New York Attorney General Letitia James has filed lawsuits against FinTech firms MoneyLion and DailyPay, accusing them of preying on hourly workers across the state with illegal, high-interest payday loans.
The legal action seeks to halt their operations in New York, secure restitution for tens of thousands of affected individuals, and impose financial penalties for what are described as abusive lending practices masked as early wage access products.
The lawsuits allege that both companies misrepresent their services as fee-based wage advances, when in reality, they are issuing short-term loans with effective annual interest rates often exceeding 500%, and in some cases reaching up to 750%. These exorbitant rates stem from small advances—typically under $100—paired with mandatory fees and solicited tips, to be repaid within a week or two.
Attorney General James said, “Promising New Yorkers financial freedom while pushing them into outrageously expensive loans is downright shameful. These are payday loans by another name.” She continued, “While many New Yorkers are worried about making ends meet, DailyPay and MoneyLion are making tremendous profits by extracting workers’ hard-earned wages. I’m suing DailyPay and MoneyLion because New Yorkers deserve to keep the money they earn, not have it taken by predatory lenders.”
According to the filings, MoneyLion claims to offer “zero percent interest” loans and “instant access” to cash advances. However, the company imposes mandatory fees up to $8.99 for a $100 advance, translating to an annual interest rate of 234%. It also encourages users to leave tips, while limiting access to $100 per transaction—forcing borrowers into repeated borrowing to reach the $500 promoted in its advertisements.
DailyPay is accused of deceptive practices including partnering directly with employers to intercept employee paychecks. This allows the company to deduct repayments before workers receive their wages, often leaving little behind. Despite marketing its advances as interest-free, DailyPay reportedly collects fees on 90% of its transactions. The platform also uses borrower dependency as a selling point to investors, claiming it can extract hundreds of dollars annually per user.
The lawsuits also highlight individual cases to demonstrate the impact. One worker reportedly took over 450 loans from DailyPay in under two years, paying nearly $1,400 in fees. Another paid DailyPay nearly every day for two years, after taking close to 500 loans.
Attorney General James argues these practices violate New York’s usury laws and, in the case of DailyPay, wage assignment statutes. The lawsuits mark a significant pushback against the expanding use of FinTech platforms for what regulators deem predatory lending practices.
These legal matters are being managed by Assistant Attorney General Chris Filburn of the Consumer Frauds and Protection Bureau, with support from data scientist Akram Hasanov and data analyst Casey Marescot. Oversight is provided by bureau chief Jane M. Azia and deputy bureau chief Laura J. Levine, with additional supervision from chief deputy attorney general Chris D’Angelo and first deputy attorney general Jennifer Levy.
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