Have you gotten an advance on your paycheck through a wage-advance app or a program your employer offers? Do you live in the state of New York, or is your employer’s headquarters in that state?
Some users of these apps or programs have been surprised at the price they were charged for this advance. We’re investigating to see if these lenders or programs have given users sufficient information about what they were to pay for this advance service.
Companies sometimes offer an advance on wages to help employees meet emergencies or shortfalls between paychecks. The arrangement consists of an agreement for an online entity or app to provide you with your earnings a few days before they’d normally be paid. This loan is repaid when your actual paycheck is deposited. Sometimes, the employer is not involved, and the individual enters into the arrangement with the lender.
Some of the better-known apps or lenders in this business include the following:
• Daily Pay
• Instant Financial
Daily Pay’s website advertises its PayEx platform by saying, “With our PayEx solution, employees can access their pay and tips early and save it as they earn it.” It claims that its program can “reduce financial stress for … employees.”
Even’s website puts it this way: “Employee financial stress and uncertainty are at an all-time high. Even’s Daily Money Platform gives employees visibility into their daily earnings, access to pay when they need it, and the power to plan—before payday arrives.”
And FinFit bills itself as “Building Employee Financial Wellness” and claims its services are an “Affordable alternative to high-interest loans.”
But are these statements true? Do they really help reduce financial stress, or do they add to it with high fees? Do these platforms in fact charge larger amounts for their services than expected, just as payday lenders do?
Because the money is repaid immediately, there does not seem to be an interest rate. However, these advances are a form of loan, and you pay a fee for them. The fee you’re charged can actually be similar to a high interest rate on a normal loan. We’re investigating to see if a class action is appropriate.
If you’ve used one of these programs, and you’re a resident of New York or an employee of a company headquartered in New York, we’d like to know about your experience. If you were surprised at the high fee, and you feel that the program deceived you about this, please let us know about it.