New York sues Rapid Ruling, an arbitration forum built to rubber-stamp MCA judgments

On June 8, New York Attorney General Letitia James sued Rapid Ruling and its founders, Zachary Meyer and Andrew Sachs, alleging the online arbitration platform sold itself as a neutral forum while a merchant cash advance company wrote the rules it ran on. The figure that carries the complaint is this: of roughly 3,000 arbitrations Rapid Ruling administered in its first three years, the office says 97 percent went forward without the small business ever appearing, and the funder that opened the case won almost every time. A proceeding where one side never shows up and loses anyway is not arbitration. It is a collections rail wearing the costume of a hearing, and that is the part worth a funder's attention. The petition describes arbitrators who rejected merchant defenses as a matter of routine and handed funders the junk fees and padded legal costs they asked for, then turned those awards into judgments that froze accounts and seized assets. The forum is downstream of the funding file. Whether a dispute is ever close gets decided long before anyone files for arbitration, by what the contract actually says and whether the funder honored it. A deal with a working reconciliation path, accurate UCC filings, and a personal guarantee the merchant read and understood can survive a neutral forum. A deal without those things can only win in a forum it controls, and controlling the forum is precisely what the state has now moved to shut down. The mechanism the complaint describes is familiar to anyone who has read an MCA contract closely. The arbitration clause sat in the fine print, naming a single venue the merchant had never heard of and could not realistically attend. By the time a business fell behind, the forum was already chosen, the rules were already written, and the outcome was, by the office's count, nearly decided. That is not a drafting accident. A contract that routes every dispute to a forum the funder helped design is betting that no one neutral will ever read the room. This is also the first enforcement action under New York's FAIR Business Practices Act, which took effect February 17 and let the attorney general pursue unfair and abusive conduct against businesses, not just deceptive conduct against consumers. When that law passed, the open question was whether it would reach commercial financing in practice. The Rapid Ruling suit answers it. James said taking advantage of small businesses "with predatory loans and unfair arbitration proceedings is both illegal and immoral," and her office is building the case on a statute written to make exactly that reach. The track record behind the filing is not subtle. In January 2025, James reached a roughly $1 billion settlement with a network of companies tied to Yellowstone Capital, delivering more than $534 million in debt relief. In 2023, a court ordered Richmond Capital Group and affiliated funders to cancel debt and repay overcharges to small businesses nationwide. Rapid Ruling moves that line of work from the funders themselves to the machinery they used to collect. The operator read A captured forum does not just risk an enforcement action. It poisons every judgment that ran through it. A funder that built its collections on a process a court later voids is not holding clean receivables; it is holding awards that can be reopened, with restitution and penalties attached. The 97 percent no-appearance rate is the same signature as a default file with no reconciliation path. It looks like winning right up until someone neutral reads it. Opinion A judgment is only as durable as the process that produced it The funders who come through this cycle intact are the ones whose contracts can win in a room they do not own. That means a reconciliation clause that actually adjusts when revenue falls, disclosures the merchant saw before signing, and a collections file that reads the same whether a friendly arbitrator or a hostile regulator is holding it. The shop that needs a stacked forum to win has already told you what its paper is worth. More on what holds up when a regulator reads the file at plutusai.net .