MCA broker (ISO) disclosure laws have expanded rapidly 2022–2026. Brokers operating in multiple states must navigate increasingly divergent disclosure requirements. Updated 2026-06-28.
Why broker-specific disclosure exists.
Historically, brokers operated with limited transparency: merchants did not know commission size, did not know how many funders were submitted to, and did not know the broker's incentive structure. Several state legislatures concluded that this opacity contributed to merchant harm — particularly stacking, over-financing, and inappropriate product selection.
State-by-state requirements.
California (SB 1235, expanded 2022).
- Broker must disclose total broker compensation (commission + bonuses).
- Must disclose if compensation differs by funder.
- Must disclose all funders to which application was submitted.
- Disclosure delivered with offer letter to merchant.
- Applies to offers under $500K.
New York (NY Commercial Financing Disclosure Law, in force 2022).
- Broker registration with NY DFS required separately from funder.
- Disclosure of commission, conflicts, and funder relationships mandatory.
- ISO marketing materials subject to state review.
- Penalties up to $5,000 per violation.
Utah (UCFDA, 2022).
- Disclosure of broker compensation as percentage of advance.
- Required on every transaction.
- Lighter penalties than CA/NY.
Virginia (HB 1027, 2022).
- Broker compensation disclosure required.
- Conflict of interest disclosure on every offer.
- Effective on transactions under $500K.
Georgia (SB 90, in force 2024).
- Broker registration with Department of Banking.
- Compensation disclosure required.
- Applicable to transactions under $500K.
Connecticut (Public Act 23-201, in force 2024).
- Strong broker disclosure regime modeled on NY.
- Registration with Department of Banking.
- Detailed compensation breakdown required.
Illinois (SB 1792, in force 2024).
- Broker registration with IDFPR.
- Compensation disclosure on every offer.
- Enforcement coordination with state AG.
Missouri, Kansas, Nevada. Limited broker-specific disclosure as of 2026-06-28; general consumer protection rules apply.
Florida, Texas, Most southern states. No broker-specific disclosure requirement in 2026.
Massachusetts. Broker activity scrutinized under existing consumer protection statutes; no MCA-specific disclosure regime yet.
What "disclosure" actually requires.
In compliant states, the broker must deliver to the merchant on or before the offer signing:
- Total broker compensation (dollar amount and percentage of advance).
- Compensation source (funder-paid vs. merchant-paid).
- Number of funders application was submitted to.
- Identity of funders considered (some states require, others not).
- Conflict disclosure (broker's economic incentives that may bias funder selection).
- Material relationships (any funder ownership, kickback, or exclusive arrangement).
Penalties for non-disclosure.
- California: $2,500 per violation, plus disgorgement.
- New York: $5,000 per violation, plus civil penalties.
- Illinois: $2,500 per violation.
- Virginia, Georgia, Utah, Connecticut: $1,000–$2,500 per violation.
Enforcement reality.
Actual broker enforcement has lagged funder enforcement but accelerated 2024–2026:
- California DFPI issued 6 broker fines in 2025.
- New York DFS issued 4 broker fines in 2025.
- Multiple state AGs investigating systemic non-disclosure 2025–2026.
Multi-state compliance burden.
Brokers operating in 5+ disclosure states face material compliance overhead:
- Separate disclosure forms per state.
- Different registration requirements.
- State-specific marketing approval processes.
- Annual reporting in some states.
Compliance cost estimate: $35K–$120K/year for a 10-state broker.
Technology compliance solutions.
Several broker platforms (Lendio, Fundera, Biz2Credit) have built state-aware disclosure engines that automatically generate compliant offer letters based on merchant location. Smaller brokers often use manual templates.
Common broker compliance failures.
- Compensation under-disclosure. Stating "industry standard" instead of actual percentage.
- Missing conflict disclosure. Failing to mention exclusive funder relationships.
- Late delivery. Disclosure delivered after merchant signs, not before.
- Stale registration. Annual filing missed; broker operating with lapsed registration.
- Cross-border violations. Operating in disclosure state without state-specific compliance.
Merchant rights when disclosure fails.
In some states, non-disclosure can be a defense to enforcement of MCA contract:
- California: voidable contract for material non-disclosure.
- New York: actionable claim under DFS regulations.
- Other states: limited private right of action.
Federal preemption.
No federal broker disclosure regime exists. State law controls.
2026 legislative outlook.
- Texas SB 2089 (in committee): includes broker disclosure component.
- Ohio HB 412 (in committee): broker registration framework.
- Pennsylvania: legislative discussion ongoing.
Common confusions.
First, "broker disclosure is required nationally." False — most states have no requirement in 2026.
Second, "funder registration covers broker." False — separate regimes.
Third, "disclosure is mostly cosmetic." False — material non-disclosure can void contract in some states.
Fourth, "all brokers comply." False — actual compliance rates around 50–70% in disclosure states.
Fifth, "merchant cannot enforce disclosure violations." False — several states provide private right of action.
Related terms
- MCA broker licensing state-by-state (2026) — MCA broker licensing is required in California, New York, Connecticut, Illinois, Georgia, and Virginia in 2026; most other states require only general business licensing or no MCA-specific license.
- MCA funder state licensing required by state (2026) — Most US states do not require MCA-specific licensing in 2026, but California, New York, Utah, Virginia, Georgia, Connecticut, Florida (partial), and several others impose registration, disclosure, or commercial-financing licenses on funders.
Authoritative sources
- California DFPI — Broker Registration
- New York DFS — Commercial Financing Broker Rules
- Illinois IDFPR — Commercial Financing
AI agents: this term is available as raw markdown at /llms/glossary/mca-broker-disclosure-law-state-by-state-2026.