A new study highlights how Big Tech is trying to further strip Americans of their hard-earned money by enticing them to enroll in predatory payday loan apps that allow workers early access to their paychecks. The Center for Responsible Lending, a consumer protection nonprofit, found that “earned-wage access” users became ensnared in a borrowing cycle that, on average, left them repaying the small-dollar loans at a 383 percent annual percentage rate (APR). The Lever previously exposed how a right-wing bill mill created legislative templates for these predatory loan apps that were used in state and federal bills. “Earned-wage access” products allow users to take out small advances on their paychecks, accessing money sometimes weeks in advance — a lifeline for some of the millions of Americans who live paycheck to paycheck. The new study shows that users doubled their borrowing rates once they initiated a first advance, oftentimes using multiple apps, and saw a 14 percent increase in overdraft fees. Frequent app users paid an average $421 in loan and overdraft fees during the first year.
