group, who will negotiate with lenders on your behalf. By enrolling in our program, we would reduce the total advance balances down to 70 cents on the dollar! But more importantly, we turn your daily payment into a ONCE a week payment, and reduce that amount by up to 50%!”
After Fork, Coinbase Has Change of Heart on Bitcoin Cash
August 6, 2017
Now that Bitcoin Cash has forked off of Bitcoin, Coinbase is no longer taking a hard line stance against the alt currency. In a new email they sent to account holders, they cite security of the network, customer demand, trading volumes, and regulatory considerations as the reasons they have decided to support Bitcoin Cash by January 1, 2018. Not mentioned are the rumored threats of class action lawsuits for withholding Bitcoin Cash from their account holders.
On Twitter, Columbia University Professor Tim Wu had likened Coinbase’s original refusal to turn over Bitcoin Cash to account holders to a hijacked stock split. “Imagine a stock split where the broker declined to issue the new stock to its owners,” he wrote on July 31st. He also wrote that Coinbase was “courting serious, maybe ruinous legal trouble if it doesn’t give the users the full value of the Bitcoin fork.”
There is little doubt that Coinbase would’ve been exposed to lawsuits because they have access to Bitcoin Cash through their users’ Bitcoin deposits but were keeping the Bitcoin Cash for themselves. And Bitcoin Cash is not exactly valueless. As of the time I’m writing this, 1 Bitcoin is equal to $3,226, according to Coinmarketcap.com. 1 Bitcoin Cash is equal to $204. Bitcoin is hovering around its all-time high while Bitcoin Cash is already the 4th most valuable alt coin.
A letter from Coinbase on their change of heart is below:
Dear Coinbase customer,
We wanted to give our customers an update on the recent Bitcoin hard fork. You can read more about what a digital currency fork is here:
https://blog.coinbase.com/what-is-a-bitcoin-fork-cba07fe73ef1
Forks enable innovation and improvements to digital currency and we believe that we will see an increasing number of forks in the future. We expect this to be a vibrant and innovative community.
When a digital currency forks, it creates a new digital asset. Adding new digital assets to Coinbase must be approached with caution. Not every asset is immediately safe to add to Coinbase from a technical stability, security, or compliance point of view.
Our top priority is the safety of customer funds and we spend extensive time designing, building, testing and auditing our systems to ensure that the digital asset we support remains safe and secure. We may not always be first in adding an asset, but if we do, you can be sure that we’ve invested significant time and care into supporting it securely. We believe this is the best approach for us to maintain customer trust.
In the case of bitcoin cash, we made clear to our customers that we did not feel we could safely support it on the day it was launched. For customers who wanted immediate access to their bitcoin cash, we advised them to withdraw their bitcoin from the Coinbase platform. However, there are several points we want to make clear for our customers:
Both bitcoin and bitcoin cash remain safely stored on Coinbase.
Customers with balances of bitcoin at the time of the fork now have an equal quantity of bitcoin cash stored by Coinbase.
We operate by the general principle that our customers should benefit to the greatest extent possible from hard forks or other unexpected events.
Over the last several days, we’ve examined all of the relevant issues and have decided to work on adding support for bitcoin cash for Coinbase customers. We made this decision based on factors such as the security of the network, customer demand, trading volumes, and regulatory considerations.
We are planning to have support for bitcoin cash by January 1, 2018, assuming no additional risks emerge during that time.
Once supported, customers will be able to withdraw bitcoin cash. We’ll make a determination at a later date about adding trading support. In the meantime, customer bitcoin cash will remain safely stored on Coinbase.
Thank you,
Coinbase Team
A Bitcoin Hard Fork is Coming and Creating New Money With It
July 30, 2017On August 1st, Bitcoin will fork into two different currencies. That’s because a significant group of developers and miners believe that the Bitcoin protocol needs an upgrade in order to scale. Not everyone agrees so the chain is splitting in two. Since a split chain will share the same history, anyone who owns Bitcoin on one chain will automatically own the same amount of Bitcoin on the other chain. To avoid confusion, Bitcoins on the new chain will be called Bitcoin Cash.
You can think of this fork as a stock split except that Bitcoin & the new Bitcoin Cash will have a different value and future. An original Bitcoin at present has a value of about $2,700 per coin. Bitcoin Cash will likely be worth less.
If you store your Bitcoins on an exchange, you could actually miss out on getting your Bitcoin Cash. Coinbase, for example, an exchange based in San Francisco, said that its users will not be able to access Bitcoin Cash. In a letter they sent out to customers last week, they advised customers withdraw funds before the fork if they hope to benefit from Bitcoin Cash.
Dear Coinbase Customer,
We wanted to provide an update on proposed changes to the Bitcoin network and what that means for bitcoin stored on Coinbase. You can read more about what a digital currency fork is https://blog.coinbase.com/what-is-a-bitcoin-fork-cba07fe73ef1.
Our first priority is the safety of customer funds. In the event of a fork, customer fiat currency (USD, EUR and GBP) and digital currencies (bitcoin, ether and litecoin) are safe.
On August 1st, 2017 there is a proposal to make changes to the bitcoin software. This proposal, known as Bitcoin Cash, is likely to create a fork in the Bitcoin network. This means that after August 1st, 2017 there are likely to be two versions of the Bitcoin blockchain and two separate digital currencies.
In the event of two separate blockchains after August 1, 2017 we will only support one version. We have no plans to support the Bitcoin Cash fork. We have made this decision because it is hard to predict how long the alternative version of bitcoin will survive and if Bitcoin Cash will have future market value.
This means if there are two separate digital currencies – bitcoin (BTC) and bitcoin cash (BCC) – customers with Bitcoin stored on Coinbase will only have access to the current version of bitcoin we support (BTC). Customers will not have access to, or be able to withdraw, bitcoin cash (BCC).
Customers who wish to access both bitcoin (BTC) and bitcoin cash (BCC) need to withdraw bitcoin stored on Coinbase before 11.59 pm PT July 31, 2017. If you do not wish to access bitcoin cash (BCC) then no action is required.
We plan to temporarily suspend bitcoin buy / sells, deposits and withdrawals on August 1, 2017 as the fork is likely to cause disruption to the bitcoin network. This means your funds will be safe but you will be unable to access your bitcoin (BTC) for a short period of time.
We will keep you updated on this event through our blog, status page and Twitter.
Thank you,
Coinbase Team
If you are one of the few people in the alternative finance community who has still never owned, bought, or sold something with Bitcoin, Coinbase is a good place to start. They are fully licensed in New York State. Sign up here.
AltFinanceDaily has accepted Bitcoin as a form of payment since 2014.
The value of a Bitcoin is up 63% year-to-date, according to the AltFinanceDaily Tracker, while the S&P 500 is only up 10%.
SoFi Bank Puts ILC Charter in Spotlight
June 28, 2017
Online lender SoFi’s decision to apply for a bank charter has snagged the attention of alternative lenders, big and small banks and regulators alike. Market participants appear split between cheering the move and drawing a line in the sand. One thing they agree on is that the signs were there all along.
Christopher Cole, executive vice president and senior regulatory counsel at the Independent Community Bankers of America (ICBA) said it was only a matter of time.
“We were expecting the application from a fintech company to come eventually and it came pretty rapidly,” Cole told AltFinanceDaily. “What was surprising to me was that they took the ILC route as opposed to the OCC special purpose national bank charter.”
As a Utah-chartered industrial bank SoFi would be subject to the regulation of the FDIC. There have not been any ILC applications for deposit insurance in years in part due to a temporary moratorium that Dodd Frank placed on the ILC loophole following the financial crisis, a roadblock that has since been removed.
Richard Hunt, president and CEO of the Consumer Bankers Association (CBA), said that SoFi’s application was certainly not a shock.
“The whole world is evolving, fintech is evolving. This was inevitable one way or another,” Hunt told AltFinanceDaily, adding that there will probably be more applications coming down the pike, which he welcomes. “We’re glad more people are getting into banking. SoFi at one time railed against banks and now it wants to get into banking. Welcome to the world of banks and overregulation.”
The CBA is comprised of the country’s largest financial institutions as well as regional banks.
“This is the first true test of the FDIC in a new fintech world,” said Hunt, adding that it’s the duty of the FDIC to ensure that SoFi Bank is well capitalized. “That is part of the application process.”
The ICBA is comprised of approximately 6,000 small banks across $5 trillion in assets.
“This would actually create a risk to the deposit insurance system. An ILC would have deposit insurance from the FDIC. If SoFi Bank fails because parent SoFi can’t maintain it, the rest of the banking system must pay for it. They’re putting the banking industry at risk here,” said Cole.
And while the rise of fintech startups has created more competition for banks, neither trade organization has a problem with this.
“We’re not trying to keep fintech from competing, that’s not the case,” said Cole.
Meanwhile Hunt told of his trip to Silicon Valley in which he visited SoFi as well as many other fintech startups.
“I’ve always been a big fan of SoFi, especially after visiting. I’m head over heels they chose banking as their industry. We’re gloating that they want to join the banking industry. This is good for consumers, to have choices. We are not going to be afraid of SoFi joining the banking world. We welcome them to the banking world,” said Hunt, adding that banks are ready to compete as long as it’s fair.
Fair is precisely what the ICBA is seeking.
Level Playing Field
There are about 30 existing ILCs in existence now and thousands of insured banks. And SoFi’s use of the ILC charter is the ICBA’s main objection.
“It’s the fact that they’re using this loophole so that SoFi, the parent company of SoFi Bank the subsidiary, will not be subject to the same kind of restrictions that the owner of a commercial bank would. And therefore, you don’t have a level playing field,” said Cole.
The ICBA is also concerned that a successful SoFi ILC charter would set a precedent for other fintech firms.
“Who’s next? I could see Amazon trying to do this and waiting for SoFi to do it first. Who knows? I could see maybe Google and PayPal pursuing this. I could see some big commercial companies exploiting this loophole, and that is why we think it should be closed,” said Cole.
Meanwhile CBA’s Hunt sees things somewhat differently. He said SoFi’s application represents an opportunity for bank regulators to review the ILC in a new world environment and possibly make changes.
“No one envisioned when they wrote the ILC charter that we would have fintech companies that finance mortgages and student loans from private equity capital and not deposits. It’s a new world. Like with all rules and regulations, federal regulators should periodically review longstanding policy,” Hunt said.
Either way the influence of the banking sector should not be overlooked.
“We have been fighting the ILC charter for over a decade. When Walmart tried to apply for an ILC charter in 2006 we objected at that point. And that resistance was part of the reason why they never got a charter,” said Cole.
SoFi Bank
The ICBA is preparing commentary for the FDIC, which is due by July 18. “Our comments will be focused mostly on the use of the ILC charter,” said Cole.
Once the comments are in, the ball is in the FDIC’s court. “We’re anticipating that a decision will be made in the next two to three months. We should know by the end of this year whether or not SoFi Bank gets its charter and deposit insurance,” said Cole.
If SoFi does become a bank, Hunt says he’s pleased that the fintech company has expanded its lending beyond only the elite universities though he’s still not sure they’ve gone far enough. “If they are granted the ILC charter, every student should have fair access to SoFi’s products just as they do with every other bank in this country,” said Hunt.
SoFi declined to comment for this story.
Déjà Vu: Some Small Business Funders are Fading Away
June 20, 2017
Apparently I’m old enough to see this happening all over again. A handful of big names in the alternative small business space are faltering and many of you have asked what this means for the industry. It really doesn’t mean anything other than those who do not learn history are doomed to repeat it.
We already went through this in 2008-2009 when at least half of the funders in the merchant cash advance industry were wiped out over the course of several months. Merit Capital Advance, Fast Capital, First Funds, Summit, and Global Swift Funding were the Goliaths of their time. Those companies going out of business seemed unthinkable in principle and for what that would mean for the industry as a whole. Smaller players disappeared too, names like iFunds, Infinicap, and others for those of you who might remember.
Those companies failed. The industry continued.
While it’s easy to finger the financial crisis as the culprit for their demise, the truth, or at least the truth through the fog of war and days gone by, is a lot more relatable. Funders were undone by their dependence on a single source of capital, sloppy underwriting, defaults, rogue ISOs, a race to hit origination targets, overpaying commissions, misplaced predictions, and even stacking. If any of those things remind you of what’s happening today, well then of course there are companies failing.
One lesson from the past is that you won’t necessarily get a year or two to adjust and figure things out. It will seem like everything is great and then suddenly it’s not. No company is going to sit you down and tell you their 1-2 year going-out-of-business plan to prepare you for change. They probably don’t have any such plan, will fight to avoid it and their end may be just as much a shock to themselves as it is to everyone else.
What we’re learning again this time is that some business models just won’t pan out long term. And some business models that used to work no longer work so much today. Things like stacking are not going away. It’s not illegal and no legal precedent has been established against it. If you’re an ISO though, you may be risking a relationship or breaching your own ISO contract by helping a merchant engage in it. So it’s a slippery slope but one that has permanently disrupted the landscape.
I have heard a lot of complaints from ISOs about the supposed decay of funder loyalty, as in they feel their deals are getting swiped. Another lesson from 2008 is that in times of strain, parties are more likely to look to their contracts for guidance and if the contract says they can take your deal after a certain amount of time and they very much financially need to, they probably will do it. The whole hey, we’re friends, we wouldn’t do that kind of thing goes out the window if survival is at stake and the contract allows for certain actions. That also means that if you’re an ISO who has violated an ISO agreement before and got nothing but a shrug in the past, don’t be surprised if suddenly one day you’re put on notice of a breach and are forced to reckon with the consequences of it.
What failures in the industry may also mean is a return to a semblance of order, a return to a code. 2010-2011 was a refreshing time to be in the business with so much unhealthy competition out of the way even though approval terms were less flexible and there were fewer options to shop around for. By 2013 however, a flood of participants discovering the industry for the first time, believed that they had stumbled upon something brand new and lost were the lessons of yore. Some of them introduced lasting change, like ACH debits over merchant accounts splits. Others just replicated the cavalier tactics that had proved fatal in the previous generation, distorting a happy market equilibrium in the process.
Ultimately, the market will prevail, albeit with some new names and new faces at the top. This is the way of things. It has happened before. It will happen again. Look at the companies rising rather than those that are falling. Whatever they are doing may be the future, whether you agree with how they do business or not.
