The District of Columbia's Attorney General has filed a lawsuit against the fintech company Earnin, accusing it of deceptively marketing and providing illegal high-interest loans. Earnin allows users to borrow against their paychecks, claiming to offer loans of up to $750 without interest or mandatory fees. However, the lawsuit alleges that Earnin charges a "Lightning Speed" fee that effectively results in an average interest rate of 300%, significantly exceeding the District's legal cap of 24%. The AG also contends that Earnin is operating without the necessary licensing. Earnin's lawyer argues that users can access their funds without cost if they are willing to wait a few days, claiming that the lawsuit reflects a misunderstanding of their service. This legal action is part of a broader trend, as similar fintech companies face increasing scrutiny and regulatory actions regarding their lending practices. The payday loan industry is under heightened scrutiny, with new regulations set to take effect in 2025.
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