➤ Breaking down the latest legal case and what it means for small business owners

In 2025, the Federal Trade Commission finally did what many small business owners have been praying for—it fired a warning shot across the bow of the predatory lending industry.

For years, MCA lenders and fintech “advance” providers have operated in a gray zone. Now, one of the largest legal actions to date has been filed, and it’s setting a powerful precedent.

Let’s break it down.

The Case That Changed the Tone: FTC v. X Capital Group

In January 2025, the FTC filed suit against a New York-based firm operating under three different names: X Capital Group, Liberty Business Resources, and Fast Merchant Funds.

According to the complaint, the company:

• Falsely advertised “no credit check” business advances
• Withheld full contract terms until after funding
• Debited daily payments even after businesses closed
• Used fake “confessions of judgment” to sue and garnish business accounts across state lines

The FTC called it what it was: deceptive, abusive, and unlawful.

But here’s the key: the FTC didn’t just fine the company. It pushed for injunctions, full restitution, and permanent bans against the owners ever operating in business finance again.

That’s a first.

Why Now? Why 2025?

Let’s be honest—this crackdown is long overdue.

Over the last 10 years, Merchant Cash Advances have quietly become a $30+ billion industry, with little to no federal regulation.

Here’s why the FTC is finally stepping in:

• The economic aftermath of COVID and inflation drove more small businesses into high-cost capital
• Fintech lenders merged with aggressive collection firms—blurring the line between funding and extortion
• Consumer complaints spiked, with more than 2,000 reports in 2024 alone citing deceptive practices and business closures tied to MCA debt

The agency could no longer ignore the systemic damage.

How Predatory Lending Works (and Why It’s Legal… Until It’s Not)

The trick is simple:

1. A business applies for fast capital
2. Instead of a loan, they get a “purchase of future receivables” contract
3. That contract lets the lender take daily payments directly from the business bank account—regardless of cash flow

Because it’s not technically a loan, usury laws don’t apply. But here’s where they cross the line:

• They misrepresent terms upfront
• They don’t disclose actual payback multiples (often 1.5–1.9x)
• They stack multiple advances, creating a cash flow trap
• They threaten owners personally despite the loan being under the business

That’s where the FTC stepped in. The new lawsuits argue that deception, omission, and abusive collection violate both the FTC Act and the Gramm-Leach-Bliley Act.

What This Means for You as a Business Owner

If you’ve ever taken an MCA—or even considered it—this case affects you.

Here’s what’s changing:

• More enforcement is coming. The FTC is working with state attorneys general and the CFPB to build a database of bad actors.
• Contract reviews will matter. Any agreement that lacks clear disclosures or confesses judgment without due process is now at risk of being voided.
• Lenders are scared. Some firms have stopped offering new deals while they “review compliance.”

And that gives you leverage.

WaterWorks Advisory: What You Can Do Right Now

1. Review your MCA contracts.

Look for these red flags:

• Confession of Judgment (COJ) clauses
• “Non-loan” or “future receivables” language
• Personal guarantee requirements hidden in the fine print

2. If you’re currently paying an MCA, don’t wait.

Our strategy may include:

• Cease & Desist letters citing abusive terms
• UCC-3 Termination filings
• Business debt consolidation under EIN-based 0% funding options
• Legal referrals for contract rescission and restitution

3. Tell your story.

You’re not alone—and silence is what keeps these lenders in power.

→ Comment below: Have you experienced deceptive practices or daily withdrawals that drained your business?

→ Subscribe to stay updated: Each month, we share what’s happening behind the scenes—so you’re not left in the dark.

What Comes Next?

This lawsuit is just the beginning.

We expect:

• FTC guidance on MCA disclosures in 2026
• A nationwide push for MCA licensing and regulatory registration
• A rise in consumer-led class action lawsuits

And at WaterWorks Agency, we’re preparing for that future now—not when it’s too late.

Whether you’re dealing with daily payments, chasing capital, or just trying to protect your business—you have options.

But first, you need to understand your rights.

Let’s stop pretending MCA debt is just the cost of doing business. It’s not. It’s a trap—but one that can be escaped with knowledge, timing, and community support.

Final Note:

If your credit is at least 650 and your business is structured correctly, we can help you exit bad deals without bankruptcy. Sometimes, all it takes is the right move at the right time.

Get your documents reviewed.

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Let’s build smarter business strategies—together.