On August 28, the U.S. District Court for the Eastern District of Pennsylvania denied a motion to dismiss a proposed class action against a financial services company offering earned wage access products in the form of cash advances on users’ paychecks. The plaintiffs, individually and on behalf of a putative class, alleged that the company’s “lightning speed fee” and tipping practices violated Pennsylvania usury law and that the failure to disclose these fees violated TILA.
The court indicated that plaintiffs plausibly alleged these fees and tips could constitute finance charges that must be disclosed under TILA, stating the plaintiffs did not need to show that lightning fees and tips were a necessary condition of the credit extension, but rather only a connection between the fees and the extension of credit. The plaintiffs also claimed the expedited advance fee ranged from $1.99 to $3.99, with users reportedly pressured to pay tips, resulting in an APR equivalent of 284 percent. The court emphasized that “TILA is a remedial statute and should be construed liberally in favor of the consumer,” allowing the plaintiffs’ TILA and Pennsylvania usury claims to move forward.
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