Article summary
NY AG Letitia James's suit against arbitration platform Rapid Ruling is the sharpest recent look at how MCA funders lock in one-sided collections — even as federal regulators loosen reporting requirements in the opposite direction.
Article content
The merchant cash advance industry's biggest current storyline isn't a single day's headline — it's a widening split between state enforcement getting more aggressive and federal oversight pulling back.
Here's where things stand.
NY AG sues "sham" arbitration platform Rapid Ruling New York Attorney General Letitia James filed suit against Rapid Ruling, an online arbitration platform, along with its founders Zachary Meyer and Andrew Sachs, alleging the company presented itself as a neutral forum while secretly coordinating with an MCA funder to write rules that favored the lender.
According to the OAG's investigation, an MCA company drafted and repeatedly revised Rapid Ruling's arbitration rules, and Meyer and Sachs adopted nearly all of the lender's proposed changes.
The suit further alleges that 97% of the roughly 3,000 arbitrations Rapid Ruling handled in its first three years proceeded with no appearance from the small business on the other side — and that the platform ruled for the MCA company that initiated the case in nearly all of those default outcomes.
The AG is seeking restitution for affected businesses, damages, civil penalties, and a court order shutting the platform down.
(ag.ny.gov) CFPB moves the opposite direction, excluding MCAs from 1071 reporting While New York escalates enforcement, the CFPB finalized a rule this spring that excludes merchant cash advances from Section 1071 small-business lending data collection entirely — a reversal of its 2023 position that MCAs counted as "credit" under the Equal Credit Opportunity Act.
No MCA provider will be required to report demographic and pricing data under the final rule.