On November 19, the Attorney General for the District of Columbia (D.C. AG)
released a
complaint against a financial technology company for alleged violations of the District’s Consumer Protection Procedures Act (CPPA). The D.C. AG’s complaint asserted the company’s earned wage access product, marketed as a way for consumers to access their paycheck early without loans, mandatory fees or interest, actually constituted a loan with interest rates exceeding the district’s 24 percent usury cap. The AG contended the company’s practices misled consumers and that it operated as an unlicensed lender in the district.
The lawsuit outlined three counts against the company: for violating the CPPA; violating Title 16 of the District of Columbia Municipal Regulations; and violating the District’s interest rate cap. The complaint detailed how the company’s business model involved charging “Lightning Speed” fees that were required for instant access to funds, which the D.C. AG claimed effectively resulted in high-interest loans with an average interest rate of over 300 percent. Additionally, the D.C. AG argued the lack of a money lending license further exacerbated the company’s non-compliance with local regulations. The district sought several forms of relief, including a permanent injunction to stop the company from continuing its alleged unlawful activities, restitution for affected consumers, and civil penalties, among others.
