Baltimore didn’t pull any punches when it announced last month the city was suing the company behind an app called MoneyLion that promises interest-free cash advances to get you a portion of your pay early.

“Not only is that wrong, it’s illegal,” Mayor Brandon Scott declared, discussing the city’s allegation that the app charges fees that add up to annual interest rates of more than 350% – or more than ten times Maryland’s legal cap of 33%.

“MoneyLion has preyed on Baltimoreans, trapping our most vulnerable residents in borrowing cycles that made it harder and harder for them to pay bills and put food on the table,” Scott said in a news release.

It was another story earlier this year in Annapolis.

Lawmakers made it easier for companies like Money Lion Technologies, Inc. to operate in Maryland, passing an industry-backed bill that exempts companies providing so-called Earned Wage Access (EWA) services from many consumer protection laws.

The bill captured little attention during the 2025 legislative session, though it was opposed by both consumer advocacy groups and the Maryland Attorney General’s Consumer Protection Division. It passed, and Gov. Wes Moore allowed it to become law without his signature.

The industry won and consumers lost, said Lauren Saunders, associate director of the National Consumer Law Center.

“The first and foremost goal of this payday loan app industry is to exempt themselves from interest rate limits that keep high-cost payday loans in check,” Saunders said. “In Maryland, they got that exemption.”

Maryland’s new law took effect the same week that Baltimore, assisted by the law firm Berger Montague, filed its lawsuit against MoneyLion.

Modern Payday Loan

For those who haven’t used or heard of these EWA apps – DailyPay is another – here’s how they work:

Let’s say you get a flat tire between paydays. You budgeted for the usual expenses, but this extra cost will drain most of the money in your checking account – money you had planned to live on until your next paycheck.

So you turn to an app like MoneyLion, which promises interest-free cash advances to get you a portion of your pay early. Clicking past an ad for a Mr. Beast giveaway, you give the app access to your bank account and request “Instacash” that will arrive in your checking account within minutes.

A short-term loan of $100 will cost $7.49 in “Turbo fees,” which you pay because you need the money today.

When your paycheck arrives, MoneyLion will get its $100 almost instantaneously, pulling directly from your bank account. And you’ll have paid the equivalent of a 250% APR for early access to your own money.

Critics call this the digital-age version of a payday loan, a financial technology product that has evaded Maryland’s strong consumer lending laws – including a 33% interest rate cap for small-dollar loans – by labeling itself an EWA service.

A market study of EWA products in Maryland found they are primarily used by low-income consumers who have little choice but to pay fees to expedite their wages.

Attorneys for Baltimore made that point and others in their complaint, calling MoneyLion “a modern payday lender.”

They cite a recent Center for Responsible Lending study which found that nearly three-quarters of MoneyLion users take out more than one loan in a two-week period. Many users also see their overdraft fees increase after taking out a loan, the study showed.

Over 101% Interest Rates

So how did practices considered so detrimental to consumers get through the Maryland legislature? The Brew dug into the legislative history.

The new law puts Maryland among 10 other states that have passed industry-friendly legislation that originated with the American Legislative Exchange Council, according to Whitney Barkley-Denney, deputy director of state policy at the Center for Responsible Lending. An influential corporate interest group, ALEC pushes model bills in state legislatures around the country.

“The first and foremost goal of this payday loan app industry is to exempt themselves from interest rate limits” – National Consumer Law Center.

Earned Wage Access companies have been operating for years with little oversight under the legal fiction that they are not loans and should not fall under existing consumer lending laws, Barkley-Denney said.

“They’ve been selling this idea around the country,” she said. “That ‘We’re this new thing that’s not really a loan, but we give people money that they have to pay back, and we need special statutes just for us.”

Maryland’s new law explicitly describes earned wage access products as loans, but then exempts them from the state’s credit regulations, including nondiscrimination requirements and a cap specifying an annual interest rate of no more than 33%.

The average APR on earned wage access transactions is more than 101%, according to a market study completed earlier this year by the state Department of Labor and the University of Maryland College Park.

So what does the new Maryland law actually do? Not much that’s new, it turns out.

It requires EWA companies to offer at least one free option to access pay early, and prohibits them from suing or using third-party collection agencies to recoup their money.

The companies must be licensed, but the legislation also allows them to charge “tips” – hard-to-detect costs condemned as predatory by consumer protection groups.

The law also prevents EWAs from reporting a consumer’s failure to pay back their loan to credit agencies and caps expedited payment fees at $5 for advances of $75 or less, and $7.50 for advances greater than $75.

But these are practices that the companies were largely already doing, Barkley-Denney said.

And because EWAs have access to customers’ bank accounts, they are almost always repaid.

If customers don’t pay back these small loans, the companies can block them from using the service again rather than bothering with a lawsuit or collection agency, Barkley-Denney said.

When customers need another advance, they have to pay back what they owe in order to use the app.

At a hearing about the bill last March, Assistant Attorney General Wilson Meeks testified unsuccessfully against the special accommodations afforded by the legislation, pointing out that “these loans are not risky for lenders.”

For that reason, Meeks argued, “we see no reason why these loans can’t operate under existing law.”

State Legislators Side with Industry

Maryland did try to regulate the industry more strictly. In 2023, the state’s Office of Financial Regulation issued guidance advising that it was monitoring earned wage access products and that, under certain circumstances, these advances could be considered loans that fell under existing interest rate limits.

The following year, the Maryland Department of Labor introduced legislation that would have subjected EWA companies to state lending laws and capped fees at $3.50 per transaction.

The bill passed the House of Delegates, but did not receive a vote in the Senate Finance Committee, where Vice-Chair Kathy Klausmeier, Baltimore County’s current county executive, had introduced a separate bill favored by the EWA industry.

Delegate C.T. Wilson (D, Charles County), chair of the House Economic Matters Committee, shared Klausmeier’s skepticism toward the Department of Labor bill.

“I’m just concerned with us cutting off access to something that’s clearly necessary because it doesn’t fit into our general model of what we think loans should look like,” he said during a hearing. “I just don’t want to cut off something that people may need.”

Wilson went on to sponsor the industry-backed 2025 legislation that became law. According to campaign finance records, he received $2,000 in campaign contributions from EarnIn ahead of the 2024 legislative session.

That earned wage access company, based in Silicon Valley, kicked in another $1,000 in ticket purchases just before the 2025 session. Wilson did not respond to requests for comment for this story.

Earned wage access apps are popular in Maryland. The Department of Labor’s market study found that, between January 2019 and September 2024, there were more than 11 million EWA transactions in Maryland, totaling more than $100 million.

The study found that more than 70% of earned wage access transactions in Maryland are carried out by people who make $50,000 or less, and that 16% of users cash out six or more times in a two-week period, indicating reliance on the service. Most users have 51 or more repeat transactions, according to the study.

About 50% of users pay fees to expedite their payments, generating about $3.8 million in revenue for earned wage access companies, the study found.

“Overall, the story illustrated by these trends is one of financial necessity, with people in more economically constrained areas turning to EWA services as a lifeline,” the study concluded.

“Despite the opportunities for free access, expedited fees, and financial stress push many users to pay, reinforcing the growing dependence on these services for short-term financial relief.”

Helping the Historically Underserved?

Proponents of earned wage access see these trends differently.

Ian P. Moloney, head of policy and regulatory affairs at the American Fintech Council, said earned wage access products offer alternatives for consumers who have been historically underserved in the financial services industry.

“How many times do you have an emergency that occurs right on payday? Not very often,” he said. “So these are essentially a service that allows you access to your funds for work you’ve already completed, before that arbitrarily scheduled payday.”

Frequent reuse of EWA advances does not necessarily indicate reliance on these products, he said. Instead, it could be a sign that consumers are making their own choices about when they want to access money they have already earned.

Earned wage access products offer a low- or no-cost option that allows consumers to avoid payday loans, which carry exorbitant mandatory fees and trap people in cycles of debt, according to Moloney.

Customers who use EWA apps can choose whether they want to pay a flat fee to get their money faster, he said, but the companies don’t conduct a credit check or report to credit bureaus, making the products fundamentally different from a loan.

EarnIn and MoneyLion did not respond to requests for comment for this story.

Moore Expresses Concern

Critics of EWA services say they often trap consumers in a pattern of debt, especially when there are no guardrails on the amount of money users can borrow or the number of lenders they can use.

Gov. Wes Moore highlighted this as one of several problems he had with the EWA legislation when he allowed the bill to become law without his signature in May.

“This puts both the lenders and consumers at risk of borrowing all, or more than the total amount, of earned wages prior to receiving payment,” Moore wrote. “This can quickly result in a debt cycle for consumers and would leave lenders unable to reclaim the loan and fees.”

Moore’s letter ended with a call for further action on this issue. In an emailed statement, the Maryland Department of Labor said it is overseeing the implementation of the new law and acknowledged that EWA products raise “important questions about consumer protection, transparency, and fairness: issues that remain a priority for this administration.

“At this stage, the department is focused on assessing how the law is functioning and engaging with stakeholders to promote compliance with the licensing process and other requirements of the law.

In line with the governor’s comments last session, we are also having discussions with members of the Maryland General Assembly about legislation addressing the issues raised within the governor’s letter,” the statement continued.

Barkley-Denney said Moore’s concerns are well-founded.

“Now we need to see leadership on this coming from the governor’s office to make sure we are seeing the changes that he talked about in his letter,” she said.