New York Attorney General Letitia James sued online arbitration platform Rapid Ruling and its founders on June 8, accusing them of running a sham dispute forum that quietly teamed up with predatory merchant cash advance lenders to secure money judgments against struggling small businesses. According to the complaint, the operation regularly produced one-sided arbitration awards that lenders then used to obtain court judgments, garnish wages, and seize assets from merchants who rarely showed up in the proceedings.
The lawsuit alleges Rapid Ruling was built in coordination with a merchant cash advance company that helped draft the arbitration rules in a way that favored lenders. According to the Office of the New York State Attorney General, the complaint asks a court to shut down Rapid Ruling’s operations, order restitution and damages for affected businesses, and impose civil penalties on the company and its founders. The filing names founders Zachary Meyer and Andrew Sachs and says the scheme has had “devastating consequences” for small employers.
“Small businesses are the backbone of our economy,” Attorney General James said in the office’s statement, accusing Rapid Ruling’s operators of working “in secret to stack the deck” against merchants. The Office of the New York State Attorney General’s investigation found Rapid Ruling was founded in 2019 and handled about 3,000 arbitrations in its first three years, and that roughly 97 percent of those cases proceeded without any appearance by the small business and ended in awards for the merchant cash advance companies, according to the Office of the New York State Attorney General.
Rapid Ruling’s Sales Pitch Versus The Alleged Reality
On its own website, Rapid Ruling presents itself as a fast, “neutral” online arbitration forum that uses independent arbitrators to issue binding awards after reviewing evidence from both sides. The site also notes that arbitrators can decide a case on written submissions if a party fails to respond or appear, a procedural detail the attorney general says was weaponized to secure default wins against merchants. Rapid Ruling
Part Of A Broader Enforcement Crackdown
Regulators have been ramping up pressure on merchant cash advance lenders after years of complaints that the products function as disguised, high interest loans. New York secured a $1.065 billion judgment and settlement against Yellowstone Capital that wiped out more than $534 million in merchants’ debts, as reported by Courthouse News Service, and legal analysts say the state’s FAIR Business Practices Act broadened the attorney general’s tools to pursue unfair or abusive practices. WilmerHale has summarized the law’s expansion of enforcement powers.
What Comes Next In Court
The complaint asks a court to bar Rapid Ruling and its founders from operating the alleged scheme and to require restitution and civil penalties for harmed businesses. The case is pending in New York state court and is expected to move through motions and discovery, with the attorney general’s filing listing assistant attorneys general assigned to the matter. Local outlets that republished the attorney general’s release echoed the complaint’s core allegations and the requested remedies. Finger Lakes 1
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