Is Earnin overcharging you for your cash advance?
Keller Rohrback L.L.P. is investigating reports that the app Earnin is potentially violating lending rules. Earnin, which calls the act of borrowing an “activation” instead of a loan, asks users to pay a 10% “tip” on the money they borrow. By avoiding the word “interest,” Earnin may be circumventing the Truth in Lending Act of 1968, which requires lenders to be transparent about their annual interest rates. Earnin may be misleading users, because if the “tip” were instead called “interest,” that interest rate would be very high.
Earnin may also violate state lending rules. By not identifying as a “payday lender,” the app is able to operate nationwide (and internationally), despite payday lending being illegal in fifteen states and Washington DC. Several states, including New York and California, have reportedly started investigating Earnin’s model and are taking measures to prevent the company and others like it from taking advantage of consumers through misleading practices.
“Companies should not be able to get around rules meant to protect consumers by simply re-branding what should be considered a payday loan,” said Keller Rohrback attorney Matthew Preusch.
Keller Rohrback filed this case on November 15, 2019 in the Northern District of California. You can find case documents and more information about the case here.
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