Proposed Law Would Supercharge Predatory ‘Earned Wage’ Payday Lending

November 20, 2025 — Press Release

WASHINGTON – Nearly 200 labor, consumer, and civil rights organizations today issued a stark warning to Congress: as families struggle under record affordability pressures, legislation poised for reintroduction — modeled on last year’s H.R. 7428 — would open the door for payday loan apps to take even more from the already stretched-thin paychecks of military servicemembers and other workers.

At a moment when groceries, rent, and other necessities cost more than ever, the coalition stressed that Congress must not allow predatory lenders to disguise loans with sky-high interest rates as harmless “earned wage access” products. If similar to last year’s bill, the legislation would falsely declare that these loans “are not credit” and therefore not subject to the Truth in Lending Act (TILA), which would gut basic cost transparency and protections.

Among the bill’s harms would be to:

• Hide the true cost of borrowing by removing requirements to disclose loans’ Annual Percentage Rate (APR), a crucial standardized measurement of price;
• Exempt payday loan app companies from needing to comply with the Military Lending Act’s consumer protections for servicemembers, including a strong cost cap and ban on forced arbitration;
• Encourage a business model where workers must pay to be paid; and
• Fuel state-level efforts to dismantle safeguards against predatory payday loans.

“Payday loan apps that claim to be offering access to ‘earned wages’ are following a long line of payday lender attempts to evade the law so they can exploit people with rates over 300% APR, but numerous courts have been uniformly rejecting the charade that these loans are not loans, and Congress should too,” said Lauren Saunders, associate director and director of federal advocacy at the National Consumer Law Center.

“A bill like last Congress’s H.R. 7428 would hand payday loan apps a free pass to trap servicemembers in debt,” said Nadine Chabrier, senior litigation and policy counsel at the Center for Responsible Lending. “This type of legislation would prevent all consumers from making an apples-to-apples comparison of the cost of payday loan apps with other forms of credit.”

The coalition letter highlights mounting evidence of harm from payday loan apps including litigation by the New York Attorney General:

• DailyPay pushed users into smaller, more frequent loans to rack up fees, averaging over $300 in revenue per worker each year. One worker took out 450 loans in under two years, paying nearly $1,400 in fees.
• MoneyLion advertised “0% APR,” yet nearly nine out of ten advances carried fees, averaging over 800% APR once fees and tips were included. Lenders capped loan sizes so users were forced to take multiple loans — nearly two million loans were taken within minutes of the previous one.

The letter flags that the legislation, if similar to H.R. 7428, would “not stop all of the ‘multiple strategies that lenders use to make tips almost as certain as required fees.’” The letter also cites research from CRL that found multiplying fees associated with payday loan apps, including that overdraft fees increased 56% on average after people began using an app, and that users who had not been overdrafting previously started to overdraft 2.3 times on average over the three months after their first app-based payday loan.