Merchant Cash Advance Stacking – Sidebar
A claim brought by a first-position MCA company or lender may not be the only legal concern for a company that engages in stacking. Regulators could become involved if they believe aggressive stacking unfairly harm merchants. The Federal Trade Commission (“FTC”) and most state attorneys general can enforce unfair and deceptive trade practice acts even in B2B transactions.
A merchant may be harmed because the stacker imposes so large an aggregate obligation on the merchant that the merchant’s business fails. Or, a merchant may be harmed if a first-position MCA company or lender declares a default under the first-position contract when the merchant accepts the stacker’s offer. Arguably, the merchant could have protected herself from such a default by refusing the offer that caused the harm. However, a regulatory agency may be sympathetic to the plight of an unsophisticated merchant that failed to understand that the stacker’s offer could harm her relationships with the prior MCA company or lender.
Read full article by Robert Cook, Cathy Brennan, and Kate Fisher of Hudson Cook, LLP
Stacking: Is it Tortious Interference?
Robert Cook, Cathy Brennan and Kate Fisher are partners in the Maryland office of Hudson Cook, LLP. Robert can be reached at 410-865-5401 or by email at rcook@hudco.com. Cathy can be reached at 410-865-5405 or by email at cbrennan@hudco.com. Kate can be reached at 410-782-2356 or by email at kfisher@hudco.com.
