'The Market Leader in Business Loans' Was Selling Credit Cards Instead, the FTC Says

The Federal Trade Commission is taking action against Seek Capital and its founder and CEO, Roy Ferman, alleging the company operated a bogus business-finance scheme that cost small business owners more than $37 million.DOCUMENTED

According to the complaint, California-based Seek Capital targeted new and aspiring small business owners searching online for loans or lines of credit to open or grow their businesses, then charged them thousands of dollars for something very different from what they were led to expect.DOCUMENTED

Finding Seek while searching for a loan

According to the complaint, business owners typically find Seek Capital while searching online for sources of funding to make payroll, buy vehicles, or cover other ongoing expenses involved in running a business.DOCUMENTED Seek's ads called the company "the market leader in business loans for small businesses," and its website advertised the "Best Startup Business Loans of 2024," with marketing materials touting easy access to tens of thousands of dollars in "business loans" and "business lines of credit," including promises that applicants could be pre-approved in minutes.DOCUMENTED

"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," an FTC official said in announcing the case.DOCUMENTED

What business owners allegedly got instead

Despite the loan-focused advertising, the complaint alleges Seek charged clients thousands of dollars simply to open credit cards in the business owners' own names — a materially different product than the loans or lines of credit the marketing implied were on offer.DOCUMENTED A business credit card opened in an owner's name carries different terms, personal liability exposure, and borrowing capacity than a genuine business loan or line of credit, meaning owners who believed they were securing dedicated business financing may instead have taken on a personal credit obligation they did not fully understand.REVIEWED

What the FTC's action seeks

The FTC's complaint against Seek Capital and Ferman charges violations tied to the company's marketing and fee practices around business financing services.DOCUMENTED As is standard in FTC enforcement actions, the filing of a complaint reflects the agency's determination that it has reason to believe the law has been or is being violated and that a proceeding is in the public interest — the underlying allegations against Seek Capital and Ferman have not yet been resolved by a court.REVIEWED

Marketing promised pre-approval "in minutes" for business loans. The FTC alleges what business owners actually received, after paying thousands of dollars, was a credit card account opened in their name.

Why small-business financing scams can be harder to spot

Unlike a straightforward advance-fee scam where a consumer pays money and receives literally nothing, the Seek Capital allegations describe a scheme where the business owner does receive something — a credit card — just not the loan product the marketing described.REVIEWED That structure can make the scheme harder for a business owner to recognize as fraudulent in real time, since a credit card account is a genuine financial product with real borrowing capacity, even if it is not what was advertised or what the business actually needed.REVIEWED The confusion is compounded for owners specifically searching for a business loan or line of credit, since a credit card carries different repayment terms, interest structures, and impact on personal versus business credit history.REVIEWED

Part of a broader pattern in small-business finance enforcement

The Seek Capital case sits alongside a wider set of FTC actions in 2024 targeting companies that market financing, credit-building, or lending services specifically to small business owners, including cases involving PPP-era pandemic lenders and payment processors accused of facilitating fraud against merchants.REVIEWED Collectively, these cases reflect a recurring theme: small business owners searching online for capital are a frequent target for companies whose marketing promises simple, fast access to financing that the underlying product does not actually deliver.REVIEWED

The role of lead generators

The FTC's complaint points to marketing materials from Seek Capital "and its lead generators" — third-party marketing partners that drive traffic and applicants to a company in exchange for a fee — as a source of the misleading loan claims at issue.REVIEWED Lead-generation networks are common across the online small-business lending industry, and their involvement can complicate accountability, since a company like Seek Capital may point to independent lead generators as the source of the most aggressive marketing claims, while lead generators may argue they were simply relaying information the underlying company itself provided.REVIEWED The FTC's complaint treats Seek Capital as responsible for the marketing regardless of which entity in the chain actually authored a specific ad, on the theory that the company benefited from and helped shape the overall marketing message reaching prospective borrowers.REVIEWED

Because the case remains in litigation, the ultimate scope of any monetary judgment or industry ban against Seek Capital and Ferman will depend on how the allegations are resolved, whether through settlement or a contested trial.REVIEWED

What business owners can do to protect themselves

The FTC's broader guidance for small business owners evaluating financing offers emphasizes reading the actual terms of any product before signing, rather than relying on marketing language like "loan" or "line of credit" that a company applies loosely to whatever product it is actually selling.REVIEWED A genuine business loan and a personal credit card carry meaningfully different repayment obligations, interest structures, and effects on the business owner's personal credit history — differences that matter regardless of how a lead-generation ad or sales call describes the product being offered.REVIEWED Business owners who believe they were charged for a product different from what was advertised can file a complaint with the FTC at ReportFraud.ftc.gov.REVIEWED

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