#United States #New York #Delancey Street #FAIR Act #MCA Debt

New York's FAIR Act: A New Dawn for Small Businesses

In a significant move aimed at bolstering consumer protection, New York has introduced the Fostering Affordability and Integrity through Reasonable Business Practices Act, commonly referred to as the FAIR Act. This landmark legislation, signed by Governor Kathy Hochul on December 19, 2025, and enacted on February 17, 2026, represents the most important update to New York’s consumer protection laws in over 40 years. Now, small businesses facing the harsh realities of merchant cash advance (MCA) debt have a robust tool to defend against predatory lending practices.

The Implications of the FAIR Act

Delancey Street Group LLC, an attorney-owned business debt settlement company based in New York, has openly embraced the FAIR Act's potential. According to their co-founder Steven Raiser, this law marks a pivotal shift for small business owners subjected to aggressive tactics by MCA lenders. “Confessions of judgment, account freezes, and predatory stacking practices have long existed in a regulatory gray area,” Raiser notes. “The FAIR Act eliminates that gray zone and provides clarity and protections for businesses.”

The FAIR Act gives the New York Attorney General the authority to pursue actions against practices deemed unfair or abusive. This law explicitly extends protections to businesses, a significant change from past protections that primarily covered individual consumers. Such legislative shifts indicate that small businesses now have a voice and a fighting chance against exploitative practices.

The Growing MCA Industry Under Scrutiny

The merchant cash advance market was estimated at around $19.65 billion in 2025 and is expected to expand to $26.87 billion by 2030. These advances are appealing for small businesses that struggle to secure traditional loans; however, they usually come with exorbitant fees and repayments that can completely drain a business’s finances.

Recently, courts have started to scrutinize MCA agreements closely, with many rulings suggesting that certain terms could be classified as loans subject to state usury laws, which cap interest at 25%. The FAIR Act adds an extra regulatory layer on these emerging judicial trends, offering further protection to small entities.

Addressing the Human Cost of MCA Practices

Delancey Street Group highlights the real-world impact of MCA practices on business owners. Vinay Metharamani, CEO of Delancey Street Group, explains, “We see business owners drowning in debt as they juggle multiple MCAs with daily withdrawals that surpass their revenue. These issues often lead to confessions of judgment filed without proper understanding or notice.” This new law provides avenues for those caught in the trap of unfair contracts and collections procedures.

The expansion of protections to businesses is particularly timely and necessary. Previously, MCA funders argued that their practices fell outside consumer protection laws because the transactions were business-to-business. Now, those arguments hold no water, as the FAIR Act ensures that small businesses receive the same level of protection as individual consumers.

What Small Business Owners Need to Know

Delancey Street Group advises small business owners currently facing challenges with MCA debt to be aware of several key points:
1. Recharacterization of Agreements: MCA agreements that include fixed daily payments and lack true reconciliation could be viewed as loans, making them subject to New York's usury laws.
2. Challenge Confessions of Judgment: Any confessions of judgment filed against businesses can be challenged based on inadequate disclosure or if the agreement is categorized as a loan.
3. Abusive Collection Practices: Aggressive tactics from lenders, such as account freezes and threats of personal liability, may now be considered abusive, granting the Attorney General the authority to take action.

Navigating this complex legal landscape requires adept legal support, as Metharamani emphasizes the importance of consulting attorneys who specialize specifically in MCA defense.

Launching the FREE FAIR Act MCA Protection Review

In light of the newly enacted FAIR Act, Delancey Street Group has launched a FAIR Act MCA Protection Review: a complimentary evaluation offered to any small business owner with an existing MCA agreement. Metharamani states, “Most business owners are unaware of this law’s existence and its implications for their current agreements.”
This no-cost review is intended to assess whether business owners may have opportunities to challenge their MCA contracts under the new protections established by the FAIR Act.

To request an assessment, business owners can visit delanceystreet.com or contact Delancey Street Group directly. Metharamani encourages all affected by MCA debt to make use of this resource and clarify their legal standing.

Conclusion

The FAIR Business Practices Act is a trailblazing piece of legislation that stands to offer substantial protection to small businesses battling predatory MCA debts. As regulatory frameworks continue to evolve, the partnership between Delancey Street Group and small business clients will play a crucial role in navigating these changes, ensuring that unfair practices are no longer tolerated. For small business owners, understanding their rights and the legal landscape is essential for maintaining financial health and business viability.

For more information or to schedule a consultation, visit delanceystreet.com.