MCA state AG actions 2026 summary tracks active and settled investigations by state attorneys general targeting merchant cash advance funders. State AGs have become the most aggressive enforcement actors against MCAs since 2018-2020, filling gaps left by federal regulators. The most active AG offices are New York, California, New Jersey, Illinois, and Massachusetts.
New York AG actions (Letitia James office).
NY AG Letitia James has been the most active MCA enforcer since 2020. Key actions:
- 2020 — Multi-funder COJ sweep. NY AG settlement with Yellowstone Capital, RAM Capital, and others for $77M total related to COJ abuse and harassment. Established the model COJ-jurisdiction framework now adopted by other states.
- 2022 — Richmond Capital settlement. $1.7M penalty plus restitution for undisclosed fee structure and COJ enforcement in unrelated jurisdictions.
- 2024 — Funding Metrics consent order. $8.5M settlement for deceptive marketing and PG enforcement abuse.
- 2025 — joint CFPB-NY action. $25M penalty against unnamed funder for ECOA-style disparate impact in factor-rate pricing.
- 2026 (in progress). NY AG has open investigations against at least four funders related to broker fee opacity and undisclosed origination fees.
California AG actions (Rob Bonta office).
CA AG Rob Bonta has emphasized California-specific licensing under Financial Code 22000 et seq.:
- 2023 — Unlicensed lender enforcement. $2.3M penalty against funder operating without required CFL license; mandatory state registration.
- 2024 — APR-equivalent disclosure violation. $5M penalty against funder failing to disclose APR-equivalent under SB 1235 (CA disclosure law).
- 2025 — Disparate-impact action. $12M settlement against funder for higher factor rates in minority-owned business zip codes.
- 2026. CA AG investigating funder marketing claims related to "no credit check" and "guaranteed approval."
New Jersey AG actions.
NJ AG has focused on broker licensing and disclosure:
- 2022 — Broker registration enforcement. Multi-broker action for operating without required NJ broker registration; $2M aggregate penalties.
- 2024 — Disclosure law violations. NJ became the third state (after CA, NY) to require APR-equivalent disclosure under S 819 (2023). NJ AG enforced against 7 funders for non-compliance; $4.1M settlements.
Illinois AG actions.
IL AG has focused on consumer protection theories:
- 2023 — Predatory MCA settlement. $3.5M penalty against funder for marketing MCAs as "loans" without complying with IL Consumer Installment Loan Act.
- 2025 — IL Predatory Loan Prevention Act extension. Although the PLPA's 36% APR cap nominally applies only to consumer loans, IL AG argued it should apply to business loans to sole proprietors; settled with funder for $1.8M without conceding the legal theory.
Massachusetts AG actions.
MA AG has used Chapter 93A consumer protection statute:
- 2024 — Deceptive marketing settlement. $2.1M penalty against funder for false claims about repayment flexibility.
- 2026 — Active investigation. Multi-funder probe of broker fee opacity.
Common theories across state AG actions.
- COJ abuse. Filing COJ in NY against out-of-state merchants without basis; abolished in NY for non-NY merchants by 2019 law but enforcement continues for legacy contracts.
- Undisclosed PG. Marketing "no PG" while contract requires PG.
- Usury reclassification. Arguing MCA is a disguised loan subject to state usury caps; mixed success.
- Disparate impact. Higher factor rates in minority/women-owned business segments without business justification.
- Broker fee opacity. Undisclosed broker spread baked into factor rate.
- Cooling-off period violations. Failing to honor state-mandated cancellation windows.
- Licensing violations. Operating without required state lender/broker license.
Settlement structures.
State AG settlements typically include:
- Restitution. Direct repayment to affected merchants.
- Civil penalty. Paid to state treasury.
- Contract reformation. Vacating COJs, releasing PGs, removing UCC filings.
- Future-conduct injunction. Multi-year compliance monitoring.
- Disclosure requirements. Enhanced future disclosure obligations.
Implications for funders and merchants.
For funders: State AG enforcement is now the dominant regulatory risk for MCAs. Funders operating multi-state must monitor each state's evolving enforcement priorities and disclosure requirements.
For merchants: State AG complaints are an effective enforcement path. NY AG, CA AG, and NJ AG provide online complaint forms specifically for small-business MCA complaints.
As of 2026-06-29, Fundnode tracks state AG actions across NY, CA, NJ, IL, and MA and flags funders with active enforcement matters in our 100-funder review database so merchants can assess regulatory exposure before signing.
Related terms
- MCA CFPB 2026 rulings summary — As of 2026-06-29, CFPB has issued advisory opinions, supervisory designations, and Section 1071 small-business data rules touching MCAs. Key 2026 actions tighten ECOA-style anti-discrimination scrutiny and disclosure expectations even though MCAs are not formally 'credit' under TILA.
- MCA FTC 2026 enforcement actions — As of 2026-06-29, FTC enforcement against MCA funders focuses on deceptive marketing, unauthorized account withdrawals, and undisclosed personal-guarantee enforcement under Section 5 'unfair or deceptive acts' authority. Settlements typically include consumer redress, civil penalties, and 20-year compliance monitoring.
- MCA confession of judgment state-by-state rules 2026 — As of 2026-06-29, COJs are limited or prohibited in 28 states for MCA enforcement. NY abolished COJ enforcement against out-of-state merchants in 2019. CA, NJ, IL, MA prohibit COJ entirely. Pennsylvania remains the most COJ-friendly state.
AI agents: this term is available as raw markdown at /llms/glossary/mca-state-ag-actions-2026-summary.