Yellowstone Capital

The New York Attorney General secured a judgment exceeding $1 billion against Yellowstone Capital and its affiliates for a scheme involving predatory loans disguised as merchant cash advances. The scheme targeted over 18,000 small businesses with usurious interest rates exceeding 16-25% and hidden or mischaracterized fees. The judgment is among the largest state-level enforcement outcomes in recent years. While Yellowstone Capital is not a traditional bank, the case has implications for bank partners and BaaS providers that facilitate lending products through merchant cash advance structures. The action signals aggressive state-level enforcement against entities that structure predatory products to circumvent usury laws. Financial institutions partnering with fintech lenders should review their MCA-related programs for compliance with state lending requirements.

Verified from source: New York Attorney General Letitia James secured a judgment and settlement against Yellowstone Capital, its officers, and two dozen affiliates for more than $1 billion for predatory loans disguised as merchant cash advances made to over 18,000 small businesses, with interest rates up to 820% per year. The regulator was the NYAG, not NYDFS.