Excess debiting is the most common MCA complaint that arrives at a lawyer’s desk, and it is also the most systematically underreported. Business owners who discover that their funder has been collecting above the contractual amount often assume the discrepancy reflects a fee or an accounting adjustment they do not fully understand. Often it does not.
When a funder debits more than the agreement authorizes, several legal mechanisms are immediately available. The question is sequence.
Step 1: Compile a Complete Debit History
Request complete bank statements covering the entire funding period, from the first debit through the most recent. Download every entry. The goal is a running total of everything the funder has collected, dated, and itemized. Do not rely on the funder’s own account portal, which may reflect its internal balance calculations rather than the amounts actually cleared from your account.
Step 2: Identify the Contractual Debit Amount
Pull the original agreement and locate the specified daily or weekly deduction amount, or the specified percentage and the estimated deposit base from which it was calculated. This is your benchmark. Every debit above this amount, after controlling for any fee schedule disclosed in the agreement, is potentially unauthorized.
Step 3: Calculate the Overage
Subtract the authorized amount from each actual debit and sum the resulting differences across the entire period. This produces the total overage figure. Keep your spreadsheet. It is the core exhibit in any legal action or ACH dispute you subsequently pursue.
The funder’s position will be that every debit was authorized. Your position is that authorization was specific to a certain amount, and amounts above that figure were not covered.
Step 4: Review the Fee Schedule in the Agreement
Some excess debits reflect contractual fees, such as NSF fees, wire charges, or monthly maintenance charges, that were disclosed in the agreement but are easy to overlook. Before characterizing every overage as unauthorized, match each disputed amount against the fee schedule. This exercise serves two purposes: it produces a cleaner dispute record, and it identifies whether certain fees themselves may be unenforceable under applicable law.
A 2024 ruling from the Law Office of Jeffrey Davis found that default fee provisions in MCA agreements were frequently unenforceable as written, because the amounts were disproportionate to any actual harm and structured as penalties rather than liquidated damages.
Step 5: Send a Written Demand for an Account Statement
Demand in writing that the funder produce a complete account statement showing the total purchased amount, all amounts collected to date, all fees charged, and the remaining balance. Address the demand to the funder’s legal department or registered agent. Keep the delivery confirmation.
Funders who cannot produce a coherent account statement in response to a written demand are in a structurally weak position in any subsequent dispute.
Step 6: File an ACH Dispute Through Your Bank
For debits that exceed the authorized amount, file an ACH return request with your bank using the appropriate return code. Return code R10, customer advises not authorized, applies when the debit amount is inconsistent with the authorization. Your bank may require documentation, including the agreement and your calculation of the excess. Provide both.
Banks are more receptive to business account ACH disputes when the account holder presents a specific, documented overage rather than a general complaint about the arrangement.
Step 7: Send a Formal Breach of Contract Notice
If the overage is material and the funder has not responded satisfactorily to your account statement demand, a formal breach of contract notice puts the funder on notice that litigation is being considered. The notice should identify the specific contract provision that establishes the authorized deduction amount, state the total excess collected, demand a refund within a specified period, and preserve all claims.
Step 8: Engage Legal Counsel for Recovery or Injunctive Relief
If the overage is substantial or if the excess debiting is ongoing, legal intervention is appropriate. An attorney can file a breach of contract action, seek emergency injunctive relief to stop further debits, and, if the overage pattern suggests systematic overcharging, explore whether consumer protection or commercial fraud statutes apply.
The New York Attorney General’s March 2024 action against Yellowstone Capital and affiliated entities, which settled in December of that year, confirmed that systematic overcharging across a portfolio of MCA accounts is the kind of pattern that attracts regulatory attention at a scale that individual businesses cannot generate alone.
If your MCA account history does not reconcile with your contract, a consultation with legal counsel can clarify what was authorized, what was not, and what remedies are available. That conversation costs nothing to begin.
