Yellowstone Cash Advance: What to Know About FTC Settlement and Lawsuits

Yellowstone Cash Advance has been at the center of a significant FTC settlement and lawsuits. The company agreed to a $3.7 million settlement with the Federal Trade Commission (FTC) in 2011.

This settlement was a result of allegations that Yellowstone Cash Advance had engaged in deceptive lending practices. The FTC claimed that the company had failed to clearly disclose the terms of its loans, including the interest rates and fees.

Consumers who took out loans from Yellowstone Cash Advance may have been unaware of the true cost of their borrowing. This lack of transparency led to financial harm for many people.

New York AG Letitia James filed a lawsuit against Yellowstone Capital, its founder David Glass, and 30 other affiliated companies and individuals in March 2023.

The lawsuit alleges that Yellowstone Capital engaged in a predatory lending scheme, offering high-interest short-term funding to small businesses through merchant cash advances (MCAs).

James claims that Yellowstone Capital collected payments at fixed daily amounts, which were debited directly from the borrower's bank accounts over short repayment periods, such as 60 or 90 days.

The complaint alleges that the defendants disqualified borrowers from payment refunds by using deceptive tactics when daily payments surpassed a predetermined percentage of the borrowers' receipts.

The lawsuit seeks to recover at least $1.4 billion in interest and restitution, and an injunction to require the companies to cease their activities.

In July 2022, the Federal Trade Commission (FTC) settled with Yellowstone Capital for $9.8 million, involving similar allegations.

The New York AG's office secured settlements with five individuals implicated in the Yellowstone Capital operation, recovering a total of $3.37 million in restitution and prohibiting them from participating in the merchant cash advance industry.

The Consumer Financial Protection Bureau (CFPB) has taken action against Yellowstone Cash Advance for allegedly violating the Military Lending Act.

Yellowstone Cash Advance has been accused of extending lines of credit to active-duty military personnel without proper disclosure of the total cost of credit.

The CFPB has ordered Yellowstone Cash Advance to pay a fine of $3.5 million for these alleged violations.

The FTC is sending $9.7 million to small businesses hurt by Yellowstone Capital, a merchant cash advance company.

These businesses will receive 51% of the funds they lost, which averages out to $1,200 per check.

The FTC sued Yellowstone and its owners in 2020, alleging they withdrew money from customers' accounts without permission.

Yellowstone took hundreds of thousands of dollars it was not owed from businesses and only gave refunds when the businesses' representatives complained.

The FTC is using funds surrendered by Yellowstone to issue the checks to victims.

The U.S. Supreme Court ruled in 2020 that the FTC could not seek monetary relief for victims of misconduct in federal court going forward.

If you're feeling trapped by a merchant cash advance from Yellowstone Capital, you're not alone. Businesses can get caught in a debt cycle with these types of loans, making it hard to meet other financial obligations.

The Federal Trade Commission filed a complaint against Yellowstone Capital in 2021, alleging that the company took money from businesses' bank accounts without permission and deceived them about the financing they would receive.

Merchant cash advances, like those offered by Yellowstone Capital, often come with astronomical APRs, making it nearly impossible for businesses to repay. They also require businesses to give up control of their operating account, with daily or weekly funds withdrawn to pay down the advance.

Yellowstone Capital will pay approximately $9.8 million to settle the case with the FTC, a significant penalty for the company's alleged wrongdoing.