Article summary
New York's FAIR Business Practices Act is reshaping how merchant cash advance funders can collect debts, Texas's HB 700 disclosure regime is fully in force, Connecticut is moving to close a lender-favored loophole, and Yellowstone Capital's AG settlement checks are reaching small businesses.
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Merchant cash advance funders are navigating a fundamentally different regulatory landscape in 2026.
Three major state-level developments — New York's sweeping FAIR Act, Texas's new disclosure-and-registration law, and Connecticut's pending confession-of-judgment reform — are converging simultaneously, while one of the industry's highest-profile enforcement cases reaches its final payout stage.
New York's FAIR Business Practices Act Arrives for MCA Funders Signed by Governor Hochul on December 19, 2025, and in effect since February 17, 2026, New York's FAIR Business Practices Act is the most significant update to the state's core consumer-protection statute in more than four decades.
Critically for the MCA industry, the law explicitly extends its protections to businesses and nonprofits — not just consumers — and for the first time empowers the Attorney General to pursue enforcement actions against "unfair" and "abusive" practices.
For MCA funders, the practical implications are significant.
Aggressive collection tactics — stacked ACH debits, account freezes without judicial review, and threat-laden demand letters — may now constitute "abusive" practices under the statute.
Confessions of judgment filed in New York courts face heightened scrutiny, and MCA agreements lacking true reconciliation mechanisms may be recharacterized as loans subject to New York's 25% criminal usury cap.
The AG now has direct enforcement authority it lacked before, making this law a material risk factor for any funder operating in New York.