BILL NUMBER: S8939
SPONSOR: BROUK
 
TITLE OF BILL:
An act to amend the general obligations law, in relation to the interest
rate and finance charges on cash advances of wages or salary
 
SUMMARY OF PROVISIONS:
Section 1. Titles and cites this act as the "Stop Taking Our Pay Act".
Section 2. Legislative Intent.
Section 3. Amends subdivision 2 of section 5-501 of the general obli-
gations law to define as loan as including any extension of credit or
advance of money on a borrower's future, earned, or potential source of
money, including future pay, salary, and earned but unpaid wages or
income. Also includes clarifying amendments on voluntary instances,
amounts advanced, and fees, charges, tips, or subscription costs.
Section 4. Provides for an immediate effective date.
 
JUSTIFICATION:
For too long, predatory lenders have trapped low-income individuals who
are living paycheck to paycheck and people of color in never ending
cycles of debt with high-interest loans by evading usury laws. New York
has long banned high-cost predatory lending by capping interest rates.'
Our state's usury laws were designed to prevent lenders from trapping
people in debt and extracting wealth from communities, and the legisla-
ture has reaffirmed these protections many times across our history.2
Today, it is a felony to charge more than 25% APR on a loan.3
Loan sharks and payday lenders have tried to evade New York usury laws
for decades, falsely claiming they are "not loans" or "don't charge
interest." Each time, advocates and regulators have exposed these claims
for what they are.4 Now, financial-technology companies are running the
same playbook through so-called "earned wage access."' These companies
market themselves as giving workers access to wages they have already
earned. In reality, they are peddling small-dollar loans with triple-di-
git interest rates, targeting workers who live paycheck to paycheck and
pushing them into an unending cycle of debts This especially impacts
vulnerable individuals from communities of color.
Economic justice advocates across New York have been sounding the alarm
against payday loan apps blatant evasion of New York usury law, with a
recent report by the New Economy Project demonstrating that these high-
cost loans have already siphoned more than half a billion dollars from
the lowest income earners in our state.' The New York Attorney General
(NYAG) has already taken strong action cracking down on payday loan
apps, filing suit against MoneyLion and DailyPay.8 It is critical the
legislature also respond to the concerning trend of payday loan apps
repeatedly violating New York consumer protection law by clarifying that
all wage and cash advance services are subject to our usury law.
By requiring workers to link their bank or payroll account and using
automated withdrawal algorithms, payday lending apps ensure they are
repaid first and in full, often triggering the need for repeat reborrow-
ing.9 These companies rely on high fees and so-called "tips" or
"subscriptions" that function as interest charges, resulting in effec-
tive annual percentage rates (APRs) that routinely exceed 300%-750%.1~
They also impose artificial withdrawal limits, forcing users to take out
multiple loans in a pay period.11 These practices are designed to create
repeat usage and dependance, often from multiple payday loan apps at a
time.12 Rather than alleviating financial barriers, payday loan apps
further exacerbate financial instability in myriad ways:
*A recent report by the Center for Responsible Lending found 67% of
payday loan app borrowers overdrafted their bank account more frequently
after their first initial advance from a payday loan app."
*Borrowing from payday loan apps escalates dramatically over time, with
users doubling their borrowing frequency within the first year of use
and 75% of customers being forced to re-borrow on the same day or the
day after repaying the prior loan.'
*Black and Latino New Yorkers, as well as people already carrying other
forms of debt, are disproportionately exposed to under-regulated finan-
cial technology (fin-tech) loans."
*Payday loan apps target working people earning less than $50,000/year,
disproportionately burdening low-wage workers already struggling to make
ends meet with illegal interest rates.16
*Young people are especially at risk for being pulled into the payday
loan cycle, with recent survey data showing nearly a third of New York-
ers under 30 use payday loan apps "frequently or all the time."17
*Financial technology (fin-tech) companies deliberately peddle payday
loan apps as a benefit to workers," while covertly extracting more than
half a billion dollars since 2019 from low-income New Yorkers, partic-
ularly women and communities of color."
*Payday loan apps foster dependency on outrageously high-cost debt, with
the New York Attorney General's investigation of payday lender DailyPay
revealing that more than 55% of all New York workers obtained two or
more payday loans each week.2~
*Payday loan apps rely heavily on predictive "Al" algorithms fed work-
ers' financial data to manipulate cash advance limits and encourage
users to take out multiple small loans, each carrying triple digit
interest rates.21 Pervasive use of Al in the payday loan app industry
contributes to skyrocketing utility costs22 and environmental degrada-
tion that further harm low-income people.23
*A recent Market US report projects that the payday loan app industry
will grow 25.7% year over year between 2025 and 2034,24 representing an
urgent threat to millions of low-income New Yorkers.
New York has never permitted payday lending and we cannot start now.
New Yorkers need real solutions to the affordability crisis and growing
racial wealth gap, including livable wages and expanding access to fair
credit and financial services through public banks and community devel-
opment credit unions. New York State must take action to stop financial
predators from exploiting vulnerable residents. Passing this legis-
lation will keep millions of dollars in our state every year and protect
workers from exploitation by Big Tech loan sharks.
 
LEGISLATIVE HISTORY:
This is a new bill.
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect immediately.
1 Seidel v. 18 East 17th Street Owners, Inc., 79 N.Y.2d 735, 740 (1992).
2 Adar Bays, LLC v. GeneSYS ID, Inc., 37 N.Y.3d 320 (2021).
3 General Obligations Law §§ 5-501, 5-511, 5-521; Banking Law § 14-a
(1); and Penal Law § 190.40.
4 Mobilization for Justice Legal Services Bill Memorandum "OPPOSE Short-
Term Financial Services Loan Act", April 22, 2013
https://mobilizationforiustice.oro/wp-content/uploads/Oppose-NYS-Check-C
asher-BillCRP-04.23.pdf.
5 TapCheck, "Tapcheck's not a bank or loan provider. So, what does that
mean for you? No hidden fees. No interest rates." (emphasis added)
Accessed September 22, 2025, https://www.tapcheck.com/employee-ppc-
category; Jacinta Majauskas "Cash Advance vs Loan: What's Best For Me?",
MoneyLion, Mar. 18, 2024 https://www.moneylion.com/learn/cash-advance-
vs-loan/.
6 University of Washington Evans Policy Innovation Collaborative,
"Earned Wage Access Financial Services," June 2025
https://evans.uw.edu/wp-content/uploads/2025/08/EWA-Report-1.pdf; Lucia
Constantine, et al., "Not Free: The Large Hidden Costs of Small-Dollar
Loans Made Through Cash Advance Apps," Center for Responsible Lending,
April 2024
https://www.responsiblelendiraorg/sites/default/files/nodes/files/resear
ch-publication/crl-not-free-hiddencosts-apr2024.pdf.
7 NY Equity Agenda Coalition, "New York Labor & Community Groups Call on
New York Regulators to Aggressively Enforce State's Usury Law and Take
Action Against Predatory Fintech Companies That Exploit Workers,"
8 New York v. MoneyLion Complaint, 451303/2025 (April 14, 2025); New
York v. DallyPay Complaint, 154851/2025 (April 14, 2025).
9 ZayZoon, "We have a proprietary algorithm that analyzes historical
earnings, employment tenure, industry, position, and a host of other
data points to predict what an employee is likely to earn at any given
time," accessed September, 22 2025 (emphasis added)
https://www.zayzoon.com/this-is-earnedwage-access; University of Wash-
ington Evans Policy Innovation Collaborative, "Earned Wage Access Finan-
cial Services," June 2025
https://evans.uw.edu/wp-content/uploads/2025/08/EWA-Report-tpdf.
10 Burks, et al, "NICKEL AND DIMED: How Payday Loan Apps Drain Workers'
Pay and How to Stop Them," Center for Responsible Lending, October 15,
2025; New York v. MoneyLion Complaint, 451303/2025 (April 14, 2025); New
York v. DailyPay Complaint, 154851/2025 {April 14, 2025).
11 Lucia Constantine, et al., "Not Free: The Large Hidden Costs of
Small-Dollar Loans Made Through Cash Advance Apps," Center for Responsi-
ble Lending, April 2024
https://vvww.responsiblelendinp.org/sites/default/files/nodes/files/rese
arch-publication/crl-not-free-hiddencosts-apr2024.pdf.
12 Christelle Bamona and Lucia Constantine, "Escalating Debt: The Real
Impact of Payday Loan Apps Sold as Earned Wage Advances", Center for
Responsible Lending, September 22, 2025
https://www.responsiblelendinp.orcilsites/default/files/nodesffiles/rese
arch-publication/orl-payday-loanapps-ewa-sep2025.pdf.
13 Burks, et al, "NICKEL AND DIMED: How Payday Loan Apps Drain Workers'
Pay and How to Stop Them," Center for Responsible Lending, October 15,
2025.
14 Id.
15 Hilary Wilson, "Credit Alone? What New Yorkers' Use of Fintech Tools
Means for State Consumer Protections," Community Service Society, Octo-
ber 2025.
16 U.S. Government Accountability Office (GAO), Earned Wage Access:
Analysis of Usage, Fees, and Industry Practices, January 24, 2023.
https://www.pao.00v/products/coo-23-105536.
17 Hilary Wilson, "Credit Alone? What New Yorkers' Use of Fintech Tools
Means for State Consumer Protections," Community Service Society, Octo-
ber 2025.
16 "Dave is a banking app on a mission to build products that level the
financial playing field." https://dave.com/about, accessed Sept. 22,
2025.
19 New Economy Project, "$500 Million and Counting: How Unchecked Payday
Loan Apps Are Draining New Yorkers' Paychecks," March 2025,
https://www.neweconomvnyc.oro/wp-content/uploads/2025/03/500-Million-and
-Counting.pdf; Comp!. at paragraph 57, The People of New York v. Daily-
Pay, (Supreme Court of New York) (April 14, 2025 (No. 154851/2025);
Lucia Constantine, et al., "Not Free: The Large Hidden Costs of Small-
Dollar Loans Made Through Cash Advance Apps," 5, Center for Responsible
Lending, April 2024
https://vvww.responsiblelending.org/sites/default/files/nodes/files/rese
arch-publication/crl-not-free-hiddencosts-apr2024.pdf. 20 New York v.
DailyPay Complaint at paragraph 95, 154851/2025 (April 14, 2025).
21 New York v. MoneyLion Complaint at paragraph 80, 451303/2025 (April
14, 2025); Burks, et al., "NICKEL AND DIMED: How Payday Loan Apps Drain
Workers' Pay and How to Stop Them," Center for Responsible Lending,
October 15, 2025.
22 Julie Margetta Morgan, "Fueling Debt: How Rising Utility Costs Are
Overwhelming American Families," The Century Foundation, November 17,
2025.
23 Adam Zewe, "Generative Al's environmental impact," MIT News, January
17, 2025
https://news.mitedu/2025/explained-generative-ai-environmental-impact-01
17.
24 Market.us, "Global Earned Wage Access Market Size...", August 2025.