MoneyLion & DailyPay Accused of Trapping New Yorkers in Debt Cycle

NEW YORK – New York Attorney General Letitia James today launched a blistering attack on payday lenders MoneyLion Inc. and DailyPay, Inc., accusing them of preying on tens of thousands of New Yorkers with illegal, high-interest loans. The AG’s office alleges these companies aren’t offering a helping hand, but a financial noose, disguising predatory loans as simple “paycheck advances.”

The investigation reveals that both MoneyLion and DailyPay offer small, short-term loans to hourly workers, ostensibly allowing access to “earned” wages before payday. However, the fees and tips tacked onto these advances translate into astronomical annual interest rates, frequently soaring into the triple digits – up to a shocking 750 percent. The lawsuit alleges a deliberate scheme to keep workers perpetually indebted, pushing them to take out loan after loan to cover the holes created by previous advances.

“Promising New Yorkers financial freedom while pushing them into outrageously expensive loans is downright shameful. These are payday loans by another name,” Attorney General James declared. “While many New Yorkers are worried about making ends meet, DailyPay and MoneyLion are making tremendous profits by extracting workers’ hard-earned wages. I’m suing DailyPay and MoneyLion because New Yorkers deserve to keep the money they earn, not have it taken by predatory lenders.”

The mechanics are brutal. Workers receive a small advance – typically less than $100 – and are expected to repay it, plus fees and tips, within seven to ten days. A common DailyPay loan, a seven-day $20 advance with a $2.99 fee, equates to an annual interest rate exceeding 750 percent. More than half of MoneyLion loans carry annual interest rates above 500 percent. The AG’s office claims both companies rely on deceptive advertising, promising instant access to funds, zero percent interest, and fee-free products – promises quickly revealed as false.

MoneyLion, according to the lawsuit, charges mandatory fees for immediate access to funds, as high as $8.99 for a $100 advance repaid in two weeks (a 234 percent annual interest rate). They further squeeze customers by soliciting “tips” and limiting transactions to $100, forcing repeat borrowing to access the advertised $500. DailyPay is equally accused of trickery, contracting with employers to intercept paychecks and deduct owed amounts *before* the employee receives any remaining funds. Despite promising interest-free advances, DailyPay collects fees on approximately 90 percent of its loans.

Attorney General James is seeking a full stop to MoneyLion and DailyPay’s alleged illegal lending practices in New York. The lawsuit demands restitution for the tens of thousands of affected workers and the imposition of significant civil penalties. The fight for financial justice is on, and James is sending a clear message: preying on vulnerable workers will not be tolerated in the Empire State.