Merchant cash advances (MCAs) often appear to be a quick fix for businesses in need of immediate funding. However, these short-term financial arrangements frequently come with hidden costs—most notably, the relentless daily ACH debits that drain business bank accounts and jeopardize cash flow. For many business owners, finding a way to stop daily ACH debits becomes a critical move for survival.
Understanding the Problem with Daily ACH Debits
Daily ACH debits are a core part of how MCA agreements are structured. Rather than fixed monthly payments like traditional loans, MCA funders pull a fixed percentage of a business’s daily credit card or bank account revenue—regardless of how well the business is performing. This means even if a company has a slow day or unexpected expense, the withdrawal is still taken.
Over time, these automatic debits can become suffocating. Many merchants begin to notice their ability to meet other financial obligations slipping away. Vendors go unpaid, employee salaries fall behind, and operational stress intensifies. Worse, MCA contracts often have renewal clauses that can extend this cycle indefinitely.
Legal Grounds to Challenge or Block ACH Debits
Fortunately, legal options are available to merchant cash advance block ACH debits under certain conditions. While MCAs are not technically loans—making them harder to challenge under traditional lending laws—they are still subject to regulations regarding fair business practices, contract enforcement, and fraud.
Here are some potential legal avenues:
- Violation of Usury Laws
Even though MCA funders claim their contracts are not loans, courts have ruled otherwise when the repayment terms mirror high-interest lending. In such cases, excessive interest rates can violate state usury laws, opening a path for legal relief.
- Fraud or Misrepresentation
If the MCA provider failed to disclose critical terms, misrepresented the repayment structure, or acted deceptively in any part of the transaction, the contract may be challenged on grounds of fraud.
- Breach of Contract or Unconscionability
Some MCA agreements are so one-sided that they may be considered unconscionable and unenforceable in court. If the terms are heavily skewed in favor of the funder or changed without notice, a legal defense can be mounted.
- Violation of UCC Regulations
MCA funders often file UCC-1 liens to secure their interests in a business’s receivables. However, wrongful or aggressive use of these liens can be disputed—particularly if they interfere with other business relationships or lack proper notification.
- Injunctive Relief to Halt Debits
In extreme cases, a court may grant injunctive relief to temporarily or permanently stop debits from being pulled. This is especially useful when the ongoing withdrawals are causing immediate and irreparable harm to the business.
Steps You Can Take Now
- Gather Documentation: Collect all contracts, emails, repayment schedules, and communications with the MCA provider.
- Track Withdrawals: Keep a clear record of all ACH debits and how they’ve impacted your finances.
- Consult an Attorney: Legal interpretation of MCA contracts requires a specialist who understands their complex nature.
A proactive legal strategy can provide the leverage needed to negotiate settlements, restructure payments, or litigate when necessary.
Conclusion
Facing constant withdrawals from a merchant cash advance agreement can be financially and emotionally draining—but it’s not a battle you have to face alone. For those looking to regain control, working with a knowledgeable legal team can make all the difference. Grant Phillips Law specializes in helping small business owners fight back against aggressive MCA practices, offering legal strategies tailored to stop daily withdrawals and protect long-term financial health.
