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TAFS Factoring, Inc., is a nationwide factoring company that provides financial services to small businesses. In 2019, TAFS was sued by a competing factoring company, Apex Capital Corp., for alleged tortious interference with contract and unfair competition.

The lawsuit stemmed from TAFS’s exclusive factoring agreement with A.G.Y. Logistics 1, Inc. (AGY), a commercial carrier. In 2019, AGY terminated its contract with Apex and entered into a new contract with TAFS. Apex then sued TAFS, alleging that TAFS had interfered with its contractual relationship with AGY and engaged in unfair competition.

The case was eventually settled out of court, with TAFS agreeing to pay Apex an undisclosed sum of money. However, the lawsuit raised serious concerns about TAFS’s business practices.

Allegations Against TAFS Factoring

In its lawsuit, Apex alleged that TAFS had engaged in a number of illegal and unethical practices, including:

  • Tortious interference with contract: Apex alleged that TAFS had intentionally interfered with its contractual relationship with AGY by offering AGY more favorable terms and conditions.
  • Unfair competition: Apex alleged that TAFS had engaged in unfair competition by using its superior market position to pressure AGY to terminate its contract with Apex.
  • Breach of contract: Apex alleged that TAFS had breached its own contract with AGY by failing to advance all of AGY’s accounts receivable.

TAFS’s Response to the Lawsuit

TAFS denied all of the allegations against it. In a statement, TAFS said that it “competes fairly and ethically in the factoring industry.” TAFS also said that it was “confident that the allegations against us are unfounded and that we will prevail in court.”

Settlement of the Lawsuit

In 2020, TAFS and Apex reached a settlement agreement. The terms of the settlement were not disclosed, but it is believed that TAFS agreed to pay Apex an undisclosed sum of money.

Impact of the Lawsuit on TAFS

The TAFS factoring lawsuit had a significant impact on the company’s reputation. The lawsuit raised serious concerns about TAFS’s business practices and led to a number of negative reviews from customers.

In addition, the lawsuit resulted in a number of class action lawsuits against TAFS. These lawsuits alleged that TAFS had engaged in illegal and unethical practices, such as charging excessive fees and failing to advance all of its customers’ accounts receivable.

Conclusion

The TAFS factoring lawsuit is a reminder that businesses should carefully review their contracts and be aware of the potential legal risks associated with factoring agreements. Businesses should also be aware of the potential risks of doing business with TAFS Factoring, Inc.

FAQs

Q: What is factoring?

A: Factoring is a financial service that allows businesses to sell their accounts receivable to a factoring company in exchange for immediate cash. Factoring can be a helpful tool for businesses that need to improve their cash flow.

Q: What are the risks of factoring?

A: There are a number of risks associated with factoring, including:

  • Fees: Factoring companies charge fees for their services. These fees can be significant and can reduce the amount of money that a business receives from its accounts receivable.
  • Contracts: Factoring contracts can be complex and difficult to understand. Businesses should carefully review their factoring contracts before signing them.
  • Loss of control: When a business factors its accounts receivable, it gives up control over the collection process. This can lead to problems if the factoring company fails to collect on the accounts receivable.

Q: What are the risks of doing business with TAFS Factoring?

A: The TAFS factoring lawsuit raised a number of concerns about TAFS’s business practices. These concerns include:

  • Tortious interference with contract: TAFS has been accused of intentionally interfering with other factoring companies’ contracts.
  • Unfair competition: TAFS has been accused of using its superior market position to pressure businesses to terminate their contracts with other factoring companies.
  • Breach of contract: TAFS has been accused of breaching its own contracts with businesses.

Q: What should I do if I am considering doing business with TAFS Factoring?

A: If you are considering doing business with TAFS Factoring, you should carefully review their contracts and be aware of the potential legal risks. You should also consider doing business with a different factoring company.

Q: What should I do if I have a problem with TAFS Factoring?

A: If you have a problem with TAFS Factoring, you should contact the company directly. You may also want to consider filing a complaint with the Better Business Bureau or your state’s attorney general’s office.

 

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