Many of these companies are legitimate. It's just that no license vouches for any of them in this work. To find a legitimate company, look at fees, the negotiation process, and who they use if a funder sues you.
If you search online for "are MCA debt relief companies legitimate" most results are written by relief companies ranking themselves.
How do MCA debt relief companies work?
Some companies employ non-lawyers to negotiate with MCA funders. Others are law firms or a combination. Still others are just trying to sell you new money and calling it debt relief.
Many are modeled after consumer credit card programs, which are tolerable because card companies take a long time to do anything. MCA funders can cut off your revenue stream days after you stop paying them. Under UCC 9-406(a), once your customers have notice of the assignment they can only pay the funder to discharge their debt to you. Add in a personal guarantee or confession of judgment and you have a recipe for disaster in a "stop paying, save, and we'll settle later" program.
Are MCA debt relief companies legitimate under the law?
The practice is legal, but most laws regulating consumer debt relief do not apply to businesses. The FTC's Telemarketing Sales Rule defines debt relief broadly enough to include businesses, but under 16 CFR 310.6(b)(7), calls to businesses are exempt from almost all of the rules. In March 2024 the FTC voted to apply some of the misrepresentation provisions of 16 CFR 310.3 to business-to-business calls. The rule banning advance fees (16 CFR 310.4(a)(5)) is not on the list. Further, the rule only applies to "unsecured" creditors. Most MCA funders file a UCC-1 claiming your receivables.
State regulations mostly apply to consumer debt as well. California's debt settlement law (registration since February 15, 2025) only applies to consumer non-mortgage debt. Texas HB 700 only applies to MCA providers and brokers. New York's FAIR Business Practices Act, which took effect February 17, 2026, lets the Attorney General pursue unfair and abusive practices against small businesses. Two states whose law on its face is not limited to consumer debt are Washington and Pennsylvania. In Washington, for-profit debt adjusters cannot charge more than 15% of the total amount of debt listed in the contract under the state's debt adjusting law. Only non-profits are exempt from this when dealing with business debt. In Pennsylvania, 18 Pa.C.S. 7312 makes it a misdemeanor to "pool" debt, taking the customer's money to pay creditors for a fee, unless an exception such as being a Pennsylvania law firm applies. Ask whether a firm would hold your money in its own account. In the other states we checked, the laws regulate the funders directly.
Can non-lawyer companies negotiate my MCA legally?
Generally, yes. However, there is a fine line between negotiating and practicing law. In 2020, the Supreme Court of Ohio found in a 5-2 decision in Ohio State Bar Association v. Watkins Global Network that merely relaying settlement offers for small businesses did not constitute the unauthorized practice of law. However, building a strategy around an unsettled legal question did. The firm, subject to 31 complaints, was fined $1,000 and ordered to stop.
The primary difference arises in court. In New York, CPLR 321(a) requires that a corporation "shall appear by attorney." If a funder sues you, a non-lawyer firm will not be able to help you file an answer, move to vacate a confession of judgment, or pursue usury claims. An honest firm explains this at the outset, including what happens if you are sued mid-program. See also our list of questions to ask before hiring anyone to help you with your MCA debt.
Who have regulators actually gone after in the MCA industry?
The public enforcement actions we could find are against the funders, not the relief firms. The FTC obtained a $20.3 million judgment and a lifetime bar from the industry against MCA operator Jonathan Braun in February 2024. In January 2025 the New York Attorney General obtained a $1.065 billion judgment against MCA funder Yellowstone Capital, canceling $534.5 million in debt for about 18,000 businesses charged up to 820% interest per year. In June 2026 the AG filed suit against an entity called "Rapid Ruling", an arbitration service set up by MCA companies that handled about 3,000 cases over 3 years, with businesses absent in 97% of them. A competent firm checks these before negotiating, so you don't pay off a debt that has already been canceled.
What does a legitimate MCA relief operation look like?
Legitimate firms have voluntarily adopted many of the consumer-grade fee requirements, including:
- Written fees based on results, with set-aside funds in an account in your name that can be withdrawn within 7 business days (the FTC's consumer standard).
- No promised percentage saved or time to save.
- The name and bar number of the handling attorney, or a written referral agreement for litigation.
- No advice on legal defenses unless the firm is a law firm.
- A plan for 9-406 notices, confessions of judgment, or personal guarantees.
- Registration with the Texas OCCC if they arrange new financing for Texas businesses, since brokers must register.
See also our post about how to tell if MCA debt settlement firms are legit or a scam.
MCA debt relief FAQs
Does the FTC's "no fees until settlement" rule protect my business?
Probably not. By the text of the Telemarketing Sales Rule, the advance-fee ban does not apply to B2B calls, though the bans on misrepresenting savings, time, and success do.
How do MCA debt relief firms get paid?
Firms charge when you enroll, when they save you money, or both. Figures published by firms and critics include 15% nonrefundable fees to enroll, 10-15% at the beginning of the engagement, and 15-25% of the savings; at least one firm charges 35% of the savings. One firm's own disclosure says clients may save 57% of their debt before program fees, and 27% after program fees.
Is the money I save in an MCA settlement taxable?
Maybe. IRS Publication 4681 states that canceled debt, even for business debts, is generally taxable, unless you can avail yourself of an exclusion (such as insolvency). However, because MCAs are structured as the purchase of accounts receivable, it's not clear how the IRS will treat them. Consult your CPA before signing up.
If regulators crack down on my funder, does that help me?
If your business is covered by the Yellowstone Capital settlement, you need to ask for all judgments and liens to be removed within 6 months of receiving notice in the mail.