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I don’t do business in New York. Why is the merchant cash advance company suing me there?

On Behalf of | Aug 6, 2024 | Merchant Cash Advances

Your small business is not located in New York and you don’t deal with any customers, vendors or employees there. In fact, you might never have set foot in New York before. But if you run into problems with your merchant cash advance (MCA), you could find yourself getting sued there.

Though business owners across the country agree to merchant cash advances, many lawsuits related to lack of repayment wind up in a New York City courthouse. This happens for a few reasons:

  • The law. New York law is considered to favor merchant cash advance companies more than other states.
  • Convenience. Many MCA companies are headquartered in New York or have offices here. They are familiar with the judges and courts, giving them an edge over the out-of-state clients they sue.
  • The contract. Many MCA lenders insert a clause in their contracts where the borrower stipulates that any litigation related to the agreement will take place in New York. Whether you understood the implications of that or not, the clause means they will likely file suit in New York instead of your home state.

In any lawsuit, the plaintiff must properly serve notice to the defendant. This is traditionally done by having someone personally deliver the notice paperwork to the defendant or their representative, such as an employee. But in many MCA lawsuits, notice is sent through the mail or even emailed. If the notice gets delayed in the mail or ends up in your spam folder, your time to react could be limited.

Go With A Local MCA Lawyer

Whether you are in New York or not, your best chance of a fair result in an MCA lawsuit filed here is to work with a local attorney who represents small businesses against the merchant cash advance industry and understands the law thoroughly.