Stop gaming the system! Learn how to work within it not unless you want to share the same fate as Seed Capital. Merrill Chandler shares the cautionary tale of Seed Capital and their sketchy business practices. Find out who they are and what they did to get the FTC to file a lawsuit against them. Learn how Seed Capital used practices such as credit card stacking to lure in some innocent, first-time investors. Join Merrill as he teaches you how to play the game correctly by following rules and regulations, and learn how to avoid companies like Seed Capital who are just there for your money.
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The Epic Fall Of The Most Popular Credit Card Stacking Company
How I Predicted Seed Capital’s Demise
My prophecy has come true. In this episode, we’re going to take a look at a case study that we did in the Fall of 2019 against Seed Capital. We did Liars, Cheaters, and Thieves takedown of its website, best representation, and unscrupulous business practices. I’ll show you what has happened and how defrauding good consumers is not okay. These guys have found. They’re desserts.
After that intro, how can we not but surprise you? We’re bringing it full circle. As the title says, you can’t gain the system. We’ve got to work within the system. We got to partner with lenders. What happens when you gain the system? We’re going to discuss a cautionary tale. Way back in 2019, in the Fall, we had a series called Liars, Cheaters, and Thieves. One of our first Liars, Cheaters, and Thieves, we did a takedown. An industry response video to the marketing, treacherous, and dishonorable business practices of an outfit called Seed Capital.
Casting forward where we end up is they have been sued, shut down by the FTC, charged gobs of crimes, and are looking at criminal penalties for misrepresentation and lying to their clients. First of all, Seed Capital, we literally reviewed page after page of their website. If you’re playing outside of the game and how the game was designed and built by lenders and by financial institutions, you’re ultimately going to get crushed by the system. Some people say, “The financial institutions are the bad guys,” or “There’s an adversarial relationship. It’s us versus them. They’re the bad guys. We’re the good guys.” The thing is, if you know anything about me and you’ve read any previous episodes, I’m all about financial partnership with the lenders. They can’t do anything without us.
Who Is Seed Capital
They can’t make money unless they lend. Who do they lend to? Borrowers. We need each other. It’s a symbiotic relationship that I want both parties to prosper. That’s what I train all my students, tribe, and clients. How do we create a win-win? Seed Capital was a group of individuals who didn’t want a win-win. They’re leveraging borrower ignorance. If you know somebody in real estate, they were literally the group at the back table on any number of real estate seminar organizations, business opportunity seminars, day trading seminars, or Amazon store seminars. Anybody who was trying to sell these packages from the big stages, I’m guessing 90+% were using Seed Capital for people who wanted to buy the training.
They wanted to learn how to do real estate investing, note buying, or build an Amazon business. They would go to the back of the room. Who happened to be conveniently there? Seed Capital or someone like them. Someone like Seed Capital would sit there and say, “We got you. If you’ve got a 700 or higher credit score, we will get you credit so that you can buy this package, training from this real estate group, Amazon store group, and note buying group, etc.” That’s how it played out. The people at the back of the stage says, “If you don’t have the capital right now to invest in yourself for this product, we’ll hook you up.”
Something Doesn’t Feel Right Here
Not knowing, people would go to the back of the room and fill out applications with Seed Capital. Seed Capital did something like, “We’ve fueled growth for over 20,000 startups.” What does that sound like to you? That sounds like business funding. Startups are business organizations. They would advertise anywhere between $100,000 and $200,000 at 0% interest. Of course, that sounds appealing. If we don’t know how this game is played you guys, that sounds amazing. I don’t fault you, your friends, or any of you who were bamboozled by these guys because these outfits and many others like them literally created a wave of fundability killing strategies that ended up on your personal profile.
Think of it this way. We talk about all the time that your personal credit profile is the goose that lays golden eggs. The golden eggs are business credit lines, business loans, commercial loans, real estate loans, etc. Interesting that we teach the process of building business credit that doesn’t report to your personal. It only reports to your business profile. Whatever activity is going on over here doesn’t harm your personal. I said this in the previous episode, and I’m going to say it right now. Either these people were ignorant of how this industry works, shame on them if they’re that stupid, or they do know how this industry works and they are intentionally deceiving borrowers and relying on borrower ignorance to capitalize and make shit tons of money.
Their fees were anywhere between $2,500 and $3,500 to help you get capital to purchase these programs. People are like, “That’s about 10% of the cost of capital. I’ll take it. I know I can make that much money back in my real estate strategy or my Amazon strategy.” Whatever it was that they were buying from these big stages. The problem with Seed Capital and every one of them like Seed Capital is that they do not get you pure business credit. They would get credit cards that report on your personal profile. Every time they used it, it would crush the soul of that personal profile. People would complain and say, “What the hell did you do to me?” They said, “We got you capital for your business. We did what we promised.”
Chris And NicoleYou can’t game the system. You have to work within the system. Click To Tweet
They didn’t tell their customers that using those credit cards would destroy their personal credit profile and destroy their fundability. Earlier in 2019, I used the example of Chris and Nicole. Chris and Nicole were the perfect example of this. You guys may relate. Chris and Nicole went to one of these real estate investment programs and they’re like, “We want to do this.” They didn’t have the money to purchase the $30,000 coaching package. What happened after that was crazy because we went back and worked with Seed Capital. Seed Capital got them $80,000 in personal credit cards. Most of us don’t know. Until this moment, you may not know the negative impact that all this credit is going to be on your personal profile.
The Lawsuit And The Problem
They thought it was business credit. Chris and Nicole, just like everybody, didn’t know the hardcore negative impact that it would be on your golden goose. They bought the program, $30,000 that left them about $50,000 to be able to use to implement. What did they do? They went out and used that $50,000 to get skin in the game for a hard money lender to take down a buy and hold. They’re doing their training exactly the way they’re supposed to do. They used about $20,000, $25,000 of that $50,000 as their skin in the game for the hard money lender. The hard money lender put up the rest of it. They put in another $25,000-ish in there in their rehab costs. When it came time to get a Fannie Mae conventional loan, what happens? They had $80,000 in these new credit cards. They maxed them all out. It was 100% utilization for all of these cards on their personal profile. Fannie would not touch them until they paid this debt. Chris and Nicole were both W-2 employees. It took them approximately eighteen months to save and borrow from family and friends to pay down enough for Fannie to give them a takeout loan to retire the eighteen-month-old hard money loan. How is it that they haven’t gone out of business yet? Unsurprising, as of January 2021, the FTC filed a law enforcement lawsuit to yellow taped everything they had to do with Seed Capital and shut them down. Go online and see if you can find Seed Capital anywhere. We did the test. We looked. Seed Capital has disappeared. Anything that looks like this logo, it’s all gone. You cannot find this ad anywhere on the internet.
I want to read the abstract of the lawsuit. It says, “Two Nevada companies and two individuals have agreed to stop charging consumers thousands of dollars to apply for multiple credit cards in their names in order to pay for expensive and often ineffective training programs.” The FTC is saying some of these stages are selling crap from the stage. They’re expensive and often ineffective. That is a proposed settlement by the Federal Trade Commission, the FTC lawsuit. The FTC filed a Federal Court complaint along with a proposed settlement which requires the defendants to stop obtaining credit cards for consumers for a fee. The defendants are required to pay $2.1 million under the proposed settlement, which will be distributed by the FTC to consumers.
Here’s the problem. There are literally thousands of these unfortunate souls who thought they were being done a solid by a company in order to create a chance at growing their business when what they got is someone who destroyed their personal credit. They still had the money but destroyed their personal credit. It was a one and done. They cooked their golden goose. This is a case study of what happens when you game the system. We have been advocates through and through of partnering with lenders and creating win-win with lenders. Finding out and discovering the rules of fundability what lenders want so you can be approved not gaming the system by trying to get a bunch of credit cards under the owners and the operators of Seed Capital and most of the other organizations exactly like it.
Those organizations would apply on behalf of the customer. The customers don’t even know what revenues or income when you fill out a credit card application. The problem is that they didn’t use the income of the borrower. They use specific income that was more likely to add to an approval. Ito all leaves a bad taste in my mouth. It’s just horrible what they’ve done to thousands of people. As an organization, we have helped hundreds of folks who have come to us who say, “What do I do? I am completely unfundable. I’m buried in debt.” There are always wonderful ways.
Credit Card Stacking And Other Practices
If you know how the rules of these games are played, then you know how we can do debt shifting strategies that are legitimate that move business expenses and business charges over onto the business credit and play this game like it was meant to be played and develop long-term relationships with lenders who loved to lend to us as a result. There’s another version of this. I prophesied this. There’s another rule that has come out as a result of all of this type of credit card stacking. Credit card stacking is getting a bunch of credit in your name quickly and trying to game the system.
In response to this, Chase came up with a rule that was called the 5/24 rule, which means if Chase, when pulling credit, finds five or more approvals in the last 24 months, they will deny the application completely. More banks have got on board and have added the 5/24 rule to many of their operating systems and underwriting systems. If they pull it up and they see more than five cards in less than 24 months, you’re going to get a denial. Seed Capital and these other types of credit card stacking organizations are literally ruining it for all of us legitimate borrowers. The other thing that we need to be aware of is that Chase has come up with a brand new one that helps these types of things.
The thing that Chase has done is that they’re cracking down cash-like transactions because Seed Capital and all of these credit card stackers have used several, but two big popular ones are Mimeo and Plastique. What these services did for Chris and Nicole, they would charge the credit cards and treat them like they’re buying something, a product or service, but then convert it into cash for a 10% charge. If you pulled out $10,000, they would charge you $1,000, $5,000 for $50,000, etc. They would use this Mimeo or Plastique service and charge those cards up and then turn it into cash, deduct their fees, and send to your checking account the cash. All these different types of businesses would use these cash transactions to help in their enterprises. Two problems. Nobody takes into effect charging this past 40%, especially within the first 30 days that you get approved. That first 30 days is critical. You’re going to end up in the risk department anything over 40%.
All of the cocks and horns are going off at the lenders watching all of this credit card stocking but they couldn’t get in front of it until the last year, maybe two years, 5/24 rule came down. They’ve mixed cash-like transactions. Once again, these credit card stackers have ruined it for everybody because you can’t go by American Express traveler’s checks with a credit card. Not with the Chase card and many more banks are likely to follow suit. You can’t buy cryptocurrency with your Chase credit card. Business or personal, it doesn’t matter. Chase has led the charge on cracking down on cash-like transactions. Anything where you can go buy something.
Victims Of Seed Capital
You can buy an Amazon gift card presumably to be able to buy merchandise but to change something into cash, Chase is charging like it as a cash advance because technically it is. They’re charging 5% points upfront and 24.9% on the transaction. Any balances you’re carrying at that rate. Checkout the people who have been victims of Seed Capital, this is horrible. Timothy said, “Seed Capital got us.” Kurt said, “Seed Capital got me when we first started our real estate journey. Remember, you’re starting out the journey because you’re going to these big real estate seminars and they send you to the back of the room, almost finally dugout and Merrill and his team advisors helped me do that as a valued client.”
Thank you for sharing Kurt. Sandra says, “I got approached by some of these clowns. No, thank you.” Good job, Sandra. A cautionary tale, you guys. We want to be credit eagles, not credit seagulls who are picking up scraps, not credit foxes who are trying to sneak our way into the hen house, and not credit rats who literally are scurrying around trying to do whatever it takes to manipulate the system. Get Fundable, Credit Sense, and all our family of companies are here to share with you the rules of the game so that we can play this funding game professionally over the long-term and build lifelong relationships with these lenders who want lifelong relationships with us. They would love nothing more than for us to use every single one of their credit instruments for the next 20 to 30 years.
We do not game the system. There’s nothing you’ll ever hear me come out of my mouth that is designed to manipulate the system, game the system, or try to hoodwink, deceive, or manipulate borrowers into doing something that is not going to serve them. My entire mission is to build this borrower educational platform so that everybody wins. You win and lenders win. As a partnership, we’re going to kill it. We’re killing it together. This is the perfect example. I don’t like to see the demise of outfits, but in this case, I thank you, FTC. Mad props for closing down an organization who has taken advantage of borrowers unknowing and made a gross profit on that.
It should be $211 million that they should be paying back. Rolin says, “There’s no way to create more lasting damage to your finances than by hacking the banking system and borrowers are unknowingly led right to that with the angry face.” Thank you for joining the show. Read the first episode. You’ll know that these guys are ruining the funding game for thousands of borrowers and it’s not going to last long. Final thought, we went to two different real estate outfits. I’ll not share their names because they’re still in business, but I know they’re scrambling right now. Brad and I met with them personally in 2019 and said, “You need to be planning for a new way to finance your programs,” because within 24 months, these guys are going to be out of the business. They’re either going to be stopped by Federal regulators or the FICO. We didn’t even know the 5/24 rule was coming out at that time. From the lending side and regulatory side, 5/24 are stopping this abhorred practice.We should be credit eagles, not credit seagulls. Click To Tweet
If you are a credit card stacker, be aware because I know the Feds are coming for you too because this is not okay because you’re not telling your clients that you are going to ruin their personal credit. We are here to make borrowing easier and expand your life as a result. If you’re on Facebook, like, comment, share this with everybody you know and love because they need to know that there are consequences to bad action. We also want them not to believe anything that they’re being told. Checkout my show. You can read the blog on GetfundablePodcast.com. You can subscribe at any one of your podcast listening software, Apple, Stitcher, etc. It has been my pleasure. I will see you on the other side.
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