The Federal Trade Commission (FTC) has initiated legal action against Seek Capital and its founder, Roy Ferman, accusing them of running a deceptive business finance scheme. The complaint alleges that this operation resulted in financial losses exceeding $37 million for small business owners.
The FTC's complaint states that Seek Capital targeted entrepreneurs seeking loans or credit lines to support their businesses. Despite advertising implying access to funds, the company charged clients substantial fees merely to open credit cards under their names.
Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, commented on the situation: “Starting or growing a small business is no easy task and it is made harder by those who deceive small business owners with false promises of liquid capital.” He emphasized the FTC's commitment to protecting consumers from unlawful practices.
According to the complaint, Seek Capital marketed itself as a leader in providing business loans and advertised “Best Startup Business Loans of 2024.” However, when potential clients showed interest, they were contacted by telemarketers who promised “lines of credit” with cash access. These sales tactics reportedly included persistent follow-up calls described as "incessant" and "harassing."
Once contracts were signed, instead of securing loans or credit lines, Seek applied for multiple personal credit cards in the business owner's name. A fee amounting to 10% of the total credit was then charged—often reaching thousands of dollars. Many business owners first learned about these applications through alerts about drops in their credit scores or bank communications regarding approvals or denials.
Business owners trying to cancel agreements faced early termination fees up to $995 before any applications were submitted on their behalf. One entrepreneur affected stated: “…because of Seek’s deceiving practices, I almost went out of business… My business plan got stalled and I did not expand my company as planned…”
The complaint also accuses Seek Capital of manipulating online ratings by pressuring clients for five-star reviews before funding was received and deleting negative feedback.
A unanimous vote by the Commission authorized filing the complaint in U.S. District Court for the Central District of California. The case will be decided by court proceedings.
The staff attorneys handling this case are Maya Sequeira and Katherine Worthman from the FTC’s Bureau of Consumer Protection.
