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  NY AG Sues Payday Lending Company for Exploiting Workers with Illegal Loans
  

  The following describes a pending government action that has been formally brought by a government agency but has not yet been resolved. We are providing a summary of the governments allegations, which have not yet been proven.

  
  

  On April 14, 2025, New York Attorney General Letitia James sued payday lender DailyPay, Inc. (DailyPay) for taking advantage of tens of thousands of New Yorkers with illegal high-interest loans. DailyPay makes paycheck advance loans to hourly workers in exchange for fees and tips, pretending to simply be advancing “earned” wages. Due to the short terms of the loans, the fees DailyPay charges amount to outrageous annual interest rates in the triple digits, frequently up to 750 percent. Both payday lenders also engage in abusive tactics that push workers to frequently take out new loans to cover gaps created by their prior loans.
  
  
  
  In a typical transaction with DailyPay, a worker receives a small amount in advance of their paycheck – usually less than $100 – and repays that amount, plus fees and tips, in seven to ten days. The result is an extremely high annualized interest rate ranging between 200 percent and 350 percent on average, but rates for these short-term loans can reach much higher. For example, DailyPay’s most common loan, a seven-day $20 paycheck advance offered for $2.99 actually reflects an annual interest rate of over 750 percent. 
  
  
  
  Attorney General James alleges that the company employs deceptive advertising to entice workers into taking out their exploitative loans. DailyPay contracts with employees’ companies, requiring employers to send their workers’ paychecks directly to the lenders first on payday, which allows it to deduct all amounts it is owed before passing on any remaining balance to employees. While it promises workers interest-free advances and financial benefits, DailyPay collects fees on about 90 percent of its loans.
  
  
  
  These payday loans are enormously costly for workers and require many to take out repeated loans to be able to make ends meet. One worker in Washington Heights, for example, took out more than 450 loans from DailyPay in less than two years, averaging more than 4.5 loans per week and paying nearly $1,400 in fees. Another worker in Syracuse paid fees on all but two of the nearly 500 loans he took out with DailyPay, paying an average of $2 to DailyPay every single day for nearly two years. The abusive nature of its business is a selling point for DailyPay: it touts its customers’ dependency to potential investors, claiming the company can extract hundreds of dollars in wages on average each year from an hourly worker. While DailyPay markets itself as a means to financial freedom, it uses its access to workers’ paychecks to ensure it always gets paid back first, regardless of the harm caused to workers’ financial wellbeing.
  
  
  
  Attorney General James alleges that the company's practices constitute illegal and deceptive conduct and abusive lending practices that violate New York’s longstanding usury prohibitions. The lawsuit against DailyPay also alleges the company has violated New York’s wage assignment laws. The lawsuit seeks to end both companies’ technology-assisted payday lending practices in New York, obtain restitution for tens of thousands of workers, and impose civil penalties and costs.

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