Small businesses play a vital role in our economy, but they often face uphill battles, especially when dealing with loans. Recently, New York Attorney General Letitia James took legal action against an online arbitration platform that allegedly cheated small businesses under the guise of neutrality.

### Allegations Against Rapid Ruling

The lawsuit against Rapid Ruling claims that the platform, alongside its founders Zachary Meyer and Andrew Sachs, misrepresented itself as a fair arbitration forum. However, it reportedly collaborated with the merchant cash advance (MCA) industry to create biased arbitration rules. As a result, many small businesses found themselves losing cases, often leading to financial ruin.

The MCA industry is known for offering lump-sum payments to businesses in return for a portion of their future revenue. Attorney General James described many MCA firms as operating like illegal lenders, as some contracts carried interest rates significantly exceeding legal limits—often more than 50 times the allowable rate. According to the investigation, after Rapid Ruling was launched in 2019, many MCA companies included hidden arbitration clauses in their contracts, forcing businesses to resolve disputes through Rapid Ruling.

### The Deceptive Process

Attorney General James asserts that Rapid Ruling falsely advertised itself as an impartial dispute resolution platform. In practice, small businesses had little chance of a fair hearing. The rules for arbitration were allegedly drafted by MCA companies, leading to a system stacked against business owners.

The statistics from the Office of the Attorney General (OAG) paint a bleak picture: 97% of nearly 3,000 arbitration cases saw small businesses absent. Rapid Ruling primarily favored the MCA counterparts, almost always siding with them in financial disputes. The arbitration often resulted in punitive judgments, enabling MCA companies to garnish wages and seize assets from struggling business owners.

### Seeking Justice for Small Businesses

The lawsuit invokes the FAIR Business Practices Act, which seeks to protect businesses from unfair and deceptive practices. Attorney General James aims to hold Rapid Ruling accountable by seeking restitution for affected businesses, along with civil penalties against the company and its founders. She emphasized the importance of supporting small businesses, which she believes are being exploited by predatory loan practices.

“The sham process created by Rapid Ruling ensured predatory lenders almost always won,” James said. She expressed her commitment to pursuing justice for the business owners and workers adversely impacted by these unlawful actions.

### Rapid Ruling’s Defense

In a statement, Rapid Ruling firmly denied the allegations, asserting that it has always worked as a neutral forum for arbitration. The company indicated its intention to strongly defend itself against the claims made by the Attorney General. However, the ongoing investigation and public scrutiny continue to highlight the serious nature of the accusations.

### What this means for you

For small business owners, this case underscores the importance of understanding the fine print in contracts, especially those involving loans or financing options. If you ever need to review an arbitration clause in a loan agreement, legal-document-to-plain-english-translator/”>AI legalese decoder can help translate it into plain English in seconds, making the terms easier to understand.

Source: https://lilifepolitics.com/news/businesses/ag-arbitration-firm-cheated-small-businesses/