FOR IMMEDIATE RELEASE: July 18, 2024

CONTACT: Raquel Villagra, New Economy Project, raquel@neweconomynyc.org

Press Statement: New CFPB Rule Cracks Down on Predatory “Fintech” Payday Loans

New Economy Project released the following statement in response to the Consumer Financial Protection Bureau’s proposed rule on workplace payday loans:

“New Economy Project strongly supports the CFPB’s proposed rule cracking down on predatory payday loans, marketed through Earned Wage Access (EWA) phone apps. Financial technology (or fintech) companies use these insidious apps to prey on low-wage workers – peddling debt trap loans with interest rates as high as 300% or more. EWA lenders design and market these loans in ways that mask their true cost, in order to evade state usury laws and extract massive sums from low-income and Black and brown communities.

“EWA companies are proliferating in New York and across the country. Just one company, EarnIn, disclosed at a recent state legislative hearing that it had over 80,000 users in New York last year. These companies are making loans in blatant violation of New York’s strong usury law, which caps interest rates on loans at 25% APR. Today’s action by the CFPB affirms that EWA advances are loans, and are therefore subject to the federal Truth in Lending Act and state usury laws.

“We urge the CFPB to issue a strong final rule that reins in predatory fintech companies that exploit low-wage workers – and to stand strong against industry attempts to evade or undermine the rule. We also call on New York regulators to aggressively enforce our state usury law and take action against EWA companies, in accordance with the CFPB’s rule.”

For more information, read New Economy Project’s recent testimony before the NYS Assembly on the impact of predatory EWA loans.

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