New York Attorney General Letitia James filed lawsuits against DailyPay and MoneyLion, accusing the fintech companies of acting as payday lenders by charging workers excessively high fees for early access to wages. The lawsuits, filed in a Manhattan state court, claim that the companies misrepresent their services and impose effective interest rates that violate state usury laws. According to James, MoneyLion's fee structure can result in an annual percentage rate (APR) of 234%, while DailyPay's model can exceed 750% APR. These services are marketed to workers needing early wage access through partnerships with major employers including McDonald's, Target, Kroger, and UnitedHealth.
James labeled the companies' practices as predatory, saying they burden workers with costly repayment terms disguised as convenience. She said, "Promising New Yorkers financial freedom while pushing them into outrageously expensive loans is downright shameful. These are payday loans by another name." She is seeking civil penalties, restitution, and a halt to the alleged misconduct. In response, DailyPay argued that its product is not a loan since repayment is not required if employers fail to process payroll. It also criticized the lawsuit, claiming it could drive consumers to more harmful financial alternatives. MoneyLion has not responded publicly. The legal action comes amid expectations that state regulators will maintain close oversight of financial services, even as the Trump administration reduces federal involvement.
