
New York sues DailyPay and MoneyLion, alleging predatory payday lending
NEW YORK, April 14 (Reuters) - New York's attorney general sued DailyPay and MoneyLion (ML.N), opens new tab on Monday, accusing the app-based financial technology companies of exploiting workers by charging excessive fees to collect paychecks more quickly, with effective interest rates above 200% and sometimes topping 750%.
Attorney General Letitia James called the companies predatory payday lenders that obscure the "exorbitant and plainly usurious" fees they charge workers, who hope to bridge gaps between payroll schedules and when bills come due.
James said MoneyLion's $8.99 fee on a $100 two-week advance under the "Instacash" brand name carries an effective annual interest rate of 234%, while DailyPay's $2.99 fee on a $20 seven-day advance carries an effective rate above 750%.
The attorney general said DailyPay reaches workers by contracting with employers such as Burger King (QSR.TO), opens new tab, McDonald's (MCD.N), opens new tab, Target (TGT.N), opens new tab, grocer Kroger (KR.N), opens new tab and healthcare providers HCA (HCA.N), opens new tab and UnitedHealth (UNH.N), opens new tab.
"Promising New Yorkers financial freedom while pushing them into outrageously expensive loans is downright shameful," James said. "These are payday loans by another name."
Both lawsuits were filed in a New York state court in Manhattan, where DailyCheck and MoneyLion are based.
The lawsuits seek restitution, civil fines and an end to the alleged exploitative practices.
DailyPay had sued James on April 7 to try to stop her from bringing the case, saying its product was not a loan because workers need not repay anything if employers fail to make payrolls.
On Monday, it repeated its disappointment that James chose to sue, saying it signals that she "prefers consumers to rely on loan sharks or pay higher overdraft and late fees."
MoneyLion did not immediately respond to requests for comment.
Many U.S. states are expected to maintain close monitoring of the financial services industry as President Donald Trump's administration curbs oversight at the federal level.
MoneyLion is being acquired by Gen Digital (GEN.O), opens new tab in a transaction expected to close on Thursday. Gen is a software company whose cybersecurity brands include Norton and LifeLock.

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Reuters
25 minutes ago
- Reuters
Activist hedge fund Parvus builds stake in Novo Nordisk, FT reports
June 9 (Reuters) - Activist hedge fund Parvus Asset Management is building a stake in Novo Nordisk ( opens new tab, after the company lost its first mover advantage in the lucrative weight-loss drug market, the Financial Times reported on Monday, citing people with knowledge of the details. The London-based fund, which has targeted budget airline Ryanair (RYA.I), opens new tab and Italian bank UniCredit ( opens new tab, wants to influence the appointment of Novo Nordisk's new CEO, the report said. Novo told Reuters in an email that it does not "have anything to add." Parvus did not immediately respond to a request for comment. In May, the company announced its CEO Lars Fruergaard Jorgensen would step down after shares plunged from a record-high in June last year as competition, particularly from U.S. rival Eli Lilly (LLY.N), opens new tab, makes inroads into Novo's market share, while its pipeline of new drugs has failed to impress investors. Novo also expects its Wegovy weight-loss drug sales in the United States to start recovering once a ban on compound copycats is enforced this month, Jorgensen said last month after the company cut its 2025 forecasts.


Reuters
35 minutes ago
- Reuters
Canada's Allied Gold could look at options for power supply deal at Sadiola mine
TORONTO, June 9 (Reuters) - Canadian miner Allied Gold could look at alternative options for a power supply deal at its Sadiola mine in Mali following a surge in gold prices and the emergence of new opportunities, its CEO told Reuters in an interview on Monday. The gold miner signed an agreement in February with UAE-based Ambrosia Investment, giving Ambrosia a 50% stake in the mine in return for installing a new power supply system that would have improved the mine's costs. Allied Gold was also supposed to receive $500 million, with approximately $250 million in upfront cash consideration from Ambrosia. The deal is yet to close. Allied Gold CEO Peter Marrone said the deal may close in June, but if it does not, it is because other options have become available to the company. "Our position in the country has changed dramatically along with gold prices," Marrone said. "The world has changed since we put the deal together." Gold prices have surged nearly 30% this year to date and hit a record $3,500.05 per ounce on April 22. Ambrosia Investment did not immediately respond to a request for comment. Marrone said the universe of power solutions for the company changed dramatically after Allied Gold signed a new mining convention with the Mali government last year. Mali is Africa's third-largest gold producer and the military-led government wants to increase revenue from the mining sector. The government believes current arrangements are unfair and has said that foreign multinationals must comply with its demands if they want to continue operating. The country is in dispute with another Canadian miner, Barrick Mining, which is the only gold miner that has not signed Mali's new mining code. Allied Gold said it took a pragmatic approach to settling with the government. "We looked at how best we can deliver returns to our investors, and came to the conclusion that let's take an action based on cooperation and support," Marrone said. Allied Gold, already listed in Toronto Stock Exchange, began its dual listing on Monday on the New York Stock Exchange.


Reuters
3 hours ago
- Reuters
US wholesale inventories in April revised higher
WASHINGTON, June 9 (Reuters) - U.S. wholesale inventories increased in April amid stockpiling of prescription medication in anticipation of tariffs from the Trump administration. Stocks at wholesalers rose 0.2% instead of being unchanged, as estimated last month, the Commerce Department's Census Bureau said on Monday. Economists polled by Reuters had expected last month's estimate would be unrevised. Inventories, a key part of gross domestic product, climbed 0.3% in March. They advanced 2.3% on a year-over-year basis in April. Wholesale stocks of prescription medication surged 1.3% in April. There were also increases in apparel, motor vehicle, groceries and professional equipment inventories. President Donald Trump has said he would impose tariffs on imports of pharmaceutical products that have long been spared from past trade disputes due to the potential for harm to patients. Apart from drugmakers, businesses front-loaded imports in the first quarter, seeking to avoid Trump's sweeping duties on foreign goods, resulting in a large trade deficit that subtracted a record 4.90 percentage points from GDP. The front-running faded in April, leading to a record decline in imports and the overall trade deficit. While the contraction in the deficit at face value suggests trade could significantly add to gross domestic product in the second quarter, economists say some of the boost could be offset by low inventories. Inventory accumulation increased at a rate of $163.0 billion in the first quarter. The economy contracted at a 0.2% annualized rate in the January-March period, the first GDP decline in three years. It grew at a 2.4% pace in the fourth quarter. Sales at wholesalers edged up 0.1% in April after jumping 0.8% in March. At April's sales pace it would take wholesalers 1.30 months to clear shelves, unchanged from March.