Article summary
New York AG Letitia James sued Rapid Ruling—an arbitration platform allegedly rigged to favor MCA lenders—while the CFPB's May 2026 final rule excludes merchant cash advances from federal small business data reporting, leaving their legal status under ECOA unresolved.
Article content
New York's crackdown on predatory merchant cash advance practices accelerated this week with a major enforcement action, while a federal regulatory update brought more clarity—and new uncertainty—to how MCAs fit into the national lending framework.
NY AG Sues Rapid Ruling for Rigging Arbitration Against Small Businesses On June 8, 2026, New York Attorney General Letitia James filed suit against Rapid Ruling—an online arbitration platform—and its founders Zachary Meyer and Andrew Sachs, alleging the company served as a front operation for the merchant cash advance industry rather than a neutral dispute forum.
According to the AG's complaint, Rapid Ruling was created in direct coordination with an MCA company, which actually wrote the platform's arbitration rules to favor lenders.
MCA funders then embedded Rapid Ruling arbitration clauses into their contracts as a standard term.
The numbers are stark: 97% of the roughly 3,000 arbitrations Rapid Ruling handled in its first three years occurred without any participation by the small business respondent—and in nearly all those cases, Rapid Ruling ruled for the lender, including awarding what the AG characterized as exorbitant junk fees and padded attorneys' fees that business owners were forced to pay.
The AG is seeking restitution for affected businesses, civil penalties against Rapid Ruling and its executives, and a court order forcing the platform to cease operations.
The suit invokes New York's FAIR Business Practices Act, signed by Governor Kathy Hochul on December 19, 2025, and effective February 17, 2026—which extended "unfair and abusive practice" protections to small businesses for the first time under New York's General Business Law § 349.
(Law360 coverage | Fingerlakes1) CFPB Final Rule Excludes MCAs From Small Business Data Reporting—But Doesn't Resolve Their Legal Status In May 2026, the CFPB issued a final rule amending small business data collection requirements under Section 1071 of the Dodd-Frank Act (Regulation B).