FTC, Manhattan Prosecutors Probe Costly Small-Business Loans
- Investigations target merchant cash-advance companies
- New York attorney general continues to pursue civil inquiry
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The Federal Trade Commission has opened an investigation into potentially unfair or deceptive practices in the merchant cash-advance industry, which offers unregulated, high-interest loans to small businesses and has exploded in size over the past decade.
The inquiry, which also includes companies offering other types of small-business financing, is at least the third by government authorities to target the cash-advance industry. The Manhattan district attorney is pursuing a criminal investigation of a group of cash-advance executives, people with knowledge of that effort said. And the New York State attorney general’s office is conducting a civil probe that was first disclosed last year.