Earned Wage Payday Lenders Are Picking Workers’ Pockets
- Jonathan H. Westover, PhD
- 3 hours ago
- 3 min read
New Report Exposes the Unfair, Deceptive and Abusive Practices of Earned Wage Payday Lenders
Financial exploitation is unfortunately nothing new, but the methods used to extract money from people struggling paycheck to paycheck are constantly changing. A new report from the National Consumer Law Center (NCLC) delves into the latest face of payday loans – so-called “earned wage access” products.
Picking Workers’ Pockets: Unfair, Deceptive and Abusive Practices by Earned Wage Payday Lenders explores the tactics that earned wage payday lenders use to collect disproportionately high fees and trap consumers in a cycle of borrowing – just as traditional payday lenders do. While most of the debate around this new form of payday loan app has centered on whether the products are loans (they are), unfair, deceptive and abusive practices are unlawful no matter what kind of label they carry.
“Earned wage payday loans exploit low-income workers and are designed to extract high fees from those who can least afford them,” said Patrick Crotty, senior attorney at the National Consumer Law Center. “The earned wage payday loan industry is rife with unfair, deceptive and abusive practices. Enforcement authorities should address those practices, and legislators should reject exemptions from interest rate caps and other consumer protection laws.”
Recent public enforcement actions by state attorneys general, the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB), and the City of Baltimore cited practices of earned wage payday lenders that are allegedly in violation of laws against unfair, deceptive or abusive acts or practices (UDAP). These practices include:
Disclosing 0% APR, “no interest” or “interest free” for costly loans when up to 90% of users pay fees that frequently add up to $300 or more a year and as much as $1400 over two years;
Promoting “instant” or “fast loans” while hiding high “expedite” fees that far exceed the cost of instant delivery and that almost all borrowers pay; and
Dark patterns that are unfair or abusive tricks to coerce purportedly voluntary “tips” and “donations,” including adding “tips” automatically with complicated, obscure and time-consuming interfaces to remove them, repeat requests for “tips,” and implied threats of consequences for borrowers who do not tip.
The report urges state enforcement authorities, regulators, and consumer advocates to be on the lookout for violations of state and federal UDAP laws in earned wage payday loans and other cash advance apps even if these products are not described as loans.
“Workers shouldn’t have to pay to be paid. Earned wage payday loans drain consumers of $300 a year or more of their hard-earned money through interest, fees, and ‘tips,’” said Lauren Saunders, associate director and director of federal advocacy at the National Consumer Law Center. “Unfair practices proliferate because these payday loans are intentionally designed to evade the legal definitions of ‘loans’ and ‘interest’ to dodge interest rate caps and other lending and disclosure laws.”
Advocates also urge state legislatures to maintain strong, comprehensive fee and interest rate caps – including an overall monthly fee cap – to rein in unfair and abusive practices.
“Stopping ever-evolving unfair practices is a game of whack-a-mole, and the best way to succeed is to have clear interest rate and fee caps for any type of high-cost loan to keep money in workers’ pockets instead of being siphoned off to predatory lenders,” said Crotty.
Related Resources
Press Release: Proposed Law Would Supercharge Predatory ‘Earned Wage’ Payday Lending, Nov. 20, 2025
NCLC Digital Library: Successful Challenges to Earned Wage Payday Loans, Nov. 12, 2025
Issue Brief: DailyPay Extracts Hundreds of Dollars From Low-Wage Workers’ Pay, May 8, 2025
Issue Brief: The Tricks Cash Advance Apps Use to Coerce Borrowers to “Tip,” April 23, 2025
Since 1969, the nonprofit National Consumer Law Center has worked for consumer justice and economic security for low-income and other disadvantaged people in the United States through its expertise in policy analysis and advocacy, publications, litigation, expert witness services, and training.
