On March 5, the U.S. District Court for the Northern District of Illinois denied a fintech provider’s motion to dismiss a proposed class action alleging that its earned wage access (EWA) products violated the Truth in Lending Act (TILA) and the Military Lending Act (MLA).
The class action alleges that the provider’s EWA products, marketed as paycheck advances available through a mobile application, are, in substance, loans subject to federal lending disclosures and the MLA’s 36% Military Annual Percentage Rate cap. According to the complaint, users authorize automatic debits from their bank accounts on the next payday and may pay expedited transfer fees and provide voluntary “tips,” which the plaintiff alleges function as finance charges that can push the effective annual rate far above the MLA cap.
The court held that the plaintiff plausibly alleged that the products fall within the scope of federal lending laws and allowed the claims to proceed beyond the pleading stage. Key aspects of the order include:
- Definition of “credit.” The court rejected the provider’s argument that its earned wage access products fall outside the TILA and MLA because users are not contractually obligated to repay the advances. Instead, the court held that “debt” under the statutes is broader than a legally enforceable repayment obligation and may include transactions that function like money expected to be repaid, allowing the plaintiff’s claims to proceed.
- Treatment of fees and tips. The complaint plausibly alleged that expedited transfer fees and user “tips” were charges imposed in connection with the advance and therefore could qualify as finance charges when determining the effective annual percentage rate.
- Consistency with other EWA litigation. The court noted that several federal district courts addressing similar earned wage access products have reached comparable conclusions and allowed TILA and MLA claims to proceed past the pleading stage.
The court also addressed a December 2025 CFPB advisory opinion regarding certain EWA products (previously discussed here), concluding that the complaint plausibly alleged that the provider’s model fell outside the scope of that guidance because it allegedly involved underwriting and credit-risk assessment.
Putting It Into Practice: Federal courts have allowed TILA and MLA claims against earned wage access providers to proceed where plaintiffs allege that the products operate like traditional credit products, as discussed in our prior post (previously discussed here). The court’s opinion also shows that while the CFPB’s advisory opinion was withdrawn, it still can be seen as persuasive to courts. Providers offering EWA products should monitor this litigation trend and evaluate whether their product structures and fee arrangements could raise similar issues under federal consumer lending laws.
