Earnin

Last updated
EarnIn
FormerlyActiveHours
Industry
Founded2013
FounderRam Palaniappan (CEO)
Headquarters Palo Alto, California
Services Earned wage access
Number of employees
200+ (2021)
Website www.earnin.com

EarnIn is a financial services company that provides earned wage access services. [1] Founded as Activehours in 2013, the app launched in May 2014. [2] [3] The company's business model, which is based on users paying voluntary "tips" to withdraw earned wages ahead of time, has been compared to payday lending services. [4] It expanded its services in 2019 to include negotiating with doctors and hospitals to lower its users' medical bills. [5] In 2020, EarnIn acquired and implemented a new savings feature, Tip Yourself. [6]

Contents

History

EarnIn was founded by Ram Palaniappan in 2013. [7] [2] Palaniappan, who helped launch RushCard, wanted to help people unlock their earned wages. [3]

After a year of development, EarnIn launched its app in May 2014. At launch, the company was handling transactions for employees at 100 different companies; a few months later, this had grown to 250 employers including Best Buy, Starbucks, Wells Fargo, and Bank of America. [3] [8] [9]

In November 2017 the company rebranded from Activehours to Earnin. [9]

In 2019, there were also consumer complaints about glitches sometimes resulting in delays in fund transfers. [4]

In May 2019, the company began offering its users a service to negotiate for a reduction in outstanding doctor or hospital bills. The company will also negotiate installment payments for outstanding medical bills if it can. [5] The service is offered without a fee and members are asked to leave a voluntary tip for good service. [10]

In 2019, EarnIn acquired Chicago-based company, Tip Yourself. In May 2020, EarnIn integrated the service into their own app. Tip Yourself is a tool that provides members with "Tip Jars" that they can set up for specific savings goals such as “a trip, home improvement projects or a rainy day fund.” [6]

In January 2023, the company rebranded from Earnin to EarnIn. [11]

In 2024, EarnIn furthered its debt relief efforts by partnering with Forgive Co. Together, the two forgave over $10 million in debt held by those living in metro Atlanta. [12]

In May 2024 EarnIn created a $50,000 fund to help cover overdraft charges incurred by its previous customers in the state of Connecticut. [13] [14]

Services

EarnIn offers a suite of mobile financial tools designed to give customers flexible access to their earnings and support overall financial wellness. The app is available to customers who are at least 18 years old, paid on a consistent schedule, have a U.S. bank account, and earn at least $320 per pay period. Services are available regardless of employer or banking provider, no interest is charged, and no credit check is required. [15] After a member's scheduled wages are deposited in their bank account by their employer, the company automatically withdraws the wages and the tip. [16] [4] [8] [17] EarnIn's "zero integration" B2B model, which allows companies to offer EarnIn without requiring that it be integrated into a company's payroll system. [18]

EarnIn’s Cash Out feature allows customers to access earned wages before their designated payday. In return for this access, EarnIn deducts an equal amount from a customer's bank account on their designated payday. EarnIn allows access of up to $150 per day, or $750 per pay period. [19]

In April 2019, the New York State Department of Financial Services investigated whether the company's "tipping" system skirted New York State lending laws regulating payday lending. [20] [4] An article in the New York Post said that members who do not leave tips may have their monthly maximum restricted, which may trigger interest rate disclosure laws. [21] New York State subpoenaed information from the company, including a calculation of annual percentage rates if tips were measured as fees or interest. [4]

In November 2024, the Attorney General for the District of Columbia filed a lawsuit against EarnIn, alleging that the company deceptively marketed its earned wage advance services. [22] The complaint claims that EarnIn misrepresented its "Cash Out" product as fee-free and interest-free, while in reality, consumers were required to pay optional "Lightning Speed" fees to access funds instantly. These fees allegedly resulted in effective annual percentage rates (APRs) exceeding 300%, far above the District’s 24% interest cap. The lawsuit also alleges that EarnIn operated without a lending license.

In August 2024, a class action lawsuit was filed in the United States District Court for the Northern District of California against EarnIn (operating as Activehours, Inc.). [7] The plaintiffs allege that the company’s tipping and fee model violates Georgia’s Payday Lending Act and the federal Truth in Lending Act (TILA). The complaint asserts that users were routinely charged fees and tips that resulted in APRs averaging 284%.

Previously, in March 2021, a federal court granted final approval of a $12.5 million settlement in a class action lawsuit against EarnIn, in which plaintiffs claimed that the company’s practices led to overdraft fees on their bank accounts. [23]

In August 2024, a class-action lawsuit was filed in the U.S. District Court for the Northern District of California against EarnIn. The plaintiffs alleged that the company's optional fees and tips constituted hidden interest payments, violating Georgia's Payday Loan Act and the federal Truth in Lending Act (TILA). The complaint highlighted that EarnIn's fees and tips led to APRs averaging 284%. [24]

In September 2024, a class-action lawsuit titled Orubo v. Activehours, Inc. was filed in the U.S. District Court for the Northern District of California. The plaintiffs alleged that EarnIn's optional fees and tips constituted hidden interest payments, violating Georgia's Payday Loan Act and the federal Truth in Lending Act (TILA). The complaint highlighted that EarnIn's fees and tips led to APRs averaging 284%. [24]

In April 2019, the New York State Department of Financial Services launched an investigation into EarnIn's tipping model to determine whether it violated state lending laws regulating payday lending. The investigation focused on whether the company's "tips" and "Lightning Speed" fees constituted interest charges that exceeded state usury limits.

In 2024, a wrongful termination lawsuit was filed in Vermont Civil Court by a former EarnIn employee alleging retaliation after reporting months of harassment and threats by users of the platform. [25] According to the complaint, the employee had submitted numerous reports to internal management and HR without meaningful response. The plaintiff was allegedly terminated shortly after notifying law enforcement and federal agencies, including the FBI and Vermont Attorney General's Office. The suit remains active as of early 2025.

In 2024, another employment-related lawsuit (Castro v. Activehours, Inc.) was filed in California state court, alleging wrongful termination after bringing concerns over data leaks and security and privacy. [26] The suit remains active as of early 2025.

References

  1. ↑ Debter, Lauren. "Want To Cash In On Your Paycheck Before Payday? There's An App For That". Forbes. Retrieved 2020-11-11.
  2. 1 2 Carrns, Ann (2014-05-22). "Getting Your Wages, Before Payday (Published 2014)". The New York Times. ISSN   0362-4331 . Retrieved 2020-11-11.
  3. 1 2 3 "The Next Big Thing You Missed: Startup Offers Payday Advances Without the Pesky Loan-Sharking". Wired. ISSN   1059-1028 . Retrieved 2020-11-11.
  4. 1 2 3 4 5 "A payday lender in disguise? New York investigates the Earnin app". American Banker. 2019-04-04. Retrieved 2020-11-11.
  5. 1 2 Rubin, Ben Fox. "You can hire this startup -- for free -- to negotiate down your medical bills". CNET. Retrieved 2020-11-11.
  6. 1 2 "Earnin Unveils Tip Yourself - A New Way to Build Savings in the Earnin App". www.yahoo.com. Retrieved 2020-11-11.
  7. 1 2 Valle, Gaby Del (2019-05-22). "How a Silicon Valley startup is trying to rebrand payday loans". Vox. Retrieved 2020-11-11.
  8. 1 2 "Activehours raises $39 million for its new take on cash advances". TechCrunch. Retrieved 2020-11-11.
  9. 1 2 "Earnin raises $125M to help workers track and cash out wages in real time". TechCrunch. Retrieved 2020-11-11.
  10. ↑ Reader, Ruth (2019-05-22). "This company wants to help you lower your medical bills (some catches may apply)". Fast Company. Retrieved 2020-11-11.
  11. ↑ Gramatikova, Tsani (2023-02-21). "EarnIn Unveils a New Strategic Brand Identity That Highlights Its Mission To Alleviate Financial Anxiety". Smart Branding. Retrieved 2025-08-20.
  12. ↑ Kanell, Michael E. "Company pays off debts of Atlantans in 'random acts of kindness'". The Atlanta Journal-Constitution. ISSN   1539-7459 . Retrieved 2025-09-04.
  13. ↑ Haar, Dan. "Dan Haar: Finance firm banned from CT is giving away $50K to former customers as legislation fails". CT Insider. Archived from the original on 2025-06-30. Retrieved 2025-09-23.
  14. ↑ Ragland, Jamil (2024-05-02). "Company That Advances Workers' Pay Offers Refund For Fees After Halting Service". CT News Junkie. Retrieved 2025-09-23.
  15. ↑ Renzulli, Kerri Anne. "EarnIn App Review". Business Insider. Retrieved 2025-09-23.
  16. ↑ "How the Pay What You Want Model Can Work For You". www.bizjournals.com. Archived from the original on 2021-04-21. Retrieved 2020-11-11.
  17. ↑ "The Rise of Digital Tipping — From Music to Your Own Paycheck". OZY. 2019-05-08. Retrieved 2020-11-11.
  18. ↑ Balogh, Shannen. "This startup has raised $190 million from investors like Andreessen Horowitz to help workers get paid in between paychecks. Its head of B2B explains why it's introducing a 'zero integration' model". Business Insider. Retrieved 2025-09-23.
  19. ↑ Renzulli, Kerri Anne. "EarnIn App Review". Business Insider. Retrieved 2025-08-28.
  20. ↑ Dugan, Kevin (2019-03-28). "Cash-advance app Earnin gets subpoenaed by NY regulator: source". New York Post. Retrieved 2021-04-07.
  21. ↑ Dugan, Kevin (2019-03-22). "Popular cash advance app Earnin operating in payday loan 'gray area,' critics claim". New York Post. Retrieved 2020-11-11.
  22. ↑ "Activehours, which makes every day a payday, just raised $22 million in Series A funding". TechCrunch. Retrieved 2020-11-11.
  23. ↑ "Perks et al v. Activehours, Inc., No. 5:2019cv05543 - Document 63 (N.D. Cal. 2021)". Justia . March 25, 2021.
  24. 1 2 Rosenblum, Taylor Gess, Carlin McCrory, Caleb Rosenberg, Jeremy (2024-08-22). "Class Action Alleging Usurious Fees and Tips Filed Against FinTech Provider of Earned Wage Access Services". Consumer Financial Services Law Monitor. Retrieved 2025-03-31.{{cite web}}: CS1 maint: multiple names: authors list (link)
  25. ↑ "Register of Actions". portal.vtcourts.gov. Retrieved 2025-03-31.
  26. ↑ "Case 24STCV32469 Kelvin Evelio Castro Vs Activehours, Inc., Et Al. - Trellis: Legal Intelligence + Judicial Analytics". Trellis.Law. Retrieved 2025-03-31.
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