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FTC Commissioner Targets Use of Confessions of Judgement for Small-Business Loans

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WASHINGTON – The U.S. Federal Trade Commissioner, Rohit Chopra, has called for scrapping the use of a legal instrument called confession of judgment in small business lending contracts. Chopra urged the agency forum to be accountable for cleaning up this market. Use of such terms in small business loans contract since the last few years have led to several legal actions against small business borrowers.

The unregulated merchant cash-advance industry has got an edge over small business borrowers as it could not lose court dispute if someone agrees to legal terms such as confessions of judgment. Since 2012, small business borrowers have not managed to defeat cash-advance companies in over 25,000 judgments in the US. Under this, lenders have a right to legally seize borrowers’ bank accounts and other assets. A huge number of bad credit small business loans options are available which simply help business owners to arrange money in the case of emergency. Small business loans market has been witnessing growth at a huge rate. Many popular online sources such as capitalforbusiness.net have given many consumers an option to get a loan even if they have a bad credit.

Earlier, FTC had banned the use of confessions of judgment by using 1984 Credit Practices Rule. However, the rule was not applicable for small businesses. There are many reports of unfair marketing, sales, and collection practices in the small business finance market, so FTC has been taking action under the FTC Act to tackle such conduct. Chopra said that FTC is the only federal regulator in the non-bank small business financing market, so it has to keep an eye if any violation of law is there or not.

Katherine Fisher, who advocates for cash advance companies, said that FTC took the appropriate decision to ban confession of judgments as consumers don’t have much-needed protection due to limited options available. However, small businesses could easily resort to many other options, so there is no need to impose a ban on this case.

A multi-lingual talent head, Jimmy is fluent in languages such as Spanish, Russian, Italian, and many more. He has a special curiosity for the events and stories revolving in and around US and caters an uncompromising form of journalistic standard for the audiences.

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American Coffee Shop Closes after 3rd ADA Lawsuit

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On April 30th, Jason’s Cafe closed after three different ADA lawsuits were filed against the restaurant. The cafe had been doing business in Menlo Park, California for 11 years.

These lawsuits were all filed for different reasons: the width of bathroom stalls was too narrow, the front door was too heavy, and the lines for the handicap spaces in the parking lot were faded beyond recognition.

Restaurant owner Jason Kwan says the building was old–built 40 or 50 years ago. This was before the ADA was in place. So, the original building plans did not comply with today’s expectations.

To meet the requirements of the ADA, Kwan would need to replace the front door or install a handicap door switch with a button, repaint the lines in the parking lot, and do a total renovation of the bathroom. These repairs would certainly add up.

But, if the changes are not made, Kwan will continue to be faced with even more costly lawsuits.

It seems that these are typically the types of buildings that are targeted for lawsuits. People familiar with the American Disabilities Act (ADA) know that, like Jason’s Cafe, these older buildings have likely not been renovated or updated to meet the standards required by the 1990s act.

Two of the three people who filed lawsuits against Jason’s Cafe have sued other restaurants for noncompliance. Each one had already sued a handful of restaurants and hotels in the years previous.

These lawsuits had a devastating effect on Kwan’s bottom line. Not only would he have to pay for the changes made to the restaurant, but he also needs to pay for his own legal fees and the legal fees of the plaintiff, along with any other damages incurred by the noncompliance.

After the third lawsuit, Kwan was forced to close his doors. He was understandably disappointed, saying, “That’s my baby right there.”

These lawsuits are not uncommon today, and small business like Jason’s Cafe need to be aware of the requirements expected of their stores and websites through the ADA.

In the first half of 2018, about 5,000 ADA lawsuits were filed. That number is up 30% from the previous year. Of those lawsuits, 1,053 of them were filed for noncompliance on business websites. This number increased a staggering 90% from the previous year.

A good example of noncompliance on a website comes from a lawsuit filed on Avanti Hotel.

This small, 10-room boutique was sued because its website was not accessible for non-seeing, non-hearing users. In order to have an ADA compliant website, it needs to be coded properly to allow for a screen reader to translate the information. Links and images need tags, videos need captions, etc.

Without proper coding, some people with disabilities will not have access to all of the information on the businesses’ sites.

Though there is no need for physical renovation in this case, these lawsuits can still be incredibly expensive. California sees more ADA lawsuits than any other state in the U.S. The state government has set a minimum $4,000 fee for non compliant businesses. This number does not include any legal fees for the defendant or the plaintiff.  This minimum is only enforced in California at this time.

For Avanti Hotel, they were advised to take a settlement between $8,000 and $13,000 after all fees and costs for damages were covered.

These damages can be much higher depending on the sort of business/association being sued. Healthcare organizations with noncompliant sites have some of the biggest risks associated with these lawsuits.

A healthcare website that is not ADA complaint is a real danger to the health and wellness of disabled persons. Damages in these cases can easily add up to a six-figure fine. Organizations could lose business, government funding, their good reputation, and would risk the wellbeing of millions of disabled people.

ADA lawsuits are no small matter. They have the power to close down restaurants or businesses if owners are not careful. Many small businesses cannot afford the kinds of fees associated with these lawsuits. So, it is essential that business owners learn how to protect themselves and how to better serve their disabled patrons before they are faced with a lawsuit.

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