The Biz of Lending to the Masses: Fintech, Wage Advance Products & California CFL’s

Fintech “lenders” are pushing the boundaries of what state AG’s consider to be loans. Earnin.com, Dave.com, PayActiv.com, MeetHoneyBee.com, DailyPay.com, Flexwage.com, HelloBrigit.com, BranchApp.com, WageStream.com and on and on all offer “wage advance,” “payroll advance”  in essence a “kinder, gentler version” of a payday loan.

Fintech, California CFL’s, Wage Advance Products Embroiled in Class Action Lawsuits.

The Biz of Lending to the Masses

By: Jer Ayles & “The Biz of Lending to the Masses.”

Bottom line, these Fintech companies offer employees early access to their earned income from employers such as Walmart, McDonald’s, Wendy’s, Allstate…

Are these loans? Should these Fintech companies be forced to navigate through the EXPENSIVE, TIME-CONSUMING HASSLE of securing state-by-state lending licenses? Or, collaborate with federally recognized Native American Indian tribes enabling geographically challenged tribes to participate in this new world of E-commerce?

Fintech companies typically charge their customers a monthly enrollment fee, strongly “suggest” a payment to “accelerate the ACH into their customer’s bank account” and additionally, a “tip” for using their platform!

Yet they fail to enable their “borrowers” with APR comparison tools in order to evaluate their “tip” model versus other loan products such as payday loans, installment loans, line-of-credit loans, title loans…


We reversed engineered Dave.com. Here’s what we found.

A few weeks back, we applied for a $75 loan via a cell phone at Dave.com 

  • We filled out the Dave.com application
  • Tied it to a Chase acct
  • Dave “asked,” us if we would pay $3.95 to accelerate the ACH into Chase immediately.” We opted out
  • Dave “asked” us to give them a tip. The default was 15% of the $75. Via my phone, I could “slide” left to right… tip Dave 20%, 15%, 10%, or zero. We opted for zero.
  • All the above took 3 minutes 12 seconds WITHOUT any human intervention. No call center CSR… no human intervention!
  • The following day the $75 was in my Chase account in spite of the fact we opted NOT to pay the $3.95 to accelerate the ACH deposit into our Chase account.
  • We authorized Chase to pay Dave the $75 4 days later.
  • My total cost to borrow this $75? ZERO!!!!!!!!!!!!!!!!!!!!!! Free
  • THE CATCH if any? Dave charges me $1/month for their service.
  • In January 2019, Dave had 1M account holders at $1/month. As of September? 5 million! At $1/month per user. So… $5M/month top-line revenue w/o funding a single loan! Via AI and automation!!
  • Could they up the monthly fee to $2/month and achieve $10M/month?
  • Their default rate? No clue.
  • How low will they go regarding sub-prime borrowers? No clue.
  • I do know they serve a lot of “gig” workers because I’ve asked some folks I know to go through this process.
  • Are they making money yet or is this model, as of today, all about customer acquisition and data collection? No clue.
  • Mark Cuban is an early investor… SMART DUDE!
Regarding Earnin? We “borrowed” $100 for a week. The “default tip suggested” was $14.00. That’s a 700%+ APR!
A California class-action lawsuit captioned “Stark v. Activehours, Inc., d/b/a Earnin,” asserts the company is actually an unlicensed lender: “Earnin seeks to skirt applicable financial, banking, and payday lending regulations through a linguistic trick: calling a payment to use its service a ‘tip’ instead of a cost of borrowing. Semantics aside, Earnin is in the business of loaning money.”
In July of 2019, Crunchbase estimates Earnin was downloaded 776,711 times in a single month! “Pay what you think is fair.”
PS: If you’re one of my MANY readers who have paid millions of dollars in licensing, compliance, legal, audit, fines and store leases and… try NOT to be PISSED!
Instead, scale your knowledge! Embrace the changes brought about by THE PHONE!
The magnitude of the problem solved is the magnitude of the money you can make!
If the business of lending money to the masses was easy, EVERYONE would be doing it! [MJ]
Thanks for being a loyal email subscriber since December 11, 2019. I appreciate hearing from you. Let me know if you ever have any questions, ideas, needs… Jer at 702-208-6736 Cell TrihouseConsulting@gmail.com. NOTE: California CFL lenders send an email. We have solutions! Subject: “CFL” Text: Provide a few details about your Calif. business and your product line.

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