Colorado AG takes on EWA provider EarnIn

• Key insights: Colorado's Attorney General Phil Weiser is suing direct-to-consumer earned wage access provider EarnIn, alleging that the company violated the state's lending laws and challenging its claim that its product is nonrecourse.  
• What's at stake: Earned wage access providers have largely been successful in carving out exceptions from usury laws in many states with legislation governing the nascent liquidity product, but that has not stopped other state regulators from challenging industry's claims. 
• Forward look: At least 44 states maintain usury caps on small loans, and if a D2C advance gets classified as a loan or credit, those caps, along with the Truth in Lending Act, the Equal Credit Opportunity Act, and other federal lending statutes, would apply in full, Benjamin Nestor, a strategic advisor at Datos, told American Banker. 

Colorado's top law enforcement official is zeroing in on earned wage access provider EarnIn in a lawsuit that is reviving a debate central to the way the industry is regulated: Should EWA be considered a loan? 

Colorado's Attorney General Phil Weiser is suing the Palo Alto, California-based, direct-to-consumer EWA fintech, alleging that the company violated the state's lending laws and challenging its claim that its EWA product, called Cash Out, is nonrecourse.  

"Colorado voters acted decisively in 2018 to rein in predatory payday lending. EarnIn's product, however, provides consumer loans at high interest rates that are styled as accessing their pay," said Attorney General Weiser in a statement. "EarnIn was not working with companies here in providing consumers with funds but acted as a third-party lender and charged illegally high rates, used deceptive design strategies to extract some charges, and trapped consumers in repeat borrowing."

Consumer advocacy groups have been sparring with the EWA industry for years over whether the liquidity product — which provides access to a consumers' earned wages ahead of the normal two-week pay cycle — should be regulated the way loans are and subject to disclosure requirements and interest rate caps. 

Twelve states have earned wage access legislation, and most are aligned in the view EWA should not be beholden to lending laws — with the exception of Maryland, Connecticut and California. 

The lawsuit alleges that EarnIn used deceptive app designs to extract finance charges and that the company violated multiple provisions of the state's lending, consumer and payday lending protections. It also argues that EarnIn's methods of obtaining repayment on the advances are similar to payday lenders. 

"Under [previous precedent], EarnIn's Cash Outs are loans under Colorado law, and EarnIn's contention that its product is not a loan based on its disclaimer of any legal repayment obligation lacks any real-world significance given how the Cash Out transactions actually operate in practice," according to the complaint. 

EarnIn General Counsel and Chief Legal and Regulatory Officer David Durant said in an email to American Banker: 

"This lawsuit doesn't protect Colorado consumers — it seeks to take away a financial tool that nearly 200,000 Coloradans have relied on, while protecting the overdraft fees and late payment penalties Coloradans turn to when they can't wait for payday. EarnIn's Cash Out product is not a loan. Our customers access a portion of the pay they've already earned, with no obligation to repay, no interest, no mandatory fees, and no advance on future earnings. Independent, peer-reviewed research found that EarnIn's Cash Out product increases users' income by 11.5% per month. Take away that access, and the need for cash before payday doesn't disappear — consumers are pushed back toward overdrafting, late fees, and other less consumer-friendly alternatives. That's the outcome this lawsuit protects.

"We firmly disagree with the Colorado Attorney General's characterizations of Cash Out, and we're disappointed that after over a year of engagement, during which the Attorney General's office said it preferred a legislative solution, this has instead resulted in a lawsuit that creates fear for consumers rather than protecting them. We have been at the forefront of seeking responsible legislation and regulatory oversight for the earned wage access industry. And, the legislation we backed in Colorado last session would have licensed EWA providers, put them under state supervision, and capped what providers can charge – just like legislation that we backed in states across the country. 

"Earned wage access is fundamentally different from a payday loan, and EarnIn has long supported creating clear, purpose-built rules for it," Durant said. 

Read more:

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• Why Pioneer Federal Credit Union is adding earned wage access
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Being held to state lending laws would put a greater compliance burden on providers, according to Benjamin Nestor, a strategic advisor at Datos. At least 44 states maintain usury caps on small loans. 

"If a direct-to-consumer advance gets classified as a loan or credit, those caps, along with the Truth in Lending Act, the Equal Credit Opportunity Act, and other federal lending statutes, would apply in full," Nestor told American Banker.  

Direct-to-consumer EWA providers can face greater regulatory scrutiny than business-to-business providers because they lack the checks and guardrails that employer-integrated business models have, Nestor said. B2B EWA relies on employer verification of actual hours worked, so the advance can't exceed wages already earned, and repayment happens through a payroll deduction, which most states view as fundamentally different from debt collection. 

By contrast, D2C models lack employer-side checks, meaning the provider has no independent way to confirm income beyond the information the user submits. Repayment also comes from a debit from a bank account.

"That's functionally closer to how a lender collects on a loan, which is precisely the comparison regulators have started drawing and show skepticism toward – in addition to additional fees or 'tips' that (as a percentage) can be quite high," Nestor said. "There also aren't guardrails in place to ensure individuals aren't using multiple providers simultaneously, which given the lower dollar threshold, can easily happen." 

Attorney General Weiser said that the the lawsuit challenges EarnIn's direct to consumer product, and not any product that integrates with employers.

The lawsuit comes amid a broader shift in consumers' expectations around the frequency in which they get paid. About one-third of the 600 respondents in American Banker's 2026 On-Chain Consumer survey said they wanted quicker or on-demand wage access.

EarnIn does a substantial amount of business in Colorado, according to the state's AG office. EarnIn from January 2023 to July 2025 made almost 3.2 million advances amounting to about $300 million to consumers in Colorado. During that period, the AG's office said EarnIn collected $16.1 million in tips and fees.