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Do New Payday Lenders Offer a True Remedy for the Desperate?

Earnin, a new online lending app touted as an alternative to payday lenders, may be giving false hope to those experiencing a shortfall. The app functions more like a cash advance, instead of a loan. However, instead of requiring users to incur a fee in addition to the original amount, Earnin “innocuously” asks users to pay back a “tip,” which is how the company makes its money. Initially, the “ask” may seem harmless. However, by the time desperate users catch on, they are in the midst of a zero-sum game: the lender continues to amass profits, and the user can now afford to borrow and repay less. Typical payday lenders provide customers with a small loan, then add high financing charges, before deducting the combined total from the user’s bank account on payday. According to an article by Atlantic news, payday lending is no longer allowed in many states , making services like Earnin and InstaCash the alternative. Earnin is seductive in that it does not demand a credit check or...

Dec 24, 2019