Aggressive MCA Debt Collection Practices: Harassment Before Judgment
I’ve worked in the merchant cash advance (MCA) space for years and have witnessed some unbelievably unethical debt collection practices by certain funding companies, often accompanied by a troubling lack of supervision from the attorneys representing them.
This post highlights some of the collection tactics employed by an individual identifying herself as “Karina,” who claims to represent Spartan Capital. Of course, I wouldn’t be surprised if she were using a different name next week.
Before there’s a decision in the case, a judgment, or even an order from the Court, companies like Spartan Capital engage in extraordinarily aggressive debt collection practices, seemingly without regard for the consequences.
In this particular case, the collection efforts appear designed to embarrass, intimidate, and harass my client. Despite knowing that both the company and its principal are represented by counsel in pending litigation, the collection communications have continued through repeated calls and text messages demanding that my client contact them immediately—or else.
Messages containing statements like “DO NOT IGNORE THIS NOTICE” are clearly intended, in my opinion, to create fear and suggest that dire consequences will follow if the recipient fails to respond. These are not isolated communications. They are part of a pattern of repeated, aggressive demands.
I’ve also seen MCA companies send messages claiming to have conducted asset investigations, identifying the locations of my clients’ homes, vehicles, and other personal property—even referencing the makes and models of their cars. Make no mistake about it: in my opinion, these tactics are designed to intimidate, not simply collect a disputed debt.
Even more troubling, I’ve encountered situations where collectors contact represented parties and make outrageous claims about pending litigation. They falsely claim that judgments have been entered when no such judgments exist, that the client’s attorney has defaulted, or even that the attorney is somehow involved in a criminal scheme.
These are serious allegations and, when knowingly false, represent an extraordinary abuse of the collection process. They should be held to account for their practices and the attorneys representing these companies should, in my opinion, be heavily sanctioned.
And here’s what makes this particularly troubling: in many of these cases, there has been no judicial determination that the merchant defaulted, no judgment entered, and no court order establishing liability.
Yet that does not stop some MCA companies from behaving as though they have already won the lawsuit and are entitled to employ whatever pressure tactics they believe will produce payment.
A disputed contractual obligation is not a judgment. An allegation of default is not proof of default. And filing a lawsuit does not give a creditor unlimited license to intimidate or harass a business owner.
After years of representing small businesses in these disputes, I’ve become increasingly concerned by the willingness of certain MCA companies and their representatives to push the boundaries of acceptable collection conduct.
In my opinion, these practices amount to harassment. They are unethical, unnecessarily aggressive, and potentially unlawful depending on the circumstances.
Small business owners should not have to endure intimidation simply because they are defending themselves in litigation. Nor should they be subjected to personal threats, misleading statements, or relentless collection communications while their legal rights remain unresolved.
These practices need to end. And I intend to continue holding those responsible accountable while pursuing justice for the clients I represent. Stay tuned for many more posts as they come.
