Thread by @CRLONLINE

Those warm and fuzzy ads for earned wage advance (EWA) and other cash advance apps hide the same dangers for working people as predatory payday loans. And they particularly target working women in Black and Latino communities. 🧵👇
#StopTheDebtTrap

https://twitter.com/latimes/status/1661804324995956747

The billionaire-backed apps from companies like Earnin, Dave, Brigit and more send you 💰 before pay day, but for an unexpected price.

https://twitter.com/doctorow/status/1653153698955288576?s=20

These fintechs sell the same false promises made to gig economy workers - that these products can give them ownership over when & how they get paid. But instead of financial freedom, consumers–especially working people of color–are lured into a debt trap.

https://twitter.com/ddayen/status/1653031387006660608?s=20

One emergency shouldn’t destroy financial stability. EWA loans and other app-based cash advances include steep fees and “voluntary” tips that can raise costs and make the borrower’s financial condition worse, driving repeat borrowing.

https://twitter.com/craignewmark/status/1661818968922013696?s=20

There is no such thing as free & easy 💸 through most of these apps, despite what their TikTok videos promote. Many market their loans as "interest free," but then add on all kinds of fees that mimic the triple-digit interest rates you see w/ payday loans.
wbur.org/hereandnow/202…

Some of these lenders imply leaving tips allows workers to “pay it forward” to help other borrowers, when it’s more likely those tips are paying the CEO’s bonus. Rather than going to a human, tips only feed companies’ bottom line - in one case to the tune of 40% of total revenue!

The @CaliforniaDFPI found that the average annual APR for cash advance apps that use a tipping biz model is 334%. 😱 Sounds like a loan to us, and DFPI agrees, recently proposing rules to ensure these companies follow state consumer credit laws.

But these companies are using ALEC legislation templates, backed by lobbying $ and political contributions to mislead legislators and the public that what high-cost predatory loans are benevolent gifts to working people struggling with inadequate wages. Don’t fall for the hype.

The cash app industry is arguing that the proposed CA rules to define their products as a loan would limit choice in how households manage their finances. In reality, we’ve seen how these products cause harm by obscuring the full cost and threatening workers’ financial stability.

If @CaliforniaDFPI’s proposed regs, which will ensure EWA and similar products follow existing state interest rate caps, are such a threat to their business model, maybe they aren’t the “industry disruptors” working in the best interest of workers of color they claim to be. 💅

The @CaliforniaDFPI and @CAgovernor are leading the country in reining in these companies’ predatory practices to protect workers - keep up the great work!