How MCA Broker Scams Work
MCA brokers connect businesses with funders and earn commissions of 5 to 15 percent per deal. This creates incentive to close deals regardless of whether the advance is appropriate. The worst brokers go beyond aggressive sales into outright fraud.
Common scams include misrepresenting the total cost, promising future advances or refinancing that never materializes, adding undisclosed fees that reduce your net amount, submitting falsified documents on your behalf, and steering you to funders paying the highest commission rather than offering the best terms.
Signs You Have Been Scammed
- The net amount deposited was significantly less than the contract amount due to undisclosed fees.
- The daily payment differs from what the broker told you verbally.
- Promises made are not in the written contract.
- The broker pressured you to sign without reading the agreement.
- You received multiple simultaneous MCAs the broker arranged without explaining stacking risk.
Steps to Take Immediately
- Document everything. Gather all communications. Compare promises to what was delivered.
- Review the contract. Have an attorney compare contract terms to broker representations. Discrepancies may constitute fraud in the inducement.
- File complaints. Report to your state attorney general, the FTC, and the BBB. Some states require broker licensing.
- Explore legal remedies. You may have claims against the broker, the brokerage, and potentially the funder if they knew about misrepresentations.
- Challenge the MCA contract. A contract obtained through fraud may be voidable entirely.
Prevention
Never sign an MCA the same day a broker presents it. Have an attorney review any agreement before signing. Verify the broker’s identity and licensing. Get all promises in writing. If the broker says something that is not in the contract, the contract controls.