Banking and Finance Law Daily Wrap Up, UNFAIR DECEPTIVE ABUSIVE ACTS OR PRACTICES—NY Attorney General sues allegedly sham arbitration service, (Jun 9, 2026)

By Donielle Tigay Stutland, J.D.

The AG’s suit alleges that the online arbitration platform favors predatory MCA companies over small businesses.

New York Attorney General Letitia James filed a suit in the New York Supreme Court against the online arbitration platform Rapid Ruling, and its two founders, for fraudulently presenting the company as a neutral arbitration forum while secretly working with the merchant cash advance (MCA) industry to stack the deck against small businesses. The AG alleges that 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.

“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 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.”

In the complaint, New York alleges that Rapid Ruling and its executives violated New York’s laws preventing unfair, deceptive, and abusive business practices, including the Fostering Affordability and Integrity through Reasonable Business Practices Act advanced by James.

The suit alleges that Rapid Ruling’s representations of itself to the public and merchants as a “neutral, independent third-party arbitration forum” are fraudulent, misleading, deceptive, and abusive because Rapid Ruling—by design and in effect—manufactures quick judgments for MCA companies while depriving merchants of an opportunity to be heard.

The complaint outlines that Rapid Ruling was co-designed by an MCA company, LCF Group, Inc., f/k/a Last Chance Funding, Inc. (LCF), to circumvent a New York law that restricted enforcement of MCA agreements against out-of-state entities and individuals. LCF helped draft Rapid Ruling’s rules, and set up Rapid Ruling’s operations, while also becoming its first and dominant client, filing thousands of arbitrations. As a result, this created a process that was fundamentally biased against the small businesses MCA lenders pursued for supposed non-payment of predatory loans.

James’ 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 the small business. Rapid Ruling’s arbitrations almost always resulted in a default award for the MCA company claimant. In the rare matters in which merchants did manage to timely respond, Rapid Ruling’s arbitrators still ruled overwhelmingly in favor of MCA companies, with the arbitrators (initially only the two founders) often mimicking verbatim the “sample” awards provided to them in training. In fact, during Rapid Ruling’s first three years, only a single merchant prevailed in a contested matter, and that victory was entirely due to a filing error by the MCA company. 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. After an MCA company received an arbitration award from Rapid Ruling, it may petition a court to confirm the award, which, if granted, produces a monetary judgment that the MCA company may collect.

Despite the company’s foundation, Rapid Ruling marketed itself as a “neutral forum for attorneys, businesses, and consumers.” It promises independent, fair, and impartial arbitrators who review evidence from both sides and issue binding awards on its website and in its advertising.

The State’s petition seeks restitution for impacted businesses, damages, civil penalties against Rapid Ruling, and a court order forcing the company, and its two founders to stop their illegal activities.

Attorneys: Letitia James, Attorney General of the State Of New York, for People of the State of New York.

Companies: Mediation and Civil Arbitration, Inc. d/b/a Rapid Ruling; LCF Group, Inc.

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