Article summary
The CFPB narrowed its Section 1071 data rule to exclude merchant cash advances without resolving whether MCAs count as credit, even as bankruptcy courts recharacterize MCA deals as loans and state AGs keep extracting nine-figure settlements.
Article content
CFPB Pulls Back on MCA Data Rules While Courts and State AGs Keep Pressing No single bombshell broke in the merchant cash advance world in the last day, but the industry's defining storyline — a federal regulator stepping back just as courts and state attorneys general step forward — is still very much in motion.
Here's where things stand.
CFPB Excludes MCAs From Section 1071 Reporting, But Ducks the Bigger Question On May 1, 2026, the Consumer Financial Protection Bureau finalized a rule amending its small business lending data collection requirements under Section 1071 of the Dodd-Frank Act, and the headline for MCA funders is that merchant cash advances are now excluded from the rule's data collection and reporting requirements.
The Bureau said it had "erred" in its 2023 rule by prematurely deciding that collecting MCA data would serve Section 1071's purposes, pointing to the varied legal treatment of MCAs across markets and unsettled case law (Greenberg Traurig; deBanked).
The amended rule takes effect June 30, 2026, with a compliance date of January 1, 2028.
What the CFPB did not do is settle whether MCAs count as "credit" under the Equal Credit Opportunity Act — it retracted its prior position without adopting a new one, leaving that threshold question open (Goodwin).
Courts Keep Recharacterizing MCA Deals as Loans While the CFPB steps back, judges are increasingly willing to look past MCA contract language.
A New York bankruptcy court recently allowed claims to proceed alleging that a set of merchant cash advance agreements were, in substance, disguised loans rather than purchases of future receivables — a recurring theme in MCA litigation that turns on whether a deal has a genuine "reconciliation" provision and true uncertainty about repayment (King & Spalding).