The Arbitration Clause in Your MCA Contract May Have Been Rigged. New York Just Filed Suit.

If your MCA contract has an arbitration clause — and most do — you need to read this.

On June 8, 2026, New York Attorney General Letitia James sued Rapid Ruling, an online arbitration platform, and its founders Zachary Meyer and Andrew Sachs. The charge: fraudulently presenting Rapid Ruling as a neutral arbitration forum while secretly working with the MCA industry to ensure small businesses almost always lost.

This wasn't an accident. It was the design.

What Rapid Ruling Was

When you sign an MCA contract, you're usually signing away your right to sue in court. Instead, the contract requires that any dispute goes to arbitration — a private process with a private decision-maker, outside the court system.

Arbitration is only fair if the arbitrator is neutral.

Rapid Ruling was not neutral.

According to the AG's investigation, Rapid Ruling was created in coordination with an MCA company. That MCA company wrote the rules governing Rapid Ruling's arbitration process. The rules were designed from the start to favor funders.

MCA companies then buried a clause in their contracts requiring that all disputes go specifically to Rapid Ruling. Merchants signed — often under pressure, often without reading every page — and unknowingly handed their dispute rights to a referee the funder had helped build.

What the Numbers Show

The investigation found that in Rapid Ruling's first three years, approximately 3,000 arbitrations were administered. In 97% of those cases, the small business never appeared. Rapid Ruling ruled in favor of the MCA funder in nearly every single case.

The arbitrators regularly rejected merchant defenses and awarded MCA companies everything they asked for — including what the AG describes as exorbitant junk fees and padded attorney's fees that business owners were then forced to pay.

Those arbitration decisions were taken to New York courts and converted into money judgments. Those judgments were used to garnish wages and seize assets from small business owners who, in many cases, had no idea a proceeding had ever taken place.

What the AG Is Seeking

Attorney General James is seeking restitution for impacted businesses, civil penalties against Rapid Ruling and its founders, damages, and a court order shutting the operation down permanently.

This follows a pattern of AG enforcement against the MCA industry. In January 2025, AG James secured a $1 billion settlement with Yellowstone Capital, delivering over $534 million in debt relief to affected businesses. In 2023, she won a court order forcing Richmond Capital Group, Ram Capital Funding, and Viceroy Capital Funding to cancel debt owed by thousands of small businesses nationwide.

The enforcement is accelerating. The tolerance is shrinking.

What to Do Right Now

Pull out your MCA contract. Find the arbitration section. It may be labeled "Arbitration," "Dispute Resolution," or "Governing Law." Read it carefully and ask:

Does it name a specific arbitration forum? If so, look that forum up. Who funds it? Who writes its rules? Is there any connection to the MCA industry?

Does it give the funder the right to choose the arbitrator? That's the same problem by a different name.

Does it require arbitration in a city or state far from where you operate? That's designed to make showing up harder.

Does it waive your right to a jury trial? Your right to file a counterclaim? Both are standard. Both matter.

If your contract named Rapid Ruling specifically, contact the NY Attorney General's office. You may be entitled to restitution.

The Bigger Point

Rapid Ruling is not an isolated case. It's a window into how MCA contracts are built. Every clause exists for a reason. The arbitration clause, the confession of judgment, the personal guarantee, the irrevocable ACH authorization — all of it is drafted by people who do this every day, for agreements signed by people who are under pressure and don't have time to read twenty pages of fine print.

That is not an accident either.

The Attorney General's lawsuit is a signal: the era of MCA contracts operating without scrutiny is ending. Courts are paying attention. Regulators are filing suit. Merchants have more legal leverage than they have ever had.

But leverage only works if you know what you signed.

Upload your MCA contract to Gradino's Contract Check. Free, read by software, no person ever sees it. You'll see your arbitration clause, your factor rate, every fee, and a full letter grade in under 90 seconds.

Source: New York State Attorney General press release, June 8, 2026. Gradino is not a law firm and nothing here is legal advice. If you believe you were harmed by Rapid Ruling arbitration, consult a licensed attorney.