Are “Tips” and “Express Fees” on EWA Apps Actually Illegal Usury?
Earned Wage Access: The New Payday Loan?
Earned Wage Access (EWA) apps like Dave, EarnIn, and Brigit allow you to get an advance on your paycheck. They claim they are not lenders. They don’t charge “interest.” Instead, they ask for a “tip” or charge a “subscription fee” or “express fee.”
The Math
If you borrow $100 for 5 days and pay a $5 “tip” and a $3.99 “express fee,” you have paid $8.99 to borrow $100. That is an APR of over 600%.
New York Usury Law
New York has a civil usury cap of 16% and a criminal usury cap of 25%. Regulators are increasingly looking at EWA apps as disguised payday lenders. If the “tip” is effectively mandatory (because the app throttles your access if you don’t tip), or if the fees exceed the legal interest rate, the loan may be void.
The Trap
These apps often have direct access to your bank account. If they try to withdraw their money and you don’t have it, they trigger overdraft fees from your bank.
Fighting Back
If you are trapped in a cycle of EWA debt:
- Revoke Authorization: Send a letter to the app revoking their right to debit your account.
- Stop Payment: Tell your bank to stop payment on the app’s drafts.
- Litigate: We are investigating class actions and individual claims against EWA apps that violate state usury and lending laws.
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