New York Takes on Payday Predators
AG sues MoneyLion, DailyPay for exploiting tens of thousands of New Yorkers
New York is taking a stand against payday predators. Specifically, New York’s Attorney General is suing both online lender MoneyLion and earned wage access (EWA) provider DailyPay for exploiting New Yorker’s desperate for easy access to cash.
According to a press release from the AG’s office:
Both MoneyLion and DailyPay make paycheck advance loans to hourly workers in exchange for fees and tips, pretending to simply be advancing “earned” wages. Due to the short terms of the loans, the fees MoneyLion and DailyPay charge amount to outrageous annual interest rates in the triple digits, frequently up to 750 percent. Both payday lenders also engage in abusive tactics that push workers to frequently take out new loans to cover gaps created by their prior loans. With these lawsuits, Attorney General James is seeking to end MoneyLion and DailyPay’s illegal payday lending practices in New York, obtain restitution for tens of thousands of impacted workers, and impose civil penalties.
MoneyLion is no stranger to running afoul of state law.
MoneyLion violated Minnesota state law by failing to be licensed by the state when it provided Minnesota-based consumers with certain loans with excessive annual interest rates of up to 645%. The settlement includes more than 700 loans issued to Minnesota consumers between November 7, 2016 and September 15, 2017. These loans ranged from $300 to $2,000 and MoneyLion charged interest rates from 9.79% to 645%.
The New York AG’s office explains the exploitation disguised as access to credit this way:
In a typical transaction with DailyPay or MoneyLion, a worker receives a small amount in advance of their paycheck – usually less than $100 – and repays that amount, plus fees and tips, in seven to ten days. The result is an extremely high annualized interest rate ranging between 200 percent and 350 percent on average, but rates for these short-term loans can reach much higher. For example, DailyPay’s most common loan, a seven-day $20 paycheck advance offered for $2.99 actually reflects an annual interest rate of over 750 percent. More than half of all MoneyLion loans impose annual interest rates above 500 percent.
Some examples of the predatory nature of these products:
One worker in Washington Heights, for example, took out more than 450 loans from DailyPay in less than two years, averaging more than 4.5 loans per week and paying nearly $1,400 in fees. Another worker in Syracuse paid fees on all but two of the nearly 500 loans he took out with DailyPay, paying an average of $2 to DailyPay every single day for nearly two years.
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This case demonstrates the importance of state Attorneys General in protecting consumers. Especially at a time when the Consumer Financial Protection Bureau (CFPB) has been weakened by Musk-Trump.
If you have a consumer protection concern or believe you are the victim of a predatory consumer finance scheme, start with your state’s Attorney General.
Attorneys General typically have consumer protection divisions and can apply relevant state laws to your situation. Sometimes, if an AG asks, a company will answer.
Second, let your Member of Congress know. One, they may be able to assist with a resolution. But also, it is important for Congress to know their constituents value the work formerly performed by CFPB. Congress can rescue the consumer champion from the DOGE Death Star . . . if they want to.
Paging Chuck Bell of Consumer.org!