March 26, 2025
The Honorable Kathy Hochul
Governor of New York State
New York State Capitol Building
Albany, NY 12224
[Via Email]
Dear Governor Hochul,
We write to bring to your immediate attention the alarming rise of payday loan apps that exploit working New Yorkers, extracting over half a billion dollars in predatory fees from their paychecks since 2019, according to a New Economy Project analysis (see attached).
As you know, payday lending is categorically illegal in New York; it is a felony to issue loans above 25% APR. Yet these so-called Earned Wage Access (EWA) apps operate with impunity, imposing a dizzying array of exorbitant and deceptive fees that amount to effective average interest rates over 330% APR.1
Our organizations collectively represent hundreds of thousands of New Yorkers organizing together to advance economic justice and stop racial wealth extraction, and we urge your office to crack down on these predatory EWA entities targeting our communities.
At a time when your administration has made affordability a top priority, payday loan apps are actively siphoning money from low-income New Yorkers, exacerbating economic and racial wealth inequality. According to the Government Accountability Office, most EWA users earn less than $50,000 annually,2 meaning these fees disproportionately burden low-wage workers already struggling to make ends meet amid New York’s affordability crisis.
In 2019, the NYS Department of Financial Services (DFS) launched a multi-state investigation into the EWA industry—only to quietly shelve it.3 Meanwhile, the industry has exploded, targeting New Yorkers on social media and even advertising on the NYC subway, turning a vital public space into a hunting ground for predatory lenders. At a State Assembly hearing last year, a representative from EarnIn, one of the larger players in the direct-to-consumer EWA space, boasted that the company had 80,000 users in New York in 2023 alone.4
The Consumer Financial Protection Bureau (CFPB) has since confirmed that these products are loans subject to federal lending laws.5 Yet EWA lenders deliberately design their products to evade New York’s strong usury laws, disguising exorbitant fees as voluntary “tips” and charging users for immediate access.
Other states are cracking down on this predatory industry. Connecticut recently brought the industry under its rate cap.6 Washington, D.C.’s Attorney General sued EarnIn last year for violating its cap and engaging in deceptive marketing.7 Meanwhile, New York’s regulators have failed to act and serious concerns have been raised about Superintendent Adrienne Harris’s close ties to the fintech industry8 and her deferential approach to enforcement of EWA.9
We urge you to take immediate action to:
- Direct DFS to enforce New York’s usury laws against payday lenders masquerading as wage-access services, just as the agency has previously done to curb illegal online payday lending.10
- Partner with the Attorney General to dedicate resources to stronger enforcement against this rapidly expanding and predatory industry.
- Reject industry-backed legislation (S3332/A258) that would carve out a loophole in our usury laws—effectively legalizing payday lending for the first time in our state’s history.
- Support the End Loan Sharking Act (S1726/A4918) to strengthen enforcement against fintech and high-cost lenders that exploit people and evade consumer protections.
New York has long led the nation in protecting its residents from payday lending. That legacy is now at risk. Your leadership is needed to ensure that these payday lenders are banned outright and that all lending in New York is subject to our state’s strong usury laws.
Thank you for your attention to this urgent matter.
Respectfully,
New Economy Project
AARP NY
Action for a Better Community (ABC)
Alternatives FCU
Banana Kelly Community Improvement Association
Brooklyn Cooperative FCU
Center for Elder Law and Justice
Communications Workers of America District 1
Consumer Reports
Empire Justice Center
The Enterprise Center at PathStone
Episcopal Diocese of Long Island
Ethical Humanist Society of Long Island
For the Many
Genesee Co-op FCU
Long Island Jobs with Justice
Long Island Progressive Coalition
Lower East Side People’s FCU
New Yorkers for Responsible Lending
New York Public Interest Research Group (NYPIRG)
NYS Community Equity Agenda
Queens Volunteer Lawyers Project
Retail, Wholesale and Department Store Union (RWDSU)
SEEN NY
WESPAC Foundation, Inc.
Westchester Cooperative Network
Western New York Law Center
1 California Department of Financial Protection and Innovation, 2021 Earned Wage Access Data Findings, March 2023. Available at: https://dfpi.ca.gov/wp-content/uploads/sites/337/2023/03/2021-Earned-Wage-Access-Data-Findings-Cited-in-ISOR.pdf
2 U.S. Government Accountability Office, Earned Wage Access: Federal and State Consumer Protections and Selected Company Practices, GAO-23-105536, March 2023. Available at: https://www.gao.gov/assets/gao-23-105536.pdf
3 New York State Department of Financial Services, DFS Leads Multi-State Investigation of the Payroll Advance Industry, Press Release, August 6, 2019. Available at: https://www.dfs.ny.gov/reports_and_publications/press_releases/pr1908061
4 New York State Assembly, Public Hearing on the Impact of Financial Technology (FinTech) & Its Role in New York’s Banking Industry, March 7, 2024. Available at: https://nystateassembly.granicus.com/player/clip/8010?view_id=8&redirect=true
5 Consumer Financial Protection Bureau, CFPB Proposes Interpretive Rule to Ensure Workers Know the Costs and Fees of Paycheck Advance Products, Press Release, July 18, 2024. Available at: https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-interpretive-rule-to-ensure-workersknow-the-costs-and-fees-of-paycheck-advance-products/
6 Consumer Financial Services Law Monitor, Connecticut Department of Banking Issues Guidance Expanding Small Loan Act to Cover Earned Wage Access Products, September 28, 2023. Available at: https://www.consumerfinancialserviceslawmonitor.com/2023/09/connecticut-department-of-banking-issues-guidance-expanding-small-loan-act-to-cover-earned-wage-access-products
7 Office of the Attorney General for the District of Columbia, Attorney General Schwalb Sues “Pay Advance” Company EarnIn for Deceiving More Than 20,000 DC Borrowers, Press Release, November 19, 2024. Available at: https://oag.dc.gov/release/attorney-general-schwalb-sues-pay-advance-company
8 New York Focus, Former Obama Advisor and Finance Executive Confirmed as New York’s Top Financial Regulator, January 25, 2022. Available at: https://nysfocus.com/2022/01/25/adrienne-harris-confirmation-department-financial-services
9 The American Prospect, The Fintech Fox in the Regulatory Henhouse, September 7, 2021. Available at: https://prospect.org/economy/fintech-fox-in-the-regulatory-henhouse-adrienne-harris
10 New York State Department of Financial Services, Cuomo Administration Demands 35 Companies Cease and Desist Offering Illegal Online Payday Loans that Harm New York Consumers, Press Release, August 6, 2013. Available at: https://www.dfs.ny.gov/reports_and_publications/press_releases/pr1308061