MCA Funder Calling Your Customers? A Contact Restriction Request and Its Limits

Yes, it’s possible, if often pointless, to tell your MCA funder to stop calling your customers. Nothing says the funder has to honor it, though, and the calls are often on firm legal ground under the UCC. Resolving the debt itself is the true way to stop them.

Business Debt

The Fair Debt Collection Practices Act - the law you hear most often about what debt collectors can’t do - governs only household, family, or personal debts. It doesn’t apply to business debt. The law bars telling outsiders about consumer debts. While the law shields consumers, it is silent on disclosures of business debts. An MCA funder can call or write to one of your customers who you did business with.

Still, you should know about California’s Rosenthal Act. The state government protects consumers under it, but now some individuals in business have its help, too, since July 1, 2025. It may reach any individual who signed, like a guarantor, if the debt is $500,000 or less and the claim was made or bought by your collector on or after that date. There isn’t any clear law on whether MCAs are covered. New York’s FAIR Business Practices Act took effect on February 17, 2026. Only the state’s Attorney General can act against unfair or abusive practices. Funders have come under scrutiny. In January 2025, New York’s Attorney General ended up with a $1.065 billion settlement from Yellowstone Capital. It had to stop collection, drop enforcement actions and vacate unpaid judgments.

UCC Notice

Under Article 9 of the Uniform Commercial Code, a creditor can tell your customers to pay it directly as a result of your default. This step can occur even before default, if the contracts say so. Once notice of the assignment is given, under 9-406, a customer paying you would not be clearing the debt; it could get squeezed to pay twice.

The funder’s customer letter isn’t garnishment. No judge looked at it, it carries no judgment behind it; it gets teeth only from the statute and the contract you signed. That’s exactly why it arrives long before a lawsuit could reach the same point.

MCAs don’t always stop at your customers. They can send notice of the UCC assignment directly to the place that handles payments for you - your credit card processor, or a platform or marketplace that sells your product. A letter at that one point can catch and freeze most of the daily revenue coming in. Processors, being cautious, tend to freeze or re-direct payments, then to sort it out later.

A UCC notice to your customers that you’re in default can strangle your flow of money in a matter of days. The customer who gets the notice may reassess the commercial risks of working with you. You’re now in public drama with a clock on it. That’s the leverage the funder wants and is using.

This leverage is not without limits. Depending on what notice the funder sent, it might not have a lot of options against your customers:

• one that doesn’t reasonably identify what was assigned has no effect;
• a customer can ask for reasonable proof, and absent that can choose to keep paying you;
• and the funder is bound to collect in a commercially reasonable manner when it has recourse against you.

It isn’t your job to tell customers about the fine details of whether the funder sent a valid notice. Work with licensed experts before trying to decide or advise them. The letter isn’t a bluff. Telling the customer to ignore it or keep paying could put them in legal jeopardy if you’re wrong.

What about a customer who was spooked by your funder’s letter? Jump on the phone before they call you. Explain that there is a dispute and you’re doing what you can to work it out. Don’t talk through the letter’s points, because you can’t say whether it meets the law’s standards. Let the customer ask their own lawyer. Hit the target date you give for the next update, and keep up the high quality of your work till the situation goes back to normal.

The Best Option Is Resolving the Debt

Only the funder, not the recipient, can take a notice back. What the funder must do - such as how they’ll send the letter, who it goes to, and by when - goes in the settlement offer. Include a list of every person or company the funder must write to. Nothing says your funder has to settle or back down. The process can work out, but there’s no guarantee.

A deal usually involves a few parts. They go into one written agreement. It gets: a signed balance and payment contract, a release of the business and any personal guarantor, a UCC-3 cancellation of the lien, a written withdrawal of every notice to your customers, payment processors and platforms. The funder’s notices come from the claim, and when the claim is settled, there’s nothing to support them anymore.