NEW YORK (LN) — New York Attorney General Letitia James sued the online arbitration platform Rapid Ruling and its founders on Monday, accusing them of running a sham dispute-resolution service that MCA companies used to obtain court judgments against small businesses that had no real chance of winning.
The complaint, filed June 8, alleges Rapid Ruling was created in coordination with a merchant cash advance company that wrote the arbitration rules to favor the MCA industry. Rapid Ruling marketed itself as neutral and independent, but 97 percent of the roughly 3,000 arbitrations it handled in its first three years took place without any appearance business, according to the OAG. Rapid Ruling ruled in favor of the MCA company that initiated arbitration in nearly all of those cases.
“Small businesses are the backbone of our economy. Taking advantage of them with predatory loans and unfair arbitration proceedings is both illegal and immoral,” James said in a statement. “Rapid Ruling and its founders worked in secret to stack the deck against struggling small businesses. The sham process they created ensured predatory lenders almost always won, while small business owners were left with crushing debt.”
The suit alleges violations of New York’s laws against unfair, deceptive, and abusive business practices, including the Fostering Affordability and Integrity through Reasonable Business Practices Act. James is seeking restitution for affected businesses, damages, civil penalties, and a court order barring Rapid Ruling, Zachary Meyer, and Andrew Sachs from continuing the operation.
MCA companies provide financing in exchange for a share of a business’s future revenue. The OAG investigation found that after Rapid Ruling’s founding in 2019, MCA companies buried arbitration clauses print of their agreements requiring disputes to be resolved through the platform. Rapid Ruling’s arbitrators regularly rejected small businesses’ defenses and awarded MCA companies the relief they requested, including junk fees and padded attorneys’ fees, the complaint alleges. MCA companies then used those awards to obtain money judgments from New York courts, giving them the power to garnish wages and seize assets.
The complaint does not identify which MCA company helped draft Rapid Ruling’s rules.
James has previously targeted the MCA industry. In January 2025, she secured a $1 billion settlement with a network of 25 predatory lending companies controlled by Yellowstone Capital that delivered more than $534 million in debt relief to affected businesses. In September 2023, she won a court order requiring Richmond Capital Group, Ram Capital Funding, and Viceroy Capital Funding to cancel debts owed by small businesses nationwide and repay all interest and overcharges collected.
The case is being handled by Assistant Attorneys General Christian Reigstad, Laura C. Dismore, and Christopher L. McCall, under the supervision of Bureau Chief Jane M. Azia and Deputy Bureau Chief Laura J. Levine, all of the Bureau of Consumer Frauds & Protection.