The Federal Trade Commission has permanently banned Seek Capital and its CEO Roy Ferman from providing business financing, debt relief, and credit repair services following a settlement that resolves allegations the company systematically deceived small business owners seeking capital to start or grow their enterprises.
The enforcement action stems from a November 2024 FTC complaint alleging that California-based Seek Capital and Ferman targeted entrepreneurs and aspiring small business owners looking for loans or lines of credit. The company's marketing materials promised to leverage special relationships with lenders to secure business funding with extended periods of zero interest, according to the FTC.
Instead of delivering the promised financing solutions, Seek Capital allegedly charged clients thousands of dollars simply to open credit cards that often lacked the advertised zero percent interest terms. These practices cost business owners millions of dollars while simultaneously damaging their credit scores, the FTC alleged.
The company also violated its own advertising claims by charging upfront fees despite promising none would be required, and imposed hefty cancellation charges when consumers attempted to exit their agreements, according to the complaint.
"Instead of offering businesses the financing they sought, Seek Capital took advantage of them and often left them in worse shape," said Christopher Mufarrige, Director of the FTC's Bureau of Consumer Protection. "Companies should be on notice that the FTC will take action to protect small businesses and entrepreneurs from deceptive claims and other unlawful conduct."
The case reached a significant milestone in September when a federal court granted most of the FTC's request for summary judgment against both Seek Capital and Ferman. The court found the defendants made multiple material misrepresentations to consumers, including false claims about having relationships with lenders and offering credit cards with line of credit capability.
The court also determined that Seek Capital falsely advertised specific favorable financing terms, particularly zero percent annual percentage rates, and misrepresented that the company charged no fees until customers received funding. Additionally, the court found the company's claims that using their services would not harm customers' credit scores were deceptive.
These misrepresentations violated both the Federal Trade Commission Act and the Telemarketing Sales Rule, the court determined. The ruling also found violations of the Consumer Review Fairness Act, as Seek Capital's contracts prevented consumers from posting negative reviews about the company's services.
The court held Ferman personally liable for the company's legal violations, establishing individual accountability for the deceptive practices. This personal liability designation allows the FTC to pursue enforcement actions directly against the CEO in addition to the corporate entity.
As part of the final settlement order, the FTC obtained a monetary judgment of $48,280,328 against both Seek Capital and Ferman. However, the full amount has been suspended in part due to the defendants' demonstrated inability to pay the complete judgment. The FTC retains the right to collect the full amount if the defendants are later found to have misrepresented their financial condition.
The permanent ban extends beyond just business financing to include debt relief and credit repair services, effectively removing both Seek Capital and Ferman from multiple sectors of the financial services industry. This comprehensive prohibition prevents them from operating in areas where they could potentially harm other consumers seeking financial assistance.
The enforcement action highlights the FTC's continued focus on protecting small business owners from predatory lending practices and deceptive marketing in the alternative financing sector. Small businesses often face challenges accessing traditional bank loans and may turn to alternative lenders, making them vulnerable to companies that exploit their financing needs.
For entrepreneurs and small business owners, the case serves as a reminder to carefully research financing companies and verify their claims before engaging their services. The FTC recommends that businesses seeking funding should be wary of companies promising guaranteed approval, special lender relationships, or unusually favorable terms without proper documentation.
The settlement also demonstrates the FTC's willingness to pursue both corporate entities and individual executives when consumer protection violations occur. By holding Ferman personally liable, the agency sends a clear message that corporate officers cannot shield themselves from accountability when their companies engage in deceptive practices.
Moving forward, the permanent ban ensures that neither Seek Capital nor Ferman can re-enter the business financing industry under different names or structures. The FTC will monitor compliance with the settlement terms and can pursue additional enforcement actions if violations occur.