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New York's attorney general has sued the arbitration platform Rapid Ruling over claims it rigged outcomes for merchant cash advance funders, one piece of a broader 2026 regulatory squeeze that includes a CFPB reversal on MCA credit status and a looming Texas registration deadline.
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Merchant cash advance funders are navigating an increasingly crowded regulatory landscape this summer, with state enforcers, federal regulators, and state legislatures all moving on different fronts at once.
Here's a roundup of the developments currently shaping the industry.
New York AG Sues "Sham" Arbitration Service Rapid Ruling On June 8, 2026, New York Attorney General Letitia James sued the online arbitration platform Rapid Ruling and its founders, Zachary Meyer and Andrew Sachs, alleging the platform was created in coordination with an MCA company to present itself as neutral while actually favoring funders in disputes with small businesses.
According to the complaint, small businesses hauled into Rapid Ruling arbitration over defaulted advances almost always lost, with arbitrators regularly rejecting merchants' defenses and awarding funders exorbitant junk fees and padded attorneys' fees.
The suit alleges violations of New York's FAIR Business Practices Act and seeks restitution for affected businesses, civil penalties, and an order barring the scheme from continuing.
It follows James's $1.065 billion judgment against Yellowstone Capital in January 2025, which cancelled roughly $534 million in debt for more than 18,000 small businesses.
CFPB Pulls Back on Treating MCAs as "Credit" On May 1, 2026, the Consumer Financial Protection Bureau issued a final rule amending its Section 1071 small business data collection requirements that excludes merchant cash advances from the reporting mandate, retreating from the agency's 2023 position that MCAs qualify as "credit" under the Equal Credit Opportunity Act.
The Bureau stopped short of declaring MCAs are categorically not credit, saying instead that further analysis is needed to sort which MCA products qualify.