Putting It All Together
This is our final installment in “Don’t Take the Bait,” our Give to the Max campaign newsletter series about payday loan apps. Our hope is that this November, you’ve learned how the industry is working to repackage predatory lending and evade existing consumer protections.
To close out our Loan Shark Week, we want to highlight some of the industry’s sneaky talking points so you have the facts to share with your friends, family, and community.
Myth: EWA products are not loans.
Fact: Earned Wage Access (EWA) products ARE LOANS. They advance money with the expectation of repayment, plus fees and charges, just like any other loan product.
Myth: EWA lenders don’t charge interest.
Fact: They assess charges in many forms, including per-transaction fees, expedite fees, tips, and subscriptions. A GAO report found that the average EWA user takes out 26 to 33 loans per year, often multiple loans in a single pay period. When annualized, these costs can exceed 300 percent APR.
Myth: EWA loans are “nonrecourse.”
Fact: EWA lenders don’t need traditional collection tactics because they have direct access to workers’ paychecks and bank accounts. Their repayment rates hover around 97 percent.
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