A coalition of labor and economic justice groups is calling out Wall Street over a $200 million deal they say exploits low-wage workers.
Their target: a securitization agreement between investment giants like Barclays, Citi, and Morgan Stanley and DailyPay — a fintech company recently sued for issuing illegal high-interest loans in New York.
“This is just the latest scheme to extract wealth from struggling New Yorkers,” the coalition said in a joint statement led by the New Economy Project. “It’s a modern payday loan trap, packaged to look like innovation.”
According to the state Attorney General, DailyPay charges fees that amount to nearly 400% APR, funneling those charges directly from workers’ paychecks. The coalition says this deal, the first of its kind involving fintech-backed payday loans, mirrors the risky subprime mortgage-backed securities that triggered the 2008 crash.
DailyPay markets its services as “earned wage access” — a way for employees to get paid early. But critics say it’s just predatory lending with a new name.
Since 2019, New Yorkers have lost over $500 million to these types of fees, according to the New Economy Project.
Push for reform picks up steam
The coalition is demanding that lawmakers pass the End Loan Sharking Act (A4918/S1726). The bill would close loopholes and make it clear that New York’s usury laws apply to all lenders — no matter what they call their product.
They’re also urging local governments to take steps toward long-term solutions, including living wages, public banks, and community-based financial services.
More than 20 organizations have signed onto the statement, including Consumer Reports, Citizen Action of New York, Lower East Side People’s Federal Credit Union, and Western New York Law Center.
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