New York AG Targets Arbitration Group Rapid Ruling In Scathing Lawsuit

The NYAG's lawsuit makes many claims, including that the arbitration company that was supposed to be non-biased "was conceived in cahoots with a merchant cash advance (“MCA”) company—non-party LCF Group, Inc., f/k/a Last Chance Funding, Inc. (“LCF”). LCF, which has entered into thousands of short-term financing agreements (“MCA agreements”) with struggling small businesses across the country, worked hand-in-hand with Respondents to shape a brutally efficient tool for extracting fast judgments against out-of-state merchants. This scheme was not just unknown to the public but virtually undiscoverable."

By Thomas Tramaglini, Chief Operations Officer 

Partner, The Center for Alternative Lending Research 

thomas@beaconclientsolutions.com  

About Thomas Tramaglini

Overview

On June 8, 2026, New York Attorney General Letitia James announced a significant lawsuit against Rapid Ruling, an online arbitration platform, along with its founders, Zachary Meyer and Andrew Sachs. The lawsuit alleges that Rapid Ruling falsely portrayed itself as an independent and neutral arbitration service while secretly collaborating with merchant cash advance (MCA) companies to create a dispute-resolution process heavily tilted in favor of lenders.

Lawsuit Can Be Read Here In Its Entirety

The case represents one of the most consequential enforcement actions yet involving the MCA industry and raises serious concerns about the use of arbitration clauses in alternative financing agreements.

Allegations of a Biased Arbitration System by the NYAG

According to the Attorney General's complaint, Rapid Ruling was not an impartial forum as advertised. Instead, investigators allege that an MCA company helped create and shape Rapid Ruling's arbitration rules from the outset.

The lawsuit claims that these rules were specifically designed to benefit MCA companies when disputes arose with small business borrowers. While Rapid Ruling marketed its services as fair and independent, the Attorney General alleges that the arbitration process systematically favored lenders seeking to collect on disputed obligations.

The Role of Arbitration in MCA Agreements

The investigation found that many MCA agreements contained arbitration clauses requiring disputes to be resolved through Rapid Ruling. These provisions were often buried within lengthy contract language and became the exclusive venue for resolving conflicts between MCA providers and small business owners.

Once disputes were sent to arbitration, MCA companies allegedly used favorable rulings obtained through Rapid Ruling to secure court judgments. These judgments could then be used to pursue collections through asset seizures, bank restraints, and other enforcement mechanisms.

Key Findings from the Investigation

One of the most striking allegations involves the outcomes of Rapid Ruling's cases during its first three years of operation.

According to the Attorney General:

• Approximately 3,000 arbitrations were administered during the period reviewed.

• Roughly 97 percent of those cases proceeded without any appearance by the small business respondent.

• MCA companies prevailed in nearly all of those proceedings.

• Arbitrators allegedly awarded lenders the amounts requested, including substantial fees and charges that the Attorney General characterizes as excessive or inflated.

The lawsuit argues that these results reflect a system that was fundamentally unfair and deprived small business owners of a meaningful opportunity to defend themselves.

Impact on Small Businesses

The Attorney General's office contends that the arbitration process contributed to severe financial consequences for thousands of businesses. Once arbitration awards were converted into court judgments, MCA companies gained powerful collection rights that could affect business operations, owners, and employees.

For struggling companies already facing financial hardship, these judgments often intensified existing challenges and limited their ability to recover.

What the Attorney General Is Seeking

The lawsuit requests that the court:

• Prohibit Rapid Ruling and its executives from continuing the alleged misconduct.

• Order restitution and damages for affected businesses.

• Impose civil penalties.

• Permanently halt the operation of what the Attorney General describes as a fraudulent arbitration enterprise.

Conclusion

The Rapid Ruling lawsuit highlights growing concerns about transparency, fairness, and due process within portions of the merchant cash advance industry. While the allegations remain to be proven in court, the case underscores the importance of independent dispute resolution mechanisms and careful review of arbitration provisions contained in financing agreements. For small business owners, the lawsuit serves as a reminder to closely examine financing contracts and understand how disputes may be resolved before entering into any funding arrangement.

We wish to note that the NY AG's lawsuit is only a lawsuit and the case has not been heard in the courts at this time. This article does not suggest guilt from any one party and we are looking forward to the future of the litigation.

Contact Beacon Client Solutions to better understand your situation and how we can help you.

Dr. Thomas Tramaglini is the Managing Director for Beacon Client Solutions, a company that supports small businesses on a host of fronts, especially MCA debt. Thomas has been a small business owner for many years, as well as held leadership positions in several organizations and companies. Thomas holds a B.A. in History, as well as Masters and Doctorates in Organizational Leadership from Rutgers, The State University of New Jersey.

Beacon Client Solutions is not an accountancy or a law firm. We are business consultants. While Beacon works with outstanding attorneys and accountants, we cannot and do not provide legal or tax advice. All of our work is connected to those who are legally certified to give such advice. Beacon does have a longstanding body of work in MCA resolution and understands what small business owners deal with, specific to MCA. Beacon Client Solutions serves clients in all 50 states, Puerto Rico, Mexico, and Canada.