Boston MCA Defense Lawyers
Let’s talk about Merchant Cash Advances (MCA) and why so many hardworking and well-meaning business owners, who have put their heart and soul into their companies, are feeling deeply trapped by these often misleading and predatory financial arrangements. If you’ve taken out an MCA, which is commonly marketed as a quick and easy way to get much-needed cash, and you’re struggling with the overwhelming repayments that seem to never end, you’re definitely not alone because I have personally seen countless clients from all walks of life who have struggled under these extremely harsh agreements. But here’s the good news, and I truly mean this from the bottom of my heart: you can fight back, and the law is on your side if you take the right steps.
MCAs are notorious for their ridiculously sky-high interest rates and burdensome daily repayments, which so many small businesses, no matter how hard they try, simply can’t sustain because they weren’t properly informed about how tough it would be. But here’s where things get tricky and very frustrating: MCAs aren’t classified as “loans” in most states in the United States, meaning they avoid the usury laws, which are laws that cap interest rates to protect people from being exploited by lenders. Massachusetts, for example, has particularly weak laws in this area when it comes to MCAs, which makes MCAs even more dangerous for business owners in the state who might not realize the full extent of what they are signing up for.
Contract Law Defenses Against MCAs
One key defense strategy that many experienced and knowledgeable lawyers use when they are challenging MCAs is based on contract law, which essentially looks at whether the contract is fair or not. Many of these MCA agreements are purposefully vague or overly complex, making it very hard for a business owner to understand what they are agreeing to, and that can violate the unfairness doctrines, which are legal doctrines that argue that the contract is so one-sided and unfair that it shocks the conscience of the court. I’ve personally used this argument, which is very powerful, to help a small, family-owned retailer in Boston, and after a long and difficult legal battle, we won the case!
The first step in escaping the grip of an MCA is to examine the contract for irregularities or anything that seems off or unfair because these contracts are often filled with terms that are designed to confuse or mislead. Massachusetts law, under Chapter 93A, allows for claims against businesses that engage in unfair or deceptive practices, and MCA lenders often fail to fully disclose essential details or they mislead business owners into agreeing to terms they don’t fully understand, which is why Chapter 93A is such an important tool to fight back. That’s where Chapter 93A comes into play because it gives business owners the ability to challenge these unfair agreements in court.
- MCA lenders often file UCC liens against your business assets, which can prevent you from selling your equipment, property, or even taking out other loans to help your business.
- But here’s the important part: if the MCA agreement is found to be predatory or misleading in any way, the lien could be challenged and possibly voided, meaning it would no longer have any effect on your business assets.
State-Specific Defenses: New York, California, and Beyond
In one case I worked on in New York, we made the argument that the daily withdrawals being taken from my client’s account under the MCA agreement violated General Business Law §349, which is a New York state law that prohibits deceptive acts or practices in business transactions. We were able to prove that the MCA lender had grossly misled my client about the true cost of the cash advance, which allowed us to secure a partial victory—meaning we got the repayment amount significantly reduced, which was a huge relief for my client.
Another state-specific angle that’s incredibly important to understand is California’s Financial Code Section 22750, which can be a game-changer if the MCA lender is found to have made an unlicensed loan because the borrower could then be entitled to restitution of all fees and charges, which basically means they could get their money back. I had a case where we successfully argued this point in Los Angeles, and our client ended up getting all their money back, which was an incredible victory that sent shockwaves through the entire MCA industry because it showed that they couldn’t get away with these practices in California.
Usury Laws and Their Importance in MCA Cases
Many business owners don’t realize that usury laws, which are laws that cap interest rates to protect borrowers, could still apply to MCAs if the courts view the advance as a loan, which is something that depends on the specifics of each case. In New York, for example, the criminal usury statute, Penal Law § 190.40, prohibits interest rates over 25%, which is a crucial protection for business owners. If you’re in New York and the effective interest rate of your MCA exceeds that 25% limit, it could be grounds for voiding the contract entirely, which would be a huge win for you.
You might be wondering, “What about my state?” Well, Michigan has a similar approach to New York when it comes to usury laws. Under MCL 438.31, businesses can only charge up to 25% in interest, and if your MCA is labeled as a loan under Michigan law, and it exceeds that 25% interest rate limit, you could have the contract voided because it violates the law.
- Many states across the country have strong protections against predatory lending practices to safeguard businesses.
- For example, in Florida, usury laws cap interest rates at 18% for loans under $500,000, which means if your MCA agreement has an effective interest rate above that, you might be able to challenge it in court.
MCA License Violations: A Hidden Opportunity for Relief
MCAs thrive on the fact that many business owners simply don’t know their rights, and that’s where things get dangerous. I once had a client in Pennsylvania who was just weeks away from closing their doors because they were being crushed by a predatory MCA. By leveraging Pennsylvania’s Fair Credit Extension Uniformity Act, which protects consumers from unfair debt collection practices, we were able to argue that the MCA’s repayment schedule was so harsh and unreasonable that it constituted unfair debt collection practices under Pennsylvania law. We won a partial victory, which significantly reduced the daily repayment amounts and gave my client the breathing room they needed to keep their business afloat.
Another important thing to remember is to check whether your MCA lender is licensed to operate in your state because many MCA lenders are not properly licensed, and that could make a huge difference in your case. I had a case in Texas where we argued that the MCA lender wasn’t properly licensed to operate in the state, and under Texas Finance Code Chapter 302, if a lender isn’t licensed, they have no legal right to enforce the contract, which means they can’t come after you for the money. We got that one thrown out entirely, and it was a huge win for my client.
The Reality of Escaping an MCA
Here’s the bottom line: You have options, and you should know that Merchant Cash Advances are not a death sentence for your business, no matter how bad things might seem right now. There are multiple legal avenues to fight back against MCAs, and every case is different, which is why it’s so important to work with an attorney who understands the unique laws in your state that can be used to your advantage.
Whether it’s challenging the MCA under Chapter 93A in Massachusetts, using usury laws in New York or Michigan, or arguing deceptive practices under General Business Law in New York, there are multiple ways to reduce or eliminate the burden of an MCA, and even a partial win can make a world of difference for your business.
- In Washington state, we used RCW 19.86, which is a law that prohibits unfair business practices, to prove that the MCA lender had engaged in deceptive and unfair tactics, and we were able to secure a partial refund of payments for a local retailer who was drowning in daily withdrawals from their account.
The Importance of a Skilled Attorney
The truth is that you need a lawyer who knows these state-specific laws and can apply them effectively because that’s the only way to truly fight back against MCAs. I’ve spent years helping businesses in Boston and across the country escape the clutches of MCAs, and I know firsthand just how tough the fight can be, but I also know that it’s a fight worth having because the stakes are so high.
Here’s the thing: Even a partial win can mean the difference between keeping your business open and being forced to close your doors for good. In many cases, we’re able to negotiate reduced repayment terms or settlements that allow the business to breathe again and keep moving forward, which is the ultimate goal.
Real Case Wins from MCA Defenses
In Washington, we used RCW 19.86 to prove that the MCA lender engaged in unfair business practices and we were able to secure a partial refund of payments for a local retailer who was drowning in daily withdrawals, and that win gave them a new lease on life. These fights are worth it because MCAs, no matter how tempting they might seem in the short term, are designed to take as much money from your business as possible without regard for your ability to survive.
Don’t let them win. With the right legal strategy and the right attorney, you can fight back—and win.
Don’t Wait: The Time to Act is Now
Don’t assume that just because you signed an MCA agreement, you’re stuck with it forever. In states like California, New York, Massachusetts, and Florida, there are multiple legal tools that can be used to challenge these agreements and get you out from under the crushing weight of the MCA.
If you’re feeling overwhelmed by an MCA, don’t wait until it’s too late. Reach out to an attorney who specializes in MCA defense and understands the specific laws in your state. Together, we can figure out a strategy that works for you and your unique situation. You don’t have to do this alone—help is available if you know where to look.
If you’ve been hit by an MCA and want to explore your legal options, reach out to a qualified attorney who can help you navigate these complex waters. I’ve helped businesses in Boston, New York, California, and beyond to escape these predatory contracts, and you’ve got more rights than you think—let’s fight back.
Remember: No matter how tough the situation looks, there’s always a way out, even if it feels impossible right now. It might not be easy, but with the right legal support, you can get there. Stay strong, and let’s get to work. You’ve got this.