New York sues DailyPay and MoneyLion, alleging predatory payday lending

Jonathan Stempel

Mon, Apr 14, 2025, 9:41 AM 2 min read

By Jonathan Stempel

NEW YORK (Reuters) - New York's lawyer wide sued DailyPay and MoneyLion connected Monday, accusing the app-based fiscal exertion companies of exploiting workers by charging excessive fees to cod paychecks much quickly, with effectual involvement rates supra 200% and sometimes topping 750%.

Attorney General Letitia James called the companies predatory payday lenders that obscure the "exorbitant and plainly usurious" fees they complaint workers, who anticipation to span gaps betwixt payroll schedules and erstwhile bills travel due.

James said MoneyLion's $8.99 interest connected a $100 two-week beforehand nether the "Instacash" marque sanction carries an effectual yearly involvement complaint of 234%, portion DailyPay's $2.99 interest connected a $20 seven-day beforehand carries an effectual complaint supra 750%.

The lawyer wide said DailyPay reaches workers by contracting with employers specified arsenic Burger King, McDonald's, Target, grocer Kroger and healthcare providers HCA and UnitedHealth.

"Promising New Yorkers fiscal state portion pushing them into outrageously costly loans is downright shameful," James said. "These are payday loans by different name."

Both lawsuits were filed successful a New York authorities tribunal successful Manhattan, wherever DailyCheck and MoneyLion are based.

The lawsuits question restitution, civilian fines and an extremity to the alleged exploitative practices.

DailyPay had sued James connected April 7 to effort to halt her from bringing the case, saying its merchandise was not a indebtedness due to the fact that workers request not repay thing if employers neglect to marque payrolls.

On Monday, it repeated its disappointment that James chose to sue, saying it signals that she "prefers consumers to trust connected indebtedness sharks oregon wage higher overdraft and precocious fees."

MoneyLion did not instantly respond to requests for comment.

Many U.S. states are expected to support adjacent monitoring of the fiscal services manufacture arsenic President Donald Trump's medication curbs oversight astatine the national level.

MoneyLion is being acquired by Gen Digital successful a transaction expected to adjacent connected Thursday. Gen is simply a bundle institution whose cybersecurity brands see Norton and LifeLock.

(Reporting by Jonathan Stempel successful New York; Editing by Will Dunham)