Ð.O.G.E. Dispatch: Unleashing the Power of the Crystal Springs Test.

New York’s Landmark MCA Decision Arms States with a Tool to Tame Predatory Lending

In a pivotal 2023 decision, Crystal Springs Capital, Inc. v. Big Thicket Coin, LLC, New York’s Appellate Division, Third Department, handed down a ruling that could redefine the Merchant Cash Advance (MCA) industry across the United States. By introducing the Crystal Springs Test—a three-pronged framework to distinguish usurious loans from legitimate receivable purchases—the court exposed MCAs as predatory lending schemes masquerading as business-friendly financing. With interest rates often exceeding 800%, MCAs have long ensnared small businesses in debt traps. Backed by aggressive enforcement from the New York Attorney General, the Crystal Springs Test is poised to become a cornerstone of MCA regulation, offering states a sharp tool to protect merchants nationwide.

The Crystal Springs Test: A Razor-Sharp Tool to Cut Through MCA Deceptions

The Crystal Springs ruling centers on its namesake test, a three-part inquiry designed to unmask MCAs that function as loans subject to New York’s usury laws (16% civil, 25% criminal). The test evaluates:

1. Reconciliation Provisions: Are payments genuinely tied to a merchant’s revenue, or are they fixed, loan-like obligations? In Crystal Springs, the court deemed the MCA’s reconciliation clauses—supposedly allowing payment adjustments based on sales—a sham, as lenders ignored them, demanding relentless daily or weekly debits.

2. Repayment Term: Does the agreement impose a fixed repayment schedule, like a loan, or is it open-ended, tied to revenue? The fixed terms in Crystal Springs screamed “loan.”

3. Recourse in Business Failure: Can the lender pursue the merchant or guarantors if the business goes under? If so, it’s a loan, not a risk-sharing receivable purchase.

   
   

The MCA in Crystal Springs flunked all three prongs, revealing a predatory loan with terms that locked Big Thicket Coin into payments untethered from revenue. This echoes findings in People v. Richmond Capital Group, LLC (2024), where Justice Andrew Borrok branded similar MCA terms “illusory” and “criminally usurious.” The Crystal Springs Test is now the gold standard for exposing MCA fraud in New York courts.

Why the Crystal Springs Test Matters: A National Game-Changer

The importance of the Crystal Springs ruling lies in the test’s potential to arm courts and regulators nationwide with a precise weapon against MCA abuses. Here’s why it’s a catalyst for reform:

1. A Binding Framework in New York’s Litigation Arena: New York is ground zero for MCA disputes, thanks to contract clauses favoring its courts. As an Appellate Division ruling, Crystal Springs mandates that lower courts apply the Crystal Springs Test, giving judges a clear lens to identify usurious MCAs. This empowers merchants to challenge predatory agreements, potentially sparking a litigation surge.

2. Alignment with Federal Precedents: The test dovetails with federal rulings in New York’s Eastern and Southern Districts and the Second Circuit, which have similarly classified MCAs with fake reconciliation provisions as loans. This state-federal harmony amplifies the test’s credibility, making it a model for other jurisdictions.

3. Fueling New York AG’s Crackdown: The New York Attorney General, led by Letitia James, has wielded the Crystal Springs Test’s logic in high-stakes enforcement. In 2024, a $1 billion settlement with Yellowstone Capital erased $534 million in debt for 18,000 businesses. A March 2024 lawsuit against another MCA network, alleging rates up to 820%, leaned on the test’s framework, labeling these deals as loans. This regulatory firepower could spur other states to act.

4. A Scalable Tool for States: The Crystal Springs Test is a plug-and-play framework for any state with usury laws. New Jersey, which secured a $27.375 million MCA settlement in 2023, is already taken cues from New York. With the $17 billion global MCA market in play, states like California, Florida, or Texas could adopt the test to dismantle predatory practices.

5. Empowering Merchants: The test gives small businesses a fighting chance against MCA defaults, often secured through dubious mailed or emailed notices. Crystal Springs allows courts to vacate such judgments when usury is in play, letting merchants use the test to contest predatory terms.

   
   

The Crystal Springs Test in Action: Reshaping MCA Regulation

The Crystal Springs Test is more than a legal standard—it’s a catalyst for systemic change.

Here’s how it’s poised to transform the MCA landscape:

• Driving Regulatory Reform: States may adopt the test to enforce stricter MCA oversight, demanding genuine reconciliation provisions, transparent interest rate disclosures, or rate caps. Lenders might scramble to tweak their contracts, but the test’s focus on substance over form leaves little wiggle room.

• Igniting Litigation: Merchants can wield the Crystal Springs Test* to challenge MCAs, filing usury claims or defenses against default judgments. This could flood courts, forcing lenders to rethink their predatory models.

• Closing Industry Loopholes: The test’s clarity puts MCA providers on notice—superficial contract tweaks won’t evade scrutiny. Lenders relying on sky-high rates face an existential threat.

• Inspiring State AGs: New York’s success with the test could rally other attorneys general to launch investigations, making the Crystal Springs Test a national rallying cry for MCA reform.

  
  

The Path Ahead: A New Era Powered by the Crystal Springs Test

The Crystal Springs ruling, through its transformative test, marks a turning point in the fight against predatory MCAs. For small businesses crushed by debt, the test is a lifeline, offering a legal weapon to challenge usurious agreements. For regulators, it’s a surgical tool to dismantle an industry that’s thrived on deception.

As New York paves the way, other states are poised to adopt the Crystal Springs Test, reining in the $17 billion MCA market. This isn’t just a ruling—it’s a movement, one that could save countless merchants and force predatory lenders to face justice.

Catch The Shift: The Crystal Springs Test is rewriting the rules, and the tide is turning fast.

Sources:

• New York Debt Lawyers, “Merchant Cash Advances Are Usurious Loans, New York Appellate Division Holds” (September 18, 2024).

• New York Appellate Division, Crystal Springs Capital, Inc. v. Big Thicket Coin, LLC, D73048 (2023).

  
  

Protect Your Business with the Ð.O.G.E.

Here are the top 10 reasons your MCA could be usury, briefly explained:

1. Excessive Effective Interest Rate: The MCA’s implied APR exceeds state usury caps (e.g., 36%-50% in many states).

2. Fixed Repayment Terms: Daily or weekly fixed payments resemble a loan, not a true purchase of receivables.

3. No Risk-Sharing: The funder bears no risk if your business fails, unlike a true revenue-based agreement.

4. Personal Guarantees: Requiring personal liability suggests a loan, not a sale of future revenue.

5. Unconditional Repayment: You must repay regardless of revenue, indicating a debt obligation.

6. High Default Penalties: Excessive fees or penalties for missed payments mimic predatory lending.

7. Short Repayment Periods: Terms under 12 months with high costs often yield usurious rates.

8. Misrepresented Terms: The MCA was sold as a “sale” but structured as a loan in fine print.

9. Lack of Revenue Reconciliation: No periodic adjustment to payments based on actual revenue.

10. State Law Violations: The MCA violates specific state laws reclassifying certain MCAs as loans.

    
    

    TRUE MCA FACT: "In a true Merchant Cash Advance (MCA) agreement, default is impossible—outside of intentional actions like closing bank accounts to evade repayment—because repayments are reconciled on day two of the agreement. The initial payment is merely an estimate, calculated based on the prior 90-120 days of business revenue at the agreed-upon percentage, and adjusted daily to reflect actual receivables, ensuring payments align with business performance rather than functioning as fixed, usury-based repayments. However, 99% of outstanding MCA agreements fail to adhere to this structure, lacking proper reconciliation and operating as non-compliant, usurious instruments that resemble loans rather than true revenue-based advances."

    
    

    IMPORTANT: "Traditional loans have structured 'fixed payments' with a 'finite term' while true Revenue sharing agreements DO NOT structure flat repayments ONLY reconciled repayment with an 'infinite' lifespan of the business with NO term imposed."

If your business entered a Merchant Cash Advance (MCA) agreement recently, it’s critical to investigate whether your contract shares these illegal usury characteristics. Ð.O.G.E. Solutions can help you address these potentially illegal usury contracts and regain financial freedom from predatory business funders.

How Ð.O.G.E. Delivers Solutions & Freedom

Our tech-forward approach helps you:

• Prevent future overpayments via weekly notice

• Potentially void-out illegal usury MCA contracts

• Avoid illegal MCA defaults deployed by funders

• Ensure compliance with real-time reconciliation

• Regain control of your 'true' business cash flow

• Recover overpayments via 'retroactive refunds'

• Correct illegal usury terms if funder cooperates

  
  

Why Choose Ð.O.G.E. Solutions?

Our Agentic AI Agents—$heriff $an$, Ðeputy ÐoXXer, and Ðeputy Ðefault—patrol predatory practices with precision. We work with legal authorities to escalate verified usury complaints, ensuring justice and savings for your business.

Whether it’s reducing payments or voiding illegal usury MCA contracts, we’ve got your back!

U.S. Merchant [Enrollment & Pricing]

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• For 1-4 MCA Contracts

• 1X Flat Fee: $499.99

  
  

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To Enroll:

1. Choose your package (Silver or Golden).

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3. Attach and submit your MCA contracts to DOGEofMCA@gmail.com.

   
   

Contact Ð.O.G.E.

Ðivision of Governance and Enforcement (Ð.O.G.E.)

“Patrolling Predatory Funding, Protecting American Business"

Pioneering MCA compliance enforcement

Telephone: (202) 883-3633

Email: DOGEofMCA@gmail.com

Website: www.DOGEofMCA.com

Ðisclaimer

Ð.O.G.E. is an innovative Merchant Cash Advance (MCA) Contract Review Service dedicated exclusively to reviewing MCA contracts. We DO NOT participate in any form of consolidation, debt consolidation, escrow plans, stop payment strategies, or any similar activities. Our sole mission is to operate within the Ð meta space, filling a critical gap between parties involved in MCA contracts and the judicial system by providing research and resources on MCA contractual inefficiencies and potentially voidable usury agreements.

Ð.O.G.E. Agentic AI Agents are designed to patrol predatory practices, enforce fair agreements, and protect U.S. businesses by identifying failures in MCA compliance. We encourage reconciliation in MCA contractual disputes, where feasible, through real-time repayment reconciliation and overpayment refunding, fostering a healthier MCA environment.

Ð.O.G.E. DOES NOT** provide accounting, business, financial, legal, or personal advice. Any analysis or resources provided by Ð.O.G.E. are for informational purposes only and should not be considered a substitute for professional advice. We strongly advise all clients to seek guidance from their own qualified advisors, attorneys, or other relevant professionals before acting on any information or analysis provided by Ð.O.G.E.

Ð.O.G.E. assumes no liability for decisions or actions, or outcomes resulting from the use of our services. Our role is strictly limited to contract review and providing research-based insights into MCA agreements. By engaging with Ð.O.G.E., you acknowledge and agree to these terms and limitations.