D.C. Attorney General Brian Schwalb has filed a lawsuit against a company he says deceived thousands of borrowers in the District.
The lawsuit filed against EarnIn – a financial technology company – claims that customers advertised by the company could use the platform to prematurely access their paychecks without interest or mandatory fees.
In reality, the legal claims Access to EarnIn’s earned wages – which it calls a “cash out” – are loans and users must pay a fee “at lightning speed” or use the free option and wait until ‘Two days to get their money.
EarnIn advances the loan and guarantees repayment during the borrower’s next payday by withdrawing the loan amount, in addition to fees and other charges, from the borrower’s bank account or debit card, according to the release.
“When you have short-term loans, small amounts with very high fees, the effective interest rates on those advances are well over 300%, well above the legal limit here in Washington,” said Schwalb.
EarnIn offers loans based on a percentage of the salary borrowers have earned but have not yet received from their employer, called earned salary advances.
EarnIn told News4 the lawsuit demonstrates a fundamental misunderstanding of how their product works which they claim has benefited District residents.
“EWA empowers individuals to make financial decisions tailored to their unique circumstances,” the release said. “Elected officials should empower workers to make choices that best meet the needs of their families. »
The lawsuit seeks restitution, civil penalties and a permanent injunction to prevent the company from violating D.C. law.
News4 sends the latest news by email. Go here to register to receive breaking news alerts in your inbox.