Can MCA Collectors Contact My Customers?

Can MCA collectors contact my customers? Yes. Your vendors too, since no federal statute prohibits it, but they can't lie to them, threaten them, or represent that they have legal powers they don't have. After you default on a merchant cash advance (MCA), funders can tell customers that owe you money to pay them instead.

The rules on what MCA collectors can say start with the Uniform Commercial Code and spill into state and federal law.

Can MCA collectors contact my customers?

MCA collectors can contact any customer that owes you money, as long as the funder holds the right to be paid. According to UCC 9-607(a)(1), "if so agreed, and in any event after default," a secured party may notify an account debtor to make payment to it. An "account debtor" is, under UCC 9-102(a)(3), "a person obligated on an account." In other words, a customer with an open invoice.

This only allows the MCA funder to tell your customers to pay them instead of you. The customer can request reasonable evidence of the assignment, pursuant to UCC 9-406(c). (For more information, read our article on how UCC 9-406 notices work.) The funder can't imply to your customers that you are insolvent or dishonest. All parties are required by UCC 1-304 to enforce the agreement in good faith.

Why doesn't the FDCPA stop MCA collectors contacting customers?

The federal Fair Debt Collection Practices Act (FDCPA) only covers consumer debts. Under 15 USC 1692c(b), a debt collector may not discuss a debt with "any person other than the consumer." But under 15 USC 1692a(5), a "debt" is only one arising from a transaction that was "primarily for personal, family, or household purposes." In Bloom v. I.C. System, 972 F.2d 1067 (9th Cir. 1992), a loan taken out to make a business investment was not a consumer debt.

Second, under 15 USC 1692a(6), a "debt collector" is one that is collecting a debt owed to someone else. A MCA funder collecting their own receivables would not fall under this provision. So the FDCPA rules about contacting your employer or family don't apply, and most state debt collection laws also only cover consumer debts.

What can't a collector tell your customers?

Can MCA collectors contact my vendors or suppliers?

No federal statute prohibits a MCA collector from contacting your vendors, but unless the vendor owes you money (as in the case of a credit, rebate, or deposit), the vendor is not an "account debtor" under the UCC, and the funder has no right to ask the vendor to pay it.

Telling a vendor the truth is not unlawful, but falsely telling a supplier the company is insolvent so it cuts off terms may be grounds for a defamation or interference lawsuit. If this is happening, cease and desist letters and injunctions are described on our page about stopping MCA notification of assignment and calling customers.

When are collection calls considered defamation or tortious interference?

Defamation

To be defamation, a call must be a false statement of fact that harms the business reputation, so the truth is not defamation. Under Pennsylvania law, the plaintiff must prove the statement was defamatory, reached a listener who understood it referred to the plaintiff, and caused special harm. See 42 Pa.C.S. 8343. In New York, statements tending to injure a person in his trade or business are slander per se, requiring no proof of special harm. See Liberman v. Gelstein.

Tortious interference

Losing a customer after a collection call is not enough. In New York, without a contract with the customer (as with most customers buying on purchase orders), the business must prove conduct that constitutes either a crime or an independent tort. See Carvel Corp. v. Noonan. Pennsylvania has adopted a related rule: giving truthful information cannot be tortious interference. See Walnut Street Associates, Inc. v. Brokerage Concepts, Inc.

Which state and federal rules limit MCA collection calls?

The California Rosenthal Act applies to commercial financing of up to $500,000 guaranteed by a natural person. Under Civ. Code 1788.10, a collector cannot tell anyone of guarantor conduct, other than failure to pay, that it knows will defame the guarantor. Remedies include actual damages, a penalty of $100 to $1,000 for willful and knowing violations, and attorney's fees. See Civ. Code 1788.30.

Texas now makes a false statement to "other parties," including claiming a legal right the funder lacks, an unlawful collection practice under 7 TAC 86.312. The rule took effect July 9, 2026, and only the Office of Consumer Credit Commissioner enforces it, at up to $10,000 per violation. In New York, the Attorney General can now enforce the FAIR Business Practices Act against abusive practices directed at businesses.

Federally, the court in FTC v. RCG Advances (S.D.N.Y. 2023) held that threats of physical, reputational and financial harm to merchants were unfair under Section 5 of the FTC Act. The FTC later obtained a $20.3 million judgment against the operator.

Frequently Asked Questions

Does the FDCPA apply if the merchant signed a personal guarantee?

Not under federal law, since the obligation was entered into for business purposes. But the California Rosenthal Act applies if the commercial financing is $500,000 or less and the owner personally guaranteed it.

What if a funder with no right to my receivables tells my customers to pay it?

Your customer can request reasonable proof of the assignment under UCC 9-406(c) before paying. In Texas, 7 TAC 86.312(b)(12) makes it unlawful to tell your customer to redirect payments scheduled to another party (e.g., a factor that bought the receivables), unless that party consented or the debt was validly assigned to the funder.

How can I prove what the debt collectors said to my customers?

Log each call's date, time, caller and what was said, and ask customers to email you a description while it is fresh. Save voicemails and notices with the envelope, since writing is easier to prove. In Pennsylvania you have one year to sue for slander, and the Rosenthal Act limitation is also one year.