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This is without question an absolutely miserable practice, and I predict NYS will take quick action to curtail it - this is the sort of bad PR that very often m

• NoGravitas 8y ago
  Yeah, the loan sharks are absolutely scammers, and the courts are absolutely corrupt to let this happen, but... there's also an element of "you can't con an honest man" at work here.
  • habitue 8y ago
    It doesn't sound like they were dishonest, just naive.
    • TAForObvReasons 8y ago
      The only really "dishonest" part involves people "lying to themselves" or refusing to cut the losses when all evidence points to it. All of the anecdotes are basically the same: "business in dire straits, we just need short-term financing to weather the short-term crisis". The people are "lying to themselves" by not making a more honest assessment of the situation. It's easy to read a situation and make a rational judgment when you aren't a participant, but a lot more difficult when it's your business
      • deleted 8y ago
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  • cortesoft 8y ago
    In what way were the Duncan's dishonest?
    • glibgil 8y ago
      They weren't honest with themselves. High interest is difficult to pay. Only luck would have allowed them to pay
      • cortesoft 8y ago
        Ok, that is a little bit of a stretch for honesty... by that definition, every single shortcoming is actually about not being honest....
        • deleted 8y ago
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      • TheOtherHobbes 8y ago
        They were up to date on their payments. There was no hint they were ever going to default. It's pure supposition - of the blame the victim kind - to imply they were running some kind of inverse scam, even subconsciously, or that they would have stiffed the lender.
        • deleted 8y ago
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      • beart 8y ago
        The article indicates they had never missed a payment.
      • FireBeyond 8y ago
        'naivety' would probably be better. 'over optimistic'.
• cm2012 8y ago
  Fax spam is super illegal, btw. Heavy fines per fax.
  • metildaa 8y ago
    A prior place I worked at paid somewhere around a million of dollars as part of a fax blasting settlement (an employee sent around 1000 faxes iirc). I don't know how this business didn't get nailed to the wall for it, the fines are per fax and crazy. One errant employee can fax blast once and wreck an entire company.
    • cm2012 8y ago
      The problem is the loan brokers in the story are fly by night middleman operations - hard to pin down.
      • varjag 8y ago
        As long as they collect their money from the victims, they can't be too hard to pin down. Sounds more like a bureaucracy issue, falling between the responsibility boundaries of different agencies.
        • cm2012 8y ago
          The problem is with how user acquisition is done on the shady side of the industry. At the top, there's a lender. In this story, the lender is Yellowstone. The lender actually gives money to the customer. A lender like Yellowstone has 200+ brokers they work with. The brokers are independent companies - "Business Lending LLC" or some generic name. The brokers do whatever they can to find customers interested in a loan. They package that customers info into a loan application, and send it to Yellowstone. Yellowstone then decides to fund it or not. If they do, the rest of the contact is between Yellowstone and the small business borrower. How does the borrower know which broker they worked with? Fax letterhead? Fake generic business name. Email of the rep they worked with? Possibly some random gmail. Etc. They get super unlucky and get fined? Declare bankruptcy, make a new company called "Business Lending 2 LLC". It's not impossible to catch these guys, but it is hard enough to enforce that no current agency is especially interested.
• pm90 8y ago
  Can we just say "Darwins law" and let it be? In all seriousness... how do you protect naive people from scams like this? I guess my despair is that: you might protect them from this obvious scam. What if the scam is a little more polished? I think this kinda thing will always happen to gullible folks. I'm not sure what the solution is.
  • PurpleBoxDragon 8y ago
    >Can we just say "Darwins law" and let it be? Only if we are willing to say the same once someone decides to fight back with actual force. If someone outright kills a scammer doing this, are you willing to write it off as "Darwin's law" and let it be?
    • deleted 8y ago
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    • travisoneill1 8y ago
      Wouldn't bother me too much.
  • Rjevski 8y ago
    At least with conventional scams it’s up to the victim to voluntarily hand over the money to the scammer. In this case it’s different because the government is complicit in the scam and forcefully takes the money from the victim to give to the scammer.
  • ben509 8y ago
    > In all seriousness... how do you protect naive people from scams like this? In this case, you stop government enforcing the scam.
  • jacob019 8y ago
    Confession of judgement should obviously be illegal.
  • saalweachter 8y ago
    So imagine instead of scammers you had hyenas who lived around a particular stretch of road and ate anyone who wandered by. You could say "Darwin", anyone dumb enough to get eaten deserves it. But you could also say "anything that eats people is gonna get shut down hard", because you don't get to be at the top of the food chain if you let things keep eating you.
• KyleJ61782 8y ago
  Agreed. This feels a lot like the home lending crisis leading up to 2009. People taking out loans for far more than they could afford with interest only loans, ARMs, etc., or taking out large home equity loans for consumer purchases. What it speaks to is a huge lack of financial literacy. I do feel for people in this situation, particularly those who are driven to the home equity loans due to unfortunate events, like cancer, in their personal lives. But I feel that it needs to be said that there's a not insignificant number of people who are caught in these situations precisely because they failed to plan and have contingency money set aside, instead spending to keep up with the Joneses.
  • aetherson 8y ago
    I mean, specifically the Duncans didn't take on more than they could afford. They were just defrauded.
    • KyleJ61782 8y ago
      They were definitely defrauded, but they weren't particularly shrewd here. Pumping the brakes a bit and taking a bit of time to consider all of the legal documentation almost certainly would have saved them. When a deal seems to good to be true, it almost certainly is. Never sign a document unless you fully understand what it is: what rights you're giving up and what legal declarations you're making.
  • bilbo0s 8y ago
    >there's a not insignificant number of people who are caught in these situations precisely because they failed to plan and have contingency money set aside... and >due to unfortunate events, like cancer, in their personal lives... I think it's a bit idealistic to think most Americans can save up to take care of a potential bout with cancer. Particularly if they are unfortunate enough to get certain varieties of cancer. It's like a Manhattan penthouse. We can save for as long and as hard as we like, but for most Americans that purchase is just going to be out of reach. That's just life here in the US when it comes to cancer. The treatments are expensive and out of reach for most of us. Insurance can make it a bit better, but at the mean, we'll still have some pretty serious problems paying for the treatment.
• cm2012 8y ago
  FYI, for a 3 month daily debit loan like this, 350% APR means paying $60,000 for a $35,000 loan. This is obviously very high, but it's not the 3.5 * the principle like many people would assume.
  • ggggtez 8y ago
    How so? You are nearly doubling your money every 3 months. What investments can do that? Crypto? Not guaranteed. Pretty much only usury and actual crime.
    • cm2012 8y ago
      My comment was just on how APR is calculated for short term loans. Also, you only double your money every 3 months if none of your loans default and you collect everything. Most of these loans default. Profits are way slimmer than you're imagining, even for the scammers (Who I definitely agree should be punished for these practices).
    • saalweachter 8y ago
      Whenever I'm evangelizing the PPACA, I always hit on the regulations around the MLR - the "medical loss ratio", ie, what percentage of premiums are paid back out as medical claims. One insurance company had a plan with a ten-percent MLR! (Marketing plans that didn't cover anything to college kids, of course.) They took in premiums and kept ninety-percent of it as profit.
  • rustcharm 8y ago
    principal
• mortenjorck 8y ago
  To you and me, it’s about as obvious a red flag as can be. To a struggling small-business owner with a staff of dozens all depending on them for their livelihoods, it’s probably a little bit murkier. Imagine writing some really bad code under an extremely tight deadline. You know it’s a bad idea, you know it’ll be miserable to maintain, and that it’s a very brittle solution, but you write a few all-caps comments around it and a self-deprecating joke in the commit message, and resolve to refactor it once the deadline has passed. The process of taking on bad tech debt is very, very similar to the process of taking on bad regular debt.
  • phkahler 8y ago
    >> To you and me, it’s about as obvious a red flag as can be. To a struggling small-business owner with a staff of dozens all depending on them for their livelihoods, it’s probably a little bit murkier. When your payments will be $800 per DAY I don't understand how the cost of having a lawyer look it over is of any consequence.
  • ambicapter 8y ago
    You know, not everything in life requires a code analogy. This one is particularly egregious because outside of Hollywood I've never heard of code intentionally deceiving its author.
• GreeniFi 8y ago
  Conmen look for people who are so desperate they will suspend disbelief. It’s no surprise that all the marks in this story were struggling to save their livelihoods. I wonder if part of the Yellowstone MO was to use fax? Over email, you have to compete with the Nigerians, Russians etc, somehow fax would seem a little more legit. Sad story this. I hope the victims can achieve some sort of redress.
  • cm2012 8y ago
    To my knowledge, Yellowstone farms out acquisition to a network of tons of shady brokers. So if they do fax spam, Yellowstone's hands are clean. I know of Yellowstone because they are one of the biggest subprime SMB lenders.
    • GreeniFi 8y ago
      That’s clever. It’s interesting how these guys always end up looking like mafia dons, one step removed from the chaos they create.
  • DoreenMichele 8y ago
    Conmen look for people who are so desperate they will suspend disbelief. They look for people who are both desperate and also naive or gullible or unrealistic or something. I spent nearly six years homeless. I was also extremely ill at the time. I absolutely was desperate. I also refused to be sucked into certain things. No, I was not going to sleep with someone for money and risk getting AIDS, being arrested, etc and having my problems become drastically worse. No, I was not going to accept an offer of temporary housing that came with a huge and obvious downside that well could have left me in much worse straits than I was already in. No, I was not going to make use of homeless services that expected me to leave all my worldly possessions, including my computer that I could not afford to replace, in an unsecured area where anyone could walk off with it. I looked for options that had clear and obvious benefit without huge fuck you potential.
    • GreeniFi 8y ago
      I’m sorry to hear that but am pleased you seem to have been able to walk away from offers that would have worsened your situation. I hope your savviness is still paying dividends.
• ggggtez 8y ago
  Agreed. No one can know the exact way everything played out, but the warning signs are there for the savvy person willing to look for them. However, I do wonder if their lack of caution may have helped their downfall to begin with. Housing isn't like tech startups. You can't just "grow at all costs" by hiring 50 employees and taking money from anyone and everyone.
• rdiddly 8y ago
  These stories are so interesting & tragic because the weakness being exploited is that uniquely American breed of optimism... the one that's maybe one part American Dream (capitalist patriotism), one part Jesus (including both the Protestant work ethic and the belief in "deserving") and one part The Secret. You can't think a fax is a gift from God if you don't think there's a God, for example. And you won't be as predisposed to look at it as a break for you, if you don't think you "deserve" a break (or to be rich, or to be in business at all). And you immediately see the downside of any loan, the second you consider "Hey what if tomorrow isn't more flush than today?"
  • agapon 8y ago
    I do not think that this is something unique or specific to the US. Loan sharks, payday loans, and the consequences exist in many countries of the world.
    • stantaylor 8y ago
      True, but many countries regulate and limit them much more aggressively than the US typically does (I use "typically" since most regulation is at the state level)
  • nathan_long 8y ago
    > one part Jesus (including both the Protestant work ethic and the belief in "deserving") Protestant theology actually says the opposite of "you deserve blessings", historically. The "five solas" of the protestant reformation include "sola gratia" (salvation only by grace - undeserved good treatment), and "solus christus" and "sola fide" make similar points. Certainly "prosperity gospel" teaching is rampant, but it has very little to do with the Jesus of the New Testament or with historical Protestantism. > You can't think a fax is a gift from God if you don't think there's a God, for example. You also wouldn't think that if you read the Bible much. - Proverbs 13:11 - Wealth gained hastily will dwindle, but whoever gathers little by little will increase it. - Proverbs 22:7 - The rich rules over the poor, and the borrower is the slave of the lender. - Hebrews 13:5 - Keep your life free from love of money, and be content with what you have, for he has said, "I will never leave you nor forsake you." You can find many examples of professing Christians (or atheists) doing stupid things. That doesn't necessarily mean that Christianity or Jesus is the problem. It's more often that they don't follow what they claim to believe.
• ironic_ali 8y ago
  There's a saying in New Zealand which describes how the Duncan's got themselves into that situation and their choice of business, "there's always real estate...".