Articles by deBanked Staff
“Grok, Read My ISO Agreement”
July 14, 2025
Before having an attorney review an ISO agreement, consider having an intelligent LLM AI take a look at it and alert you to any immediate red flags. After all, some accusations of purported funder improprieties these days are actually rooted in actions well within the rights of the funder in the ISO agreements. D’oh! But if such agreements are too long or too legalese-sounding for you to make an immediate judgment, LLMs like ChatGPT-o3 or Grok4 or Claude or Gemini etc have become so adept at understanding a subject and communicating in a way that the user understands, that perhaps it’s worth having them take a look. (Maybe even at your existing agreements!)
For example, deBanked obtained a 15-page ISO agreement and asked Grok4 a bunch of casual questions. One of them was, “can this funder backdoor my deals?” Surprisingly, it named some weaknesses and loopholes that the broker should be aware of even if they were not easily exploitable. On the other hand, this ISO agreement already had some broker protections built in that the LLM pointed out, such as an in-house funding clause where the broker would be paid the commission if their submitted deal was funded by the funder’s in-house sales team within 30 days of the broker having submitted it. Did you know they had an in-house sales team?!?! Grok4 did!
Grok4 also gave me the heads up that there’s a 30-day clawback period and that my future renewal commissions would be forfeited if I were to be terminated for cause. Ironically, the LLM also gave me some unsolicited advice, telling me to diversify my funders and to watermark my docs “as per the new tool.” When I asked what tool it was even talking about, it specified Aquamark, which appeared on this site just a few months ago. Grok4 also said to use deBanked, lol. Thanks!
Recommendations to Protect Yourself
Operational Steps: Timestamp submissions, watermark docs (as per the new tool), and require written confirmations for all merchant interactions. Diversify funders.
Contract Tweaks: Negotiate for audit rights, higher breach penalties, or tech tracking of merchant contacts. Extend non-interference to 3-5 years (common in MCA).
Industry Tools: Join broker networks or use platforms like deBanked for alerts on shady funders.
Curious what your ISO agreements say? I used Grok4 for this experiment. Of course, you should actually be using a lawyer for a real assessment. Here’s a list of some to get you started.
CA Debt Settlement Bill is Amended to Exclude MCAs, Factoring and Only Include Loans
July 11, 2025After deBanked reported on a commercial financing debt settlement bill moving its way through the state legislature in California, a committee promptly revised the whole thing to specify that it should be for commercial loans only. The language was revised to remove its applicability to “accounts receivable purchase transactions, including factoring, asset-based lending transactions, or lease financing transactions.”
The most recent version of the bill can be viewed here.
Troutman Pepper Locke Podcast Talks Biz Financing and Impact of Legislative Changes in Texas and Louisiana
July 10, 2025Troutman Pepper Locke attorneys Carlin McCrory, Jason Cover, and Caleb Rosenberg talked small business financing, the recent changes in Texas and Louisiana, and what is likely to come next. The discussion took place prior to the Texas bill being signed by the governor there but provides insights on it that still apply.
You can listen to it here:
Brendan Ross Sentenced to 40 Months in Prison
July 9, 2025Brendan Ross, once the darling hedge fund manager of alternative small business lending, has been sentenced to 40 months in prison after pleading guilty to wire fraud. Ross was indicted five years ago in 2020 for a scheme he carried out through his firm Direct Lending Investments.
“Ross allegedly caused the monthly asset values of the funds to be cumulatively inflated by over $300 million over the course of about four years,” the original indictment stated. “By fraudulently inflating the value of the funds, Ross was able to collect millions of dollars in fees he otherwise would not have been able to charge to clients, according to the indictment.”
Ironically, clues about Ross’s scheme surfaced in a 2017 tell-all book authored by an entrepreneur that had borrowed money from his fund. When the author broke the news that his lending business was going bust, Ross reportedly told him: “I am like, literally staring over the edge. My life is over.”
Approximately one year later, Ross resigned from his own firm and the company went into receivership.
California Bill Seeks to Rein in Debt Settlement Companies That Target MCAs / Business Loan Borrowers
July 7, 2025AB-1166 in California has been quietly moving through the legislature in California since February. The bill seeks to amend the Fair Debt Settlement Practices Act to include commercial financing recipients with consumer borrowers as a covered and protected group. Per the bill, “Commercial Financing means an accounts receivable purchase transaction, including factoring, asset-based lending transaction, commercial loan, commercial open-end credit plan, or lease financing transaction intended by the recipient for use primarily for other than personal, family, or household purposes.”
If it became law, debt settlement providers would be prohibited from engaging in misleading practices, have to provide specific disclosures, allow the business owner to cancel the debt settlement agreement at any time, have to provide monthly statements, itemize their compensation, and more.
The full text can be read here. It recently passed through the Senate Banking and Financial Institutions committee on July 2.
CFPB’s Funding Cut Almost in Half
July 3, 2025The current Administration’s “Big Beautiful Bill” that passed Thursday includes a paragraph that modifies the CFPB’s annual funding budget. In 2010, The Consumer Financial Protection Act, which created the CFPB, stipulated that that no more than twelve percent of the annual total operating expenses of the Federal Reserve System shall be transferred to the agency. The new law has amended that down to 6.5%.
For perspective, the CFPB received $729.4M from the Fed in FY 2024 but could have drawn up to $785.4M. Had the new cap already been in place, the agency would’ve only been entitled to take up to $425M.
All eyes had been on the CFPB in the small business finance industry where massive regulations relating to how such companies collect data were supposed to have gone into effect this month. The agency ultimately suspended compliance with the rules by one year and said it intends to rewrite those rules in the interim. The agency is required by the fifteen year-old statute to implement some form of data collection on small business lending.
deBanked Celebrates 15 Year Anniversary
July 1, 2025deBanked celebrates its 15th anniversary this month. Launched in 2010 as a blog under the name Merchant Processing Resource, its original focus was on payments and merchant cash advances.The site went through several iterations and began transitioning to the name deBanked in the Fall of 2014.
A look at the MCA content portal in 2010:
If you’re interested in some of the pre-2020 headline history, you can review this old 2019 post we made here.
Thanks for reading and cheers to another 15 years??????
ACH, Wire, and Soon Stablecoin Transfers?
June 30, 2025“Many of the users out there today are not aware of stablecoins, or not interested in stablecoins, and they should not be,” said Jose Fernandez da Ponte, PayPal’s SVP of blockchain, crypto and digital currencies to CNBC. “It should just be a way in which you move value, and in many cases, is going to be an infrastructure layer.”
Stablecoins, blockchain-based units typically pegged to the US Dollar, are taking off. According to Visa, for example, $3.7 trillion worth of stablecoins were transacted in the last 30 days alone. Since there’s no speculation angle to be gained from holding them, the value of using stablecoins versus other methods of payments is primarily speed and cost. As an infrastructure layer, traditional lenders may want to keep an eye on developments there. For example, where ACHs may become too costly or impossible to utilize efficiently, USD-> Stablecoins-> USD could become a viable mechanism to sweep funds from a traditional bank account to a third party. Borrowers may not ever even need to know or be aware that blockchain rails are being used to transmit payments. Lenders too need not be burdened by crypto and instead merely leave the conversion of one to the other and back to a payment service.
This is not the domain of edgy upstart fintechs any longer either. According to American Banker, “The progress of the GENIUS Act has spurred banks to forge stablecoin strategies, with Citigroup, Bank of America and dozens of others considering launching their own stablecoin, joining a stablecoin consortium or both.” Additionally, stablecoin issuer Circle just applied for a national bank charter.
🚨34% of ETH transactions now involve stablecoins, driving network activity near all-time highs pic.twitter.com/iTWBCHZT6b
— matthew sigel, recovering CFA (@matthew_sigel) June 30, 2025
While much of the early blockchain utopian ideals speculated that commerce may be transacted with bitcoin, using the rails to transact in dollars may be a much more near-term and universally accepted method.
