NYS Attorney General Letitia James sues arbitrator for allegedly favoring lenders

New York State sued online arbitration platform Rapid Ruling and its founders on Monday, alleging the company favors lenders and relies on rules drafted with input from a Long Island-based merchant cash advance company.

Attorney General Letitia James sued the platform in state Supreme Court, alleging Rapid Ruling has marketed itself "as a neutral arbitration forum while secretly working with the merchant cash advance industry to stack the deck against small businesses."

Merchant cash advances are a type of business financing — with short-term lengths and high-interest rates sometimes in the triple digits — that provide cash upfront to businesses in exchange for a share of revenue until the loan is repaid.

In a news release, the attorney general’s office said many merchant cash advance companies "operate as illegal predatory lenders with financing terms that amount to ... loans with interest rates more than 50 times the legal rate."

James alleges in her suit that Rapid Ruling and its founders, Zachary Meyer and Andrew Sachs, wrote the company's arbitration rules with the help of a New Hyde Park-based merchant cash advance company, The LCF Group, in a way that favored the lending industry.

The LCF Group is not named as a defendant in the lawsuit and did not immediately respond to requests for comment. 

Rapid Ruling denied the attorney general's allegations in an emailed statement. 

"Rapid Ruling has always operated as a neutral arbitration forum. The Attorney General’s allegations are completely false and attack the very core of our company. We intend to vigorously defend against them," the company said.

An attorney for LCF allegedly discussed the possibility of the company investing in or co-founding Rapid Ruling, according to the suit. Meyer and Sachs decided against it "for fear that it would create an ‘appearance of impropriety,’" the suit says.

The suit says Rapid Ruling and its founders did not disclose their ties with LCF group and other lenders in arbitration and "refused to provide answers" when explicitly asked.

As of March 2023, more than 97% of nearly 3,000 arbitrations between small businesses and lenders conducted through Rapid Ruling had taken place without an appearance by the merchant involved — leading to rulings in favor of the financier nearly every time, the suit alleges.

The suit also claims that LCF and other merchant cash advance companies started requiring all borrower disputes to be resolved through Rapid Ruling after the company’s founding in 2019, although LCF stopped using Rapid Ruling to oversee arbitration in 2024.

These practices have repeatedly put Rapid Ruling and its executives in violation of New York laws against "fraud, illegality, deception, and abusiveness" in business, the suit says.

The attorney general's news release said the suit is seeking "restitution for impacted businesses, damages, civil penalties against Rapid Ruling, and a court order forcing the company ... to stop their illegal activities."

The attorney general’s office has filed similar suits in recent years. In January 2025, New York negotiated a $1 billion settlement with more than two dozen Yellowstone Capital-controlled lending companies.

In September 2023, the state also won a court order requiring three merchant cash advance providers to cancel debt and repay tens of millions of dollars to small businesses around the country.

By Brianne Ledda

brianne.ledda@newsday.com@brianne_ledda

Brianne Ledda covers personal finance and affordability for Newsday. She previously covered Southold and Greenport for The Suffolk Times and is a graduate of Stony Brook University.