Once your customers get notice of assignment, there isn't a way to "undo" it. However, there are ways to stop damage from MCA notice of assignment. First, you can have your customers demand proof of the assignment. Second, you can try to stop further notices by letter or by court order. Third, as part of settlement, you can require the funder to send signed release letters to every customer it notified.
Can you stop an MCA notice of assignment after it's sent?
Once your customers get valid notice of assignment under UCC 9-406, they cannot discharge the invoice by paying you until the funder releases them, a court orders their release, or the notice turns out not to be valid. For how UCC 9-406 notices work and whether MCA funders can even send them, see our prior post.
If a funder sends a valid notice, writing a letter disputing the default will not get your customers off the hook. Your options are to stop new notices, neutralize those already sent, or convert the funder's misconduct into damages and bargaining leverage.
How can a customer push back on a notice right away?
Your customers can ask the funder to prove that the assignment was made. If the funder does not furnish reasonable proof "seasonably," the customer can pay you despite getting notice. The statute does not define "seasonably," but courts have held that customers who never asked for proof could not rely on it. Give your customers a letter to sign asking the funder for that proof.
At your customers' option, the notice is invalid if it does not reasonably identify the rights assigned, or if it asks them to pay the funder only a portion of each installment (as in a percentage split). This cannot be waived by contract.
Will a cease letter stop an MCA funder from sending notices?
Probably not, since no statute stops MCA funders from sending notice because you object. However, a cease and desist letter puts the funder on notice for interference claims and can set the stage for settlement. In it, you may wish to:
- Ask them to identify the clause permitting notice before default, since under UCC 9-607(a)(1) funders may notify "if so agreed, and in any event after default," and the Event of Default they say you committed.
- Request an accounting pursuant to UCC 9-210. You have the right to one within 14 days, free once every six months, with $500 in statutory damages for an unjustified failure. However, a funder claiming to be a "buyer of receivables" can cite the exception and refuse.
- For Texas merchants, cite 7 TAC 86.312(b)(12), which prohibits MCA funders from telling your customers to redirect payment already scheduled to go to another person, such as a factor, unless there was consent or a valid assignment. Effective July 9, 2026, it lets the state regulator seek up to $10,000 per violation.
Abusive calls or false statements in response are a separate problem, covered in our prior post on what MCA funders can and cannot say to your customers and vendors.
Can I get an injunction to stop MCA notice of assignment to my customers?
Possibly. Per UCC 9-625(a), the court can "order or restrain collection" if the secured party does not comply with Article 9. For instance, a court may stop notices sent prior to your default, but you likely cannot enjoin notices that comply with the law.
In New York, per CPLR 6301, you can get a temporary restraining order if you show "immediate and irreparable injury" will result before the court can hold a hearing. In Pennsylvania, per Rule 1531, you must post a bond for a preliminary injunction, and one obtained without notice will be dissolved unless the court holds a hearing within five days.
I have not seen a published opinion where a court stopped an MCA funder's 9-406 notices, and suing can prompt the funder's counterclaim. Premature or disproportionate notices are where I would expect a court to act.
Do you have a tortious interference claim?
You may have a tortious interference claim if the notice was premature, involved receivables the funder did not purchase, came after you paid off the advance, or contained falsehoods. An accurate notice after a real default is weaker ground. For at-will customer relationships, New York requires a crime or independent tort, and Pennsylvania has no liability for truthful information.
You also need to make your damages very specific. In S&T Bank v. Advance Merchant Services (2024), where the bank lost $58 million and sued approximately 30 MCA funders, an Ohio appeals court dismissed the interference claim because the damages were not pled well. Itemize the customers you lost and their revenues before and after the notices.
What should a settlement say about withdrawing the notices?
You should require the funder to send release letters to each customer and processor it notified. Under UCC 9-209(b), a secured lender must send these letters within 10 days of your signed demand if nothing is owed, with $500 in statutory damages if it does not. However, 9-209(c) excludes sales of accounts, so a funder that claims it purchased the receivables may have no statutory obligation. Put it in the settlement, requiring the funder to:
- list all the parties it sent notices to;
- send the release letters within a set time and provide you with copies;
- credit any payments your customers made directly to it after the notice;
- agree not to send more notices as long as you are current, with cure periods if you are not; and
- accept non-disparagement terms.
You should also have the funder file a UCC-3 termination statement. Under UCC 9-513(c), if the receivables were sold, the funder is obligated to file it only once your customers have paid the receivables, so set a time for filing in the settlement.
Frequently Asked Questions
Does a UCC-3 termination release my customers from the notice?
No. Under UCC 9-513, the funder must file a UCC-3 termination statement or send you one within 20 days of your signed demand if the statute's conditions are met. It does not release your customers, who need a separate release letter, so most settlements should include both.
If I agree to a payment plan, do my customers go back to paying me?
Not until the funder releases your customers from the notices it sent them.
Is there a regulator I can complain to?
In Texas, the Office of Consumer Credit Commissioner enforces new MCA rules. New York's Attorney General can sue MCA funders for unfair and abusive business-to-business practices under the FAIR Business Practices Act. The FTC has also sued MCA funders over unfair collection threats, including its 2023 summary judgment ruling against RCG Advances.