8 Collection Tactics That Cross the Line Into Actionable Conduct

Start By Ruling Out the Statute Everybody Cites

Search for what a collector is allowed to do to you and the first ten results will quote the FDCPA at you. Put it aside. Under 15 U.S.C. §1692a a “consumer” is a natural person obligated on a “debt,” and paragraph (5) defines that debt as an obligation arising from a transaction in which the money, property, insurance or services are primarily for personal, family or household purposes. A merchant cash advance funds inventory, payroll and equipment, which puts your file outside the Act no matter how the calls sound. The same problem swallows most state debt-collection licensing rules, which are written around consumer claims. That is why a funder’s collectors talk to a business the way they would never talk to a homeowner.

The theories that do apply are common-law torts, Article 9 of the U.C.C., a handful of state unfair-practices statutes, and the criminal usury and extortion provisions that sit behind the civil case. They are real, they get pleaded, and some of them have produced very large numbers on the public record. They are also elements-based, which means each one asks for a specific thing you either can prove or cannot, and the proof is usually a document or a witness that exists for about two weeks before it evaporates. A customer who took the call in March will not remember the sentence in September.

So each of the eight items below gives you four things: the tactic as it actually shows up in your week, the legal theory with its elements, the evidence that proves it, and the honest weakness a funder’s counsel will lead with. Where the answer changes by state, the item says so rather than pretending New York law is national law. If a suit has already been filed and you have been named individually on the guaranty, the personal-liability side of that case runs on its own track, and if the collector has started dialing your accounts, customer contact is the fastest-moving problem on this list.

1. Working Your Customers Instead of Your File

A collector pulls your customer list off your website or out of the bank statements you handed over at underwriting, and starts calling. The script varies but the content does not: you are in default, the business is finished, pay us instead, and by the way we would hate to see you get dragged into this. Two days later a purchase order gets cancelled and a customer who has paid you on time for six years asks for a call with your lawyer. The damage is not the money the funder collects, it is the relationship that never comes back.

In New York the claim for interference with a contract you already have requires a valid contract with a third party, the defendant’s knowledge of that contract, intentional procurement of its breach without justification, an actual breach, and resulting damages (Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413 (1996)). Where the relationship was only prospective, the bar climbs: Carvel Corp. v. Noonan, 3 N.Y.3d 182 (2004) requires conduct that is either criminal or an independent tort, with a narrow exception for wrongful means. A cancelled contract is worth pleading. A customer who simply stopped calling you is much harder.

Proof is testimony plus arithmetic. Get the customer to write down who called, from what number, on what date, and what was said, before anyone lawyers up. Pair it with the cancelled purchase order or the terminated master agreement, and with an accounts-receivable aging report from the week before and the week after. The defense you will meet is economic justification: a funder with a perfected interest in your receivables and a real event of default will argue it was protecting its own collateral, which is a legitimate interest and defeats the “without justification” element in a lot of cases.

2. Turning the Case File Into the Weapon

The suit itself is ordinary. What comes after it sometimes is not: information subpoenas to nine banks you have never used, a subpoena to your largest customer for “all documents,” a second action filed in a county three hundred miles from your shop, an amended pleading that adds your spouse. None of it is aimed at proving the debt. It is aimed at making the file expensive enough that you sign whatever gets put in front of you.

Abuse of process in New York has three elements: regularly issued process, either civil or criminal, an intent to do harm without excuse or justification, and use of the process in a perverted manner to obtain a collateral objective (Curiano v. Suozzi, 63 N.Y.2d 113 (1984)). Read the first element closely, because Curiano also holds that starting a civil action by summons and complaint is not legally considered process capable of being abused, and that the gist of the tort is the improper use of process after it issues. So the lawsuit is not the claim; the subpoenas and the provisional remedies are. The leading example is Board of Education v. Farmingdale Classroom Teachers Association, 38 N.Y.2d 397 (1975), where 87 teachers were subpoenaed for the same day and the school district had to hire substitutes, and where the court still required actual or special damages to be alleged and proved.

Malicious prosecution is the other half and it is slower. You need the proceeding to have terminated in your favor, an entire lack of probable cause, malice, and in a civil case a special injury, which Engel v. CBS, Inc., 93 N.Y.2d 195 (1999) describes as a highly substantial and identifiable interference with person, property or business, a concrete harm considerably more cumbersome than the ordinary financial and psychological demands of defending a lawsuit. That means you cannot bring it while the funder’s case is pending, and C.P.L.R. §215(3) gives you one year once you can. Both claims are usually raised as counterclaims for pressure rather than filed on their own.

3. Saying One Specific False Thing to Someone Who Matters

There is a difference between a collector telling your customer you are behind, which is usually true, and a collector telling your customer you stole the money, that you are under criminal investigation, or that the company has filed for bankruptcy when it has not. The second kind gets repeated inside your customer’s legal department, and it ends credit terms and vendor qualifications that took you a decade to earn.

The elements are a false statement, published without privilege or authorization to a third party, fault judged by at least a negligence standard, and either special harm or defamation per se (Dillon v. City of New York, 261 A.D.2d 34 (1st Dep’t 1999)). Per se matters a great deal to a business, because Liberman v. Gelstein, 80 N.Y.2d 429 (1992) lists among the four established categories statements charging a serious crime and statements that tend to injure another in his or her trade, business or profession. Land in one of those and damages are presumed rather than itemized, which is the difference between a claim you can plead and a claim you can only complain about.

The evidence requirement is unusually literal. C.P.L.R. §3016(a) requires the particular words complained of to be set forth in the complaint, and courts also want the time, the place, the manner and the person to whom the statement was made. Write the sentence down the day you hear about it, verbatim, with who said it and who heard it, and stop paraphrasing it after that. The defenses are strong: truth is complete, statements of opinion are not actionable, and the one-year clock in §215(3) runs from publication rather than from the day you found out.

4. Notifying Accounts the Funder Never Bought

The letter tells your customers to pay the funder directly. Sometimes that is lawful. The version that is not is the blanket mailing: invoices generated before the advance existed, invoices owed to a sister entity that never signed anything, customers of a division the funder has no interest in, sent by a funder sitting in third position behind two earlier filings. Once that letter is out, your customer’s accounts payable department freezes the entire ledger rather than sorting invoice by invoice, so an overbroad letter does the same damage as an accurate one.

Under U.C.C. §9-406(a) the discharge shift only happens as to the amount that actually was assigned, and §9-406(b)(1) makes a notification ineffective if it does not reasonably identify the rights assigned, while §9-406(c) lets your customer demand reasonable proof of the assignment and keep paying you if that proof is not seasonably furnished. Priority runs on §9-322(a)(1), first to file or perfect, so a junior funder that collects your receivables is interfering with the senior’s collateral as well as with you. That combination, an ineffective notice plus collection on accounts outside the collateral, is what converts a lawful remedy into a tort claim under the standards in item one.

Build the record on paper rather than argument: the financing statement’s collateral description, the schedule attached to the advance agreement, the exact letter your customer received including the envelope, and the invoice list showing dates before the funding date. Also send the account debtor a written instruction to demand §9-406(c) proof. The weakness is that a funder holding a genuine perfected interest after a genuine default is exercising something §9-607(a)(1) grants it, and courts do not award damages for a letter that changed nobody’s behavior, so the claim lives or dies on the receivables that actually stopped arriving.

5. Sitting on the Lien and Refusing to Show the Math

You paid the settlement. Ninety days later the UCC-1 is still on file, your bank declines the equipment loan because of it, and the funder’s payoff statement arrives as a spreadsheet whose total does not match your own ACH history by eleven thousand dollars. This is the least dramatic item on the page and the one with the clearest statutory hook, because Article 9 attaches specific dollars to specific failures.

U.C.C. §9-625(b) makes a person liable for the loss caused by a failure to comply with the article, and subsection (e) adds $500 for each of several enumerated failures, including filing a record the person was not entitled to file under §9-509(a) at (e)(3) and failing to file or send a required termination statement at (e)(4). Subsection (f) adds another $500 where a secured party fails, without reasonable cause, to comply with a §9-210 request for an accounting. Subsection (a) also lets a court restrain collection or disposition on appropriate terms. Note what you do not get: the minimum-damages formula in §9-625(c)(2) is limited to consumer goods, so a business recovers its proven loss and the flat amounts, and nothing more generous than that.

The proof is procedural and easy to create. Send an authenticated demand and a §9-210 request by a method that produces a delivery record, calendar the deadlines, and save a dated PDF search showing the lien still on file after they pass. Then quantify the loss with the actual denial: the term sheet you lost, the rate you had to accept instead, the equipment you could not buy. The honest weakness is scale. Five hundred dollars is a nuisance to a funder, so this item is valuable mostly as the piece of the file where you are provably right, which is a different kind of currency in a settlement conversation.

6. Quoting a Payoff Number That Keeps Moving

Three payoff letters in five weeks, each one higher, none of them itemized. A settlement agreement that releases the entity but says nothing about your guaranty. Fees appearing in the demand that appear nowhere in the contract. This is the tactic most likely to be documented already, because it happens in writing, and it is the one where the answer changes most sharply depending on which state’s law your file sits in.

New York’s consumer-protection statute was rewritten last year. The FAIR Business Practices Act, signed December 19, 2025 and effective February 17, 2026, amended Gen. Bus. Law §349 so that subdivision (a) now declares unfair, deceptive, or abusive acts or practices unlawful rather than deceptive ones alone. Read the fine print before you get excited. Only the Attorney General enforces the new unfair and abusive prongs; the private right of action in §349(h) still runs to deceptive acts, and it pays actual damages or $50, with the court permitted to treble up to $1,000 for a willful or knowing violation and to award attorney’s fees. The Governor’s approval also came with an agreement that the amendment would not displace existing case law on the consumer-oriented standard, which means Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20 (1995) still requires a plaintiff, individual or entity, to charge conduct that is consumer-oriented. A pure business-to-business collection dispute usually is not.

Other states answer differently, and the difference is the whole item. Massachusetts gives a business plaintiff its own cause of action outright: G.L. c. 93A §11 runs to any person who engages in the conduct of any trade or commerce and who suffers a loss, with recovery of up to three but not less than two times actual damages for a willful or knowing violation and attorney’s fees on a finding of violation. Texas cuts the other way by deal size: the Deceptive Trade Practices Act at Tex. Bus. & Com. Code §17.49(g) does not apply to a claim arising from a transaction involving total consideration of more than $500,000, and §17.49(f) exempts written contracts over $100,000 where the consumer had counsel and no residence was involved. So a $900,000 stack in Houston has no DTPA claim at all, while the same conduct in Boston is a fee-shifting case.

7. Threats Aimed at You Rather Than at the Balance

Every category above is about money. This one is about the calls that mention your children’s school, your immigration status, a criminal referral, or what happens to people who do not pay. Merchants under-report these because they sound unbelievable when repeated out loud, and because the caller usually blocks the number. Save the voicemail, note the date and the time, and tell counsel the same week.

Two bodies of law sit here. N.Y. Penal Law §155.05(2)(e) defines larceny by extortion as compelling delivery of property by instilling fear of enumerated consequences, which include causing physical injury, damaging property, exposing a secret or publicizing an asserted fact tending to subject a person to hatred, contempt or ridicule, and at the closing subparagraph performing any other act calculated to harm a person materially with respect to health, safety, business, calling, career, financial condition, reputation or personal relationships. Federal law is blunter: 18 U.S.C. §894 makes knowingly participating in the use of extortionate means to collect an extension of credit punishable by up to 20 years. Alongside them, criminal usury under N.Y. Penal Law §190.40 sets 25% per annum as a class E felony, Gen. Oblig. Law §5-521 confines a corporation to that defense, and Adar Bays v. GeneSYS ID, 37 N.Y.3d 320 (2021) holds a criminally usurious loan void in its entirety.

The public record shows what this looks like when a regulator gets it. In the Attorney General’s case against Richmond Capital Group, Ram Capital Funding and Viceroy Capital Funding and their principals, brought under Executive Law §63(12), the office described advances such as $10,000 repaid at $19,900 over 10 days in $1,999 daily debits, an effective annual rate near 4,000%, along with debiting excess amounts from merchant accounts and obtaining judgments by filing false affidavits in New York courts (NY AG, September 18, 2023). Liability was established and a money judgment of roughly $77.3 million followed, and on February 19, 2026 the First Department unanimously modified on the law to vacate the monetary part of that judgment and remanded for further proceedings on restitution while otherwise affirming. The caution for you is structural: these are criminal and regulatory statutes, not private causes of action, so their value in your file is that they change who is willing to sit at the table.

8. Freezing Money the Creditor Was Never Entitled to Hold

The judgment is against your LLC. The restraint lands on an operating account holding customer deposits, a payroll account funded by a factoring advance, a joint account with your spouse, and sixty thousand dollars against a judgment of nine thousand. Friday payroll does not clear. This is where the tactic and the remedy are closest together, because the fix is a motion rather than a lawsuit, and it works in days when it is filed in days.

C.P.L.R. §5222(b) tells you the shape of a lawful restraint: the garnishee is contemplated to withhold money in an amount up to twice the amount due on the judgment, and where it holds that much the notice is not effective as to other property, with the restraint running one year against a third party. §5222-a and its exemption machinery apply to a natural person’s account, not an entity’s, which surprises most owners. And Aspen Industries, Inc. v. Marine Midland Bank, 52 N.Y.2d 575 (1981) holds that a restraining notice creates no lien at all, so a creditor freezing four times the judgment has no priority to point to.

Two provisions do the work. C.P.L.R. §5239 lets any interested person, which includes the customer whose deposit got caught, bring a special proceeding before the money is applied to the judgment, and the court can vacate the execution, void the levy, direct disposition of the funds, and award damages, with expenses and reasonable attorney’s fees against a claimant whose claim is found fraudulent. §5240 lets the court deny, limit, condition, regulate or modify the use of any enforcement procedure. Bring both with a ledger showing whose money it is. The weakness is the obvious one: a valid judgment plus a properly issued notice is lawful even when the timing destroys a payroll cycle, and if the funder has also sent restraint letters to your customers, that is a separate and faster problem.

What These Claims Are Actually Worth

Almost none of the eight is worth filing as a standalone case. A commercial tort claim against a funder costs five figures to plead and defend properly, takes a year or more to reach a dispositive motion, and delivers a damages number that has to be proven with cancelled contracts and denied credit facilities rather than with outrage. Meanwhile the underlying balance keeps accruing and the funder’s counsel bills by the hour on a file that already has a confession or a judgment in it.

Where they earn their keep is inside a negotiation. A funder that has sent an overbroad §9-406 notification, missed a termination statement deadline, restrained an account holding a customer’s deposit, and left a voicemail it would not want read aloud is a funder with reasons to close at a number it would otherwise refuse. That is the realistic use: a documented record that makes the cheapest path for the other side a settlement rather than a motion. The same record also matters if a regulator ever opens a file, which is how several of the largest merchant recoveries on the public record actually happened.

Who Should You Call? Our Top-Rated Business Debt Firms

One firm on this list works the entire lifecycle of a business debt file, from stopping the daily debits through attorney-led negotiation, UCC lien removal, and a signed release. The other two cover broader debt categories that often sit alongside the advances. Choose accordingly.