On March 7, 2024, the Federal Trade Commission announced significant amendments to its Telemarketing Sales Rule (“TSR”), including an amendment that applies certain TSR provisions to all business-to-business telemarketing for the first time. As a result, when the rule changes take effect, telephone calls between a telemarketer and any business to induce the purchase of goods or services will have to comply with the TSR's provisions prohibiting misrepresentations. You can learn more about the TSR amendments and their impact on business-to-business telemarketing here.
A major provider of loans to small businesses has agreed to pay $33 million to settle a complaint brought by the FTC involving allegations that the lender failed to process applications for Paycheck Protection Program loans within the timeframes that it advertised and prevented applicants from applying for loans from other lenders.
On March 21, 2024, AB 9585 was introduced to the New York legislature, which would expand the application of the state’s usury laws to forms of financing that are generally not treated as credit, such as factoring and sales-based financing. BizFinLaw issued an alert on this proposed legislation discussing its potential impact.
California is considering two bills that would have a significant impact on providers of financing to small businesses located in the state.
The legislatures of Maryland and New Jersey are each considering commercial financing disclosure bills this year. Maryland has introduced HB 574 and SB 509. New Jersey has introduced AB 865 and SB 1397. Among other things, these bills would require disclosure of an annual percentage rate. More details are discussed in this alert.
BizFinLaw is also tracking commercial financing disclosure bills that were introduced last quarter in Illinois, Kansas, Louisiana, Missouri, and South Carolina.
In March, we reported on the New York attorney general’s lawsuit against a group of providers of revenue-based financing for allegedly engaging in a fraudulent, illegal scheme to make usurious loans.
We also analyzed a decision issued by the federal court for the Southern District of New York. In Lateral Recovery LLC v. Funderz.Net, LLC, illusory reconciliation provisions, de facto fixed terms, recourse in case of the merchant's bankruptcy, and implausible estimates of the merchant's revenues prompted the court to recharacterize revenue purchase agreements as loans.