CFPB Retreats on MCA Oversight as Colorado and New York Push Regulation the Other Way

The merchant cash advance industry doesn't have one clean regulatory story right now — it has two moving in opposite directions at once. At the federal level, the CFPB has been quietly stepping back from oversight it staked out just a few years ago. At the state and appellate court level, the trend runs the other way, with Colorado's usury fight and New York's consumer-protection expansion both narrowing the room MCA funders have to operate. Here's where each of those threads stands.

The CFPB Steps Back From Calling MCAs "Credit"

In 2023, the Consumer Financial Protection Bureau took the position that merchant cash advances qualify as "credit" under the Equal Credit Opportunity Act, which would have subjected them to the same small-business lending data collection rules (Section 1071 of Dodd-Frank) as conventional loans. That position has now been walked back. As Goodwin's May 2026 alert details, the CFPB's amended Section 1071 rule expressly excludes MCAs from the data collection and reporting requirements — though the Bureau stopped short of declaring that MCAs are not credit, saying instead that further analysis is needed. deBanked's coverage frames this as a meaningful retreat from the more aggressive federal posture MCA funders had been bracing for.

Colorado's Usury Fight Isn't Settled — It's Headed to a Full Tenth Circuit Rehearing

While Washington backs off, a Colorado case could end up doing more to reshape the MCA rate-exportation playbook than any single federal rule. In National Association of Industrial Bankers v. Weiser, the Tenth Circuit ruled on November 10, 2025 that Colorado's state usury caps can be enforced against loans made to Colorado residents even by state-chartered banks located outside the state — rejecting the argument that federal law (Section 27 of the FDIA) preempts that authority, as summarized by the Consumer Finance Monitor and Orrick. The fight is still live: banking trade groups are now pushing the full Tenth Circuit to reverse the panel's decision in an en banc rehearing. If the ruling stands, it hands Colorado plaintiffs' attorneys a stronger argument for recharacterizing MCAs as disguised loans subject to the state's 21% rate cap under the Uniform Consumer Credit Code.

New York Widens Small-Business Protections Under Its Consumer Law

New York has also moved to tighten the net. Under the state's FAIR Business Practices Act, amendments to General Business Law § 349 took effect February 17, 2026, extending protection against "unfair" or "abusive" acts to small businesses and non-profits — a category that previously fell largely outside that statute's consumer-focused reach, according to Mizrahi Law's overview of the evolving legal landscape around MCA collections. Paired with the state's existing Commercial Financing Disclosure Law, which mandates standardized cost disclosures before a merchant signs, New York continues to build one of the more comprehensive state-level frameworks governing MCA sales and collections.

What It Means

None of these threads resolved this week, and none will resolve quickly — the Tenth Circuit rehearing will likely take months, and the CFPB's "further analysis" leaves the credit-classification question technically open. But together they describe where the pressure in this industry actually sits in mid-2026: less at the federal rulemaking level, more in state legislatures, state attorneys general offices, and appellate courtrooms. Funders operating across state lines should treat Colorado and New York less as isolated compliance line items and more as previews of where other states are likely headed next.