On June 30, 2026, the Federal Trade Commission issued a press release to announce a $2.25 million settlement with Amazon. The FTC alleged that Amazon knowingly violated the Fair Credit Reporting Act by refusing to provide transaction records to consumers whose personal information was used by identity thieves to commit fraud.
Vermont. We provided an alert on the enactment of Vermont House Bill 648. This legislation was introduced and enacted at a speed that took most of the industry by surprise. The new law, which will take effect on July 1, 2027, applies exclusively to factoring and sales-based financing providers and notably includes licensing requirements, disclosure of an “APR” similar that required in California and New York, and a prohibition on the use of recurring automated payments.
Texas. We issued two alerts relating to final regulations promulgated by the Texas Office of Consumer Credit Commissioner to implement certain provisions of House Bill 700, which has since been codified into Texas Finance Code Chapter 398. In a June alert, we noted that the regulations cleared the way to automatically debit merchant deposit accounts if the funder has obtained a first priority security interest in all of the merchant’s accounts receivable. In the next alert, we reported on a new requirement established by the regulations that will require changes to all sales-based financing contracts with Texas-based merchants.
In the first half of 2026, we have seen a trend in bankruptcy courts. The trend is that bankruptcy courts don’t like revenue-based financing and one could be forgiven for concluding that the bankruptcy courts are unwilling to find that revenue-based financing is anything other than a loan.
By contrast, New York state courts continue to produce helpful caselaw. We wrote about a particularly well-reasoned opinion from the New York Appellate Division, Second Department, called Spin Capital, LLC v. Bridgelink Engineering, LLC. In this article, we analyze the court’s application of a test (commonly known as the “LG Funding test”) for determining whether a revenue-based financing transaction should be recharacterized as a disguised loan. We then explain how the court’s decision addresses long-standing questions about how the LG Funding test should be applied, and we conclude that this case should provide greater certainty for those who want to structure revenue-based financing transactions to be as robust as possible to recharacterization.