Attorney General James Sues Sham Arbitration Service Created to Help Predatory Merchant Cash Advance Industry

NEW YORK – New York Attorney General Letitia James today sued the online arbitration platform Rapid Ruling and its founders, Zachary Meyer and Andrew Sachs, for fraudulently presenting Rapid Ruling as a neutral arbitration forum while secretly working with the merchant cash advance (MCA) industry to stack the deck against small businesses. Rapid Ruling was created in coordination with an MCA company, which wrote the rules of Rapid Ruling’s arbitration process to favor the MCA industry. As a result, struggling small businesses who were hauled into arbitration by MCA lenders for failing to repay predatory loans almost always lost their cases. This scheme, uncovered by an Office of the Attorney General (OAG) investigation, led to thousands of judgments against small businesses struggling with crushing debt to MCA companies. With this lawsuit, Attorney General James is seeking restitution for impacted businesses, damages, civil penalties against Rapid Ruling, and a court order forcing the company, Sachs, and Meyer to stop their illegal activities.

“Small businesses are the backbone of our economy. Taking advantage of them with predatory loans and unfair arbitration proceedings is both illegal and immoral,” said Attorney General James. “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. I look forward to getting justice for the business owners and workers who were hurt by this shameful scheme.”

MCA companies provide financing for businesses by claiming to offer a lump sum in exchange for a share of a business’s revenue over time. In effect, many MCA companies operate as illegal predatory lenders with financing terms that amount to usurious loans with interest rates more than 50 times the legal rate. The OAG’s investigation found that after Rapid Ruling’s founding in 2019, MCA companies buried an arbitration clause in the fine print of their agreements requiring that all disputes with the businesses they lent to be resolved through arbitration before Rapid Ruling.

Attorney General James alleges that Rapid Ruling fraudulently marketed itself as a neutral forum for resolving disputes, with cases decided by “independent” and “impartial” arbitrators who issued rulings after reviewing evidence submitted by “both sides.” But, behind the scenes, Rapid Ruling’s arbitration forum was governed by rules that an MCA company drafted and edited, creating a process that was fundamentally biased against the small businesses MCA lenders pursued for supposed non-payment of predatory loans. The MCA companies then used the arbitration decisions they won to obtain money judgments from New York courts against struggling small businesses, giving them the power to garnish wages and seize assets.

The OAG’s investigation found that 97 percent of the approximately 3,000 arbitrations Rapid Ruling administered in its first three years of operation took place without any appearance by a small business. Rapid Ruling ruled in favor of the MCA company that initiated arbitration in nearly all of these cases. During that same time period, Rapid Ruling’s arbitrators regularly rejected small businesses’ defenses and awarded MCA companies the relief they requested, including exorbitant junk fees and padded attorneys’ fees that business owners were forced to pay. The money judgments resulting from these arbitration awards had devastating consequences for small businesses, their owners, and workers.

The lawsuit alleges that Rapid Ruling and its executives have violated New York’s laws preventing unfair, deceptive, and abusive business practices, including the Fostering Affordability and Integrity through Reasonable Business Practices (FAIR Business Practices) Act advanced by Attorney General James. The lawsuit seeks a court order preventing Rapid Ruling and its executives from operating their fraudulent arbitration business and directing them to pay civil penalties and provide restitution and damages for affected small businesses. 

Attorney General James is a leader in taking on the MCA industry and securing justice for small businesses impacted by predatory MCA loans. In January 2025, Attorney General James secured a $1 billion settlement with a network of 25 predatory lending companies controlled by Yellowstone Capital that will deliver over $534 million in debt relief and provide restitution to affected businesses. In September 2023, Attorney General James won a court order requiring Richmond Capital Group, Ram Capital Funding, and Viceroy Capital Funding to cancel the debt owed by thousands of small businesses nationwide and to repay all interest and overcharges collected, totaling tens of millions of dollars. 

This matter is 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. The Bureau of Consumer Frauds and Protection is a part of the Division for Economic Justice, which is led by Chief Deputy Attorney General Chris D’Angelo and is overseen by First Deputy Attorney General Jennifer Levy.