Published
September 8, 2026
Tens of thousands of hourly workers in New York took small paycheck advances from MoneyLion and DailyPay that the state attorney general sued over in April 2025, calling them payday loans whose fees and tips work out to annual rates above 750 percent on the most common advance. Both companies deny the advances are loans, no court has ruled on the merits, and there is nothing to claim.
Allegations Only · No Settlement Yet
This article describes two enforcement lawsuits brought by the New York Attorney General. The statements below are unproven allegations. Neither MoneyLion nor DailyPay has been found liable, both deny that their advances are loans, no court has ruled on the merits, and there is nothing to claim at this time. This page is informational and is not legal advice.
What Is This About?
New York Attorney General Letitia James sued MoneyLion Inc. and DailyPay, Inc. on April 14, 2025, alleging that the paycheck advances both companies market to hourly workers are payday loans with the interest relabeled as fees and tips. Both filings landed in New York County within twenty minutes of each other, and both open with the same argument: that New York has capped the cost of lending since it was a colony, and that a lender cannot escape those caps by calling its charge something other than interest.The two cases are not procedurally identical, which matters for how each one moves. The MoneyLion case is an ordinary complaint (Index No. 451303/2025) pleading seven causes of action. The DailyPay case is a verified petition (Index No. 154851/2025) brought as a special proceeding — an expedited track that skips the usual discovery phase — pleading eight. That difference is why DailyPay has asked the court to convert its case into a plenary action with discovery and a jury trial.
Neither case has been decided. Both companies removed the actions to federal court and both were returned to state court, where each moved to dismiss in January 2026. Briefing closed in April 2026 and no ruling had been reported as of September 8, 2026. There is no settlement, no fund, no administrator and no claim form, and every figure below is an allegation from the state's filings that a court has yet to evaluate.
Status
Lawsuits Filed — Motions to Dismiss Pending
Filed April 14, 2025 · fully briefed April 2026 · no ruling reported as of September 8, 2026
Alleged Cost of Credit
193% to more than 800% annualized
The state's own data analysis puts DailyPay at a 193.47% median and 398.59% average, and MoneyLion above 800% on average. Both companies dispute that the advances are loans at all.
Fees the State Says Were Collected
More than $27M and more than $31M
From New York workers alone — DailyPay over October 2020 to December 2024, MoneyLion over October 2018 to December 2023
Who the State Says Is Affected
Tens of thousands of New York workers
More than 130,000 New Yorkers took a DailyPay advance in the period analyzed; MoneyLion's New York users took about 4.25 million advances carrying a fee or tip.
Can I Claim?
No — nothing to claim yet
These are state enforcement actions, not class action settlements. Restitution is something the Attorney General is asking a court to order.
Three Rate Caps, and Why the Label Decides Everything
New York caps the cost of lending in three separate places, and the filings invoke all of them. General Obligations Law § 5-501 sets a civil usury ceiling of 16 percent. Penal Law § 190.40 makes taking interest above 25 percent a Class E felony. And Personal Property Law § 46-F caps what anyone may receive on an advance made against assigned earnings at 18 percent — a provision that applies to DailyPay because a worker taking an advance assigns the matching wages to the company.A fee charged for a service carries no cap at all. So the entire dispute turns on one question: is a paycheck advance a loan? The state's answer runs through both filings in the same form — that the transactions have every functional element of secured lending, and that the companies' own internal language says so. The MoneyLion petition quotes business plans describing Instacash advances as "single payment loans" whose due date "should be on next pay date," employees referring to amounts owed as "principal," and an in-house repayment model the company called a "Roarscore."
Both filings lean on the same 2021 Court of Appeals decision, Adar Bays, LLC v. GeneSYS ID, Inc., for the proposition that new financial products do not get to outrun old rate caps: courts have recognized "for more than a century that the economy changes" and that change creates openings for "lenders to extract unlawful interest rates through novel and increasingly sophisticated instruments."
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What the State Alleges About MoneyLion's Instacash
MoneyLion launched Instacash in 2019. A user links a bank account, the company detects at least three recurring deposits, and it then makes a fraction of the projected next deposit available as an advance. Requesting one authorizes MoneyLion to debit the linked account — and any other payment method on file if the first comes up short.The cost comes from two charges the complaint says are interest. The first is what MoneyLion calls a TurboFee, paid to have the advance arrive immediately rather than in 48 hours or more. On the fee schedule in effect since October 2022, an advance to an external bank account runs $1.99 for $5 or less and rises to $8.99 for $90 to $100. The complaint alleges the underlying cost to MoneyLion is under five cents per real-time payment, and that the company books the fees as gross revenue because the related services "are not distinct from the services of the Instacash advance."
The second is the tip. The complaint alleges MoneyLion never presets a tip of $0, personalizes what it calls a "tip anchor," and shows users "friction screens" when they zero a tip out and "retargeting screens" the next time they open the app. It quotes prompts telling users that tips "help us cover the high costs of keeping Instacash interest-free" and that "it takes money to keep 0% APR Instacash running." Internally, the state alleges, MoneyLion treated tips as "an additional revenue stream" and told itself that "Instacash profitability requires that we maximize profitability using both tip and fee-based structures."
The complaint also targets the gap between the advertised $500 and what a single transaction delivers. MoneyLion capped each advance at $50, later $100, while promoting "a cash advance of up to $500." Reaching the advertised figure therefore takes several advances and several fees — an outcome the state says the company anticipated, quoting an internal projection that raising the cap "from $50 to $75 forces users to take at least 2 instacashes to get the full $75, hence we see an increase in % fee promised." Nearly two million advances in the period analyzed were taken by users who had taken one minutes earlier.
On the numbers, the complaint covers October 2018 through December 2023 and alleges that New York users agreed to about $25.6 million in fees and $7.1 million in tips, of which MoneyLion collected more than $31 million. Across roughly 4.25 million advances carrying a fee or tip, it puts the average cost of credit above 800 percent annualized, with the distribution running:
- 1.6% under 100% APR
- 21.6% between 200% and 300% — the largest single band
- more than half above 500%
- 13.1% above 1,000%
The most common transaction was $100 for an $8.99 fee repaid in two weeks, which the state calculates at about 234 percent. The complaint's "typical" transaction — the most common amount, fee, tip and term combined, so $50 with a $4.99 fee and a $2 tip over ten days — comes to more than 350 percent.
What the State Alleges About DailyPay
DailyPay's model runs through the employer, and the petition treats that as the source of its collection power rather than as a defense. The company signs a master services agreement making it the exclusive provider of advances to that employer's workforce, receives real-time payroll data, and — the provision the state returns to most — has the employer route participating workers' entire paychecks to a DailyPay bank account on payday. DailyPay deducts what it is owed and forwards the remainder.The petition identifies fast-food chains including Burger King and McDonald's, retailers including Kroger and Target, and healthcare providers including HCA among the employers that have contracted with DailyPay. None of those employers is a defendant, and the petition does not accuse any of them of wrongdoing.
DailyPay's position has been that its advances carry no recourse against the worker. The petition's answer is that recourse is unnecessary when repayment is structural, and that the promise is qualified in any event: a worker assigns the wages, agrees not to take any action with "an adverse effect on" the company's ability to collect, must hold funds "in trust" if an employer pays them directly, and is in breach of the program terms if that money is not forwarded. The state also points out where the credit risk actually sits, quoting DailyPay's investor materials: "DailyPay does not take consumer credit risk but is instead underwriting the employer." The company runs Dun & Bradstreet viability and failure scores on prospective employers, escalates larger ones to a credit committee, and can suspend advances at an employer whose credit deteriorates. The petition alleges the resulting collection rate ran between 99.92 and 99.99 percent.
The fee side is simpler than MoneyLion's — no tips, just a charge that runs up to $3.99 for immediate delivery and $0.00 to $1.99 otherwise, varying by employer. Over October 2020 through December 2024 the petition counts more than 9.8 million advances to more than 130,000 New York workers, fees on about nine of every ten, and more than $27 million collected. It puts the median advance at $77.07 with a $2.99 fee over eight days, or above 193 percent annualized, and the single most common advance at $20 with the same $2.99 fee over seven days — above 750 percent. Roughly 93 percent of fee-bearing advances exceeded 50 percent APR, and the petition alleges 8,700,148 of them exceeded the 16 percent civil cap.
Here too the state alleges the fee does not track the cost, citing the same sub-five-cent real-time payment charge and DailyPay's own reporting that fee revenue grew more than 73 percent in a year while transaction costs rose less than 1 percent.
The Dependency Allegation Is the Sharpest Part of Both Filings
The usury counts turn on arithmetic. The abusive-practices counts, brought under the federal Consumer Financial Protection Act, turn on a claim about what repeat use does to a worker — and this is where both filings spend their strongest material.The mechanism the state describes is the same in each: an advance plus its fee comes out of the next paycheck, that paycheck lands short, and the shortfall prompts another advance. The petition puts it in terms of what the second advance actually buys. A worker who takes $75 for a $2.99 fee receives $77.99 less on payday, then borrows about $80.98 next cycle to cover the hole — new money that is not new at all, with a fee attributable to the one-time benefit of the first advance.
The state alleges the numbers bear that out. At DailyPay, average advances per worker per week rose from 2.07 to 2.86 over the period; 75 to 80 percent of revenue came from workers taking at least two a week; workers taking one every other day or more grew from about one in six to more than one in four and accounted for nearly half of all fees. About three in five advances were taken within two days of the last one. The heaviest tenth of users took a median $50 advance with a $2.99 fee over nine days — a 240 percent loan, 5.7 times a week.
The equivalent MoneyLion figures: more than 44 percent of fees and tips came from users taking two or more advances weekly, users taking one every other day or more were one in five and generated about half of all fees and tips, and about 44 percent of all advances went to users who had taken one within the previous two days at a median above 365 percent. The complaint also describes "Boost" promotions timed to holidays, birthdays and the Super Bowl that the company projected would lift usage by roughly 25 percent, and a "Peer Boost" feature that let users send each other $5 increases — which the complaint says produced online forums of users trading boosts back and forth, and which MoneyLion's founder is quoted calling "F'ing brilliant."
What makes this a legal claim rather than a criticism is the state's allegation that DailyPay marketed the pattern as an asset. The petition quotes investor materials projecting about $300 a year in revenue from each active user, better than 96 percent year-over-year retention, and a section heading calling the heaviest users the company's "long-term upside."
The petition also questions the evidence behind DailyPay's financial-wellbeing marketing. Those claims rest largely on a 2021 Aite Group survey that DailyPay paid for and helped design, of about 1,000 users out of a base then exceeding two million; the payday-loan findings drew on just over 200 responses, and 24 respondents were from New York.
What MoneyLion and DailyPay Say
Both companies deny they are lending. Their central argument is that a worker taking an advance is receiving pay already earned rather than borrowing money, so there is no loan for usury law to cap.DailyPay has pressed that point harder, and from a different angle. It sued the Attorney General on April 7, 2025, a week before the state filed, asking a federal court to declare that its product is not a loan under New York law. It has since argued that it is fundamentally different from providers that sell directly to consumers, describing itself as an add-on to employer payroll where repayment runs through the employer rather than through a debit of the worker's bank account. In a statement accompanying its filings, the company framed the state's action as an attempt to block workers from reaching income they have already earned.
Both companies also point to a federal regulator. In their January 2026 motions they cited a Consumer Financial Protection Bureau advisory opinion published December 23, 2025, which concluded that a defined category of employer-partnered advances is not credit under the Truth in Lending Act.
One piece of corporate history determines who is defending the MoneyLion case: Gen Digital, the company behind Norton and LifeLock, completed its roughly $1 billion acquisition of MoneyLion on April 17, 2025 — three days after the Attorney General sued.
Courts Elsewhere Have Been Siding Against the Industry
The New York cases are not being decided in isolation. A run of private lawsuits against paycheck advance apps has been reaching the same question, and so far the answers have gone one way. The National Consumer Law Center counts 16 of 16 courts that have addressed it rejecting the argument that these advances fall outside credit law, finding instead that they are credit under the Truth in Lending Act, the Military Lending Act, or state credit statutes.Two of those rulings involve MoneyLion directly, both in the U.S. District Court for the Southern District of New York. In Lowe v. MoneyLion Technologies Inc., decided March 9, 2026, and Burkhardt v. MoneyLion Technologies Inc., decided April 15, 2026, the court allowed claims to proceed on the allegation that MoneyLion's expedite fees, subscription fees and tips are finance charges subject to TILA and the Military Lending Act. A parallel ruling on March 30, 2026 in Feeman v. Bridge It, Inc. let servicemembers proceed against the app Brigit, whose Instant Cash product the court described as substantially similar to a payday loan. OCA covers the separate FTC refund program for Brigit customers, which is a distinct matter from that lawsuit.
None of these are final judgments. They are rulings that a complaint states a claim, which means the cases go forward rather than that anyone has been found liable. But they are the closest thing available to a preview of how the fee-versus-interest argument is landing with judges, and MoneyLion has appealed the Lowe ruling to the Second Circuit.
Washington Is Moving the Other Way
While courts have been treating these advances as credit, federal policy has moved in the opposite direction, which is part of why the New York cases matter beyond New York.The CFPB proposed an interpretive rule in June 2024 that would have classified all earned wage access as credit under Regulation Z. It never took effect. The Bureau revoked its earlier advisory opinion in February 2025 and then, on December 23, 2025, published a new advisory opinion concluding that a defined category it calls Covered EWA is not credit and that optional expedite fees and voluntary tips are not finance charges. That category is narrow: employer-partnered programs, repaid solely through payroll deduction, that never advance more than wages already earned. The opinion interprets Regulation Z and says nothing about products outside that definition — and, for these cases, nothing about state usury law, which is what all three New York rate caps are.
Congress has since taken up the question. Representative Bryan Steil introduced H.R. 9330, the Earned Wage Access Consumer Protection Act, on June 18, 2026, and the House Financial Services Committee advanced it on a 29-22 vote on June 30, 2026. The bill would build a federal framework for these products: a provider offering a paid delivery option would have to offer the same amount free, advances would be capped at earned but unpaid income, and providers would be barred from suing, arbitrating or using debt collection to recover an advance, or from charging late fees or interest when one goes unpaid. It would also decline to treat qualifying products as credit and would limit state laws that classify them otherwise. The bill has not passed the House.
New York has its own bill pending, which would require providers to hold a Department of Financial Services license and would let the DFS superintendent set a rate cap. None of that is law yet, and none of it changes what the filings allege about conduct that predates all of it.
What This Means for Workers Right Now
Practically, nothing has changed for a New Yorker who uses one of these apps. Both products remain available, and the fees are what they were.There is no claim to file. The restitution the Attorney General is seeking is relief a court would have to order or a settlement would have to create, and neither has happened. Both filings ask the court to order an accounting of affected users — MoneyLion's over the preceding six years — which is the step that would produce a list if it ever comes. Anyone who used MoneyLion or DailyPay in New York and wants to be ready is best served by keeping their own records: the dates and amounts of advances and what each one cost in fees and tips. App transaction histories do not always stay available after an account closes.
The one place a worker can act today is unrelated to the fee question: if an employer is not paying earned wages or overtime at all, that is a separate body of law with its own remedies. OCA's guide to unpaid wages and overtime claims and its wage and hour class action tracker cover that ground, and the wage theft glossary entry explains how those claims are categorized.
What Happens Next
The next milestone in both cases is a ruling on the motions to dismiss. In the DailyPay case, State Supreme Court Justice Alexander Tisch set an April 10, 2026 deadline for motion filings and had not set a hearing date; the MoneyLion motion was briefed on a similar schedule, with the Attorney General's opposition filed March 20, 2026.A denial would send both cases forward and put the usury theory in front of a court on a full record. A dismissal would end them in their current form, though the Attorney General could appeal. Either outcome would be the first substantive New York ruling on whether a paycheck advance is a loan under state law, and would carry weight well past these two defendants — every provider operating in New York is watching the same question.
OCA will update this page when either motion is decided, and will note here if any restitution process is ever announced.
Read the Filings
Both filings are public court records from the New York County Clerk, filed April 14, 2025.MoneyLion complaint — People of the State of New York v. MoneyLion Inc., Index No. 451303/2025:
DailyPay verified petition — People of the State of New York v. DailyPay, Inc., Index No. 154851/2025:
Frequently Asked Questions
Is there money to claim from the MoneyLion or DailyPay lawsuits?
No. These are law enforcement actions brought by the New York Attorney General, not class action settlements. The state is asking the court for restitution, disgorgement and civil penalties, and for an accounting of affected users, but no court has ruled, no fund exists, no administrator has been appointed, and there is no claim form. If a court orders restitution or the cases settle, any payment process would be announced then.
What is earned wage access, and why does the label matter?
Earned wage access lets a worker draw part of a paycheck before payday, usually for an optional expedite fee, a subscription charge, a tip, or some combination. The label matters because New York caps the cost of lending in three places — 16 percent under General Obligations Law § 5-501, 25 percent under Penal Law § 190.40, and 18 percent under Personal Property Law § 46-F for advances made against assigned earnings — while a fee for a service is not capped at all. The Attorney General alleges the advances are loans and the fees are disguised interest. MoneyLion and DailyPay say the advances are not loans because a worker is receiving pay already earned.
What annual rates do the filings allege?
For DailyPay, the petition alleges a median of 193.47 percent and an average of 398.59 percent across October 2020 to December 2024, with the single most common advance — $20 for a $2.99 fee over seven days — above 750 percent. For MoneyLion, the complaint alleges an average above 800 percent across October 2018 to December 2023, with more than half of advances above 500 percent and 13.1 percent above 1,000 percent. Its most common transaction, $100 for an $8.99 fee over two weeks, comes to about 234 percent. These are the state's calculations and have not been adjudicated.
Are MoneyLion and DailyPay accused of the same thing?
Mostly, but not entirely. Both face usury, fraud, deceptive practices, false advertising and federal Consumer Financial Protection Act counts. MoneyLion additionally faces allegations about tip solicitation and about advertising up to $500 while capping each advance at $50 or $100. DailyPay faces an extra count under Personal Property Law § 46-F, New York's wage assignment statute, because a worker taking a DailyPay advance assigns the matching wages to the company — a claim that does not apply to MoneyLion's model.
Where do the cases stand now?
Both are in New York State Supreme Court, New York County. Each company filed a motion to dismiss in January 2026, the Attorney General opposed, and briefing closed in April 2026. No ruling on either motion had been reported as of September 8, 2026, and no hearing date had been announced in the DailyPay case.
Have other courts decided whether paycheck advance apps make loans?
Several federal courts have allowed private cases to proceed on the theory that these advances are credit. The National Consumer Law Center counts 16 of 16 courts that have addressed the question rejecting the argument that the products fall outside credit law. Two of those rulings involve MoneyLion directly: Lowe v. MoneyLion Technologies, decided March 9, 2026, and Burkhardt v. MoneyLion Technologies, decided April 15, 2026, both in the Southern District of New York. These are rulings on early motions, not final judgments on liability.
Did the CFPB say earned wage access is not a loan?
In an advisory opinion published December 23, 2025, the Consumer Financial Protection Bureau concluded that a narrowly defined category it calls Covered EWA is not credit under the Truth in Lending Act and Regulation Z. That category is limited to employer-partnered programs repaid solely through payroll deduction and not exceeding wages already earned. The opinion interprets Regulation Z only and does not decide questions under state usury law, which is what the New York cases are about.
Do the employers named in the DailyPay petition face any claims?
No. The petition identifies employers that contracted with DailyPay to offer the program to their workforces, including fast-food chains, national retailers and healthcare providers. None of them is a respondent in the case, and the petition does not accuse any of them of wrongdoing. The claims are against DailyPay.
Sources
- People of the State of New York, by Letitia James v. MoneyLion Inc., Complaint, Index No. 451303/2025 (Sup. Ct. N.Y. Cnty., filed April 14, 2025) — full text PDF
- People of the State of New York, by Letitia James v. DailyPay, Inc., Verified Petition, Index No. 154851/2025 (Sup. Ct. N.Y. Cnty., filed April 14, 2025) — full text PDF
- New York Attorney General — "Attorney General James Sues Payday Lending Companies for Exploiting Workers with Illegal Loans," April 14, 2025
- Consumer Financial Protection Bureau — Advisory Opinion, Truth in Lending (Regulation Z): Non-application to Earned Wage Access Products, Federal Register, December 23, 2025
- Congress.gov — H.R. 9330, Earned Wage Access Consumer Protection Act, 119th Congress
- National Consumer Law Center — "Courts Reject Claims that Payday Loan Apps Don't Offer Loans"
- CourtListener — Lowe v. MoneyLion Technologies Inc., No. 1:25-cv-04098 (S.D.N.Y.)
- CourtListener — Burkhardt v. MoneyLion Technologies Inc., No. 1:25-cv-06761 (S.D.N.Y.)
- American Banker — "NY Attorney General sues EWA providers DailyPay, MoneyLion"
- DailyPay — company statement on the New York action
- Gen Digital — "Gen Completes Acquisition of MoneyLion," April 17, 2025
For more class actions keep scrolling below.
Status
Motions to dismiss pending
Case Title
People of the State of New York v. MoneyLion Inc.; People of the State of New York v. DailyPay, Inc.
Case Number
Index No. 451303/2025 (MoneyLion) · Index No. 154851/2025 (DailyPay)
Court
New York State Supreme Court, New York County
Date Filed
April 14, 2025
Brought By
New York Attorney General Letitia James
Claims Pleaded
Executive Law § 63(12) · GOL § 5-501 · Penal Law § 190.40 · GBL §§ 349, 350 · 12 U.S.C. § 5531 · and, against DailyPay, Personal Property Law § 46-F
Relief Sought
End the practice in New York, an accounting of affected users, restitution, disgorgement, civil penalties
Official Website
NY Attorney General Announcement
