And my points are:
1. MCAs are a financial wild west, and even with a publicly traded large player in the business, there's a lot of bad things going on. There are many smaller sales operations that will use Ondeck (interestingly their website says all over that they provide LOANS) for back-end funding the MCAs, padding it with additional fees. There's zero regulation and tons of abuse, unethical practices, and outright lies by the people marketing the "Cash Advances". Regulation, education, and crack-down are long overdue.
2. Unless someone can prove me otherwise, I would say that an overwhelming majority of MCAs are just additional (or sometimes the last) nails in the coffin of an operating business. However, as someone mentioned upthread, there's fraud on both ends. Since these transactions are underwritten solely on bank cash flows, if someone is able to defraud and misrepresent those, then the MCA company will end up losing.
3. Most people that take MCAs as a source of funding, aren't aware of the APR equivalent being charged, and if they signed a confession of judgment, they definitely didn't understand the ramifications of that. If something similar to a Truth In Lending document (despite the obvious shortcomings of those) would be required to be read out loud by the business taking the funds, I would guess that the landscape would change immensly.
As for the articles and political posturing, well I might have mentioned before that those are amongst the lowest of occupations in my mind, possibly even worse than the people selling the MCAs, so this might be another point where we agree.
And now the writers of the article have come out with a short video with a real story.
Some of the brutal comments (I would guess this is from people in the industry):
Dumb Americans who have absolutely zero personal responsibility deserve to be preyed upon. If you sign up for such loans from loansharks, you deserve what you get. Not to mention this Bush guy trying to weasal out of his obligations. With slimey borrowers like him, of course lenders are going to use tough measures
All voluntary transactions should be legal. This guy obviously knew he couldn't afford it but yet he still took the loan. He deserves to lose everything.
And then a comment that seems to be coming from some actuary:
Analysis would show that based on a credit rating a risk of loss (probability %) and possible return on investment % are determined. Further that can be analyzed are income statements, balance sheets, cash flow statements, etc and any information that may even be requested in order to secure the loan. Client meetings can be established to determine credit worthiness.
Lenders should understand the risk they take in lending and accept when they have losses from poorly made investments, despite the irresponsibility of those receiving the loan.
Mods might want to prune this entire discussion to a separate thread.