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Sunday, October 20, 2019

Users allege payday lending app Earnin misled them about risks of service

Federal Court

By Carrie Bradon | Sep 24, 2019


SAN JOSE, Calif. (Legal Newsline) – A lawsuit has been filed against an app-based payday lending servicer by two users over allegations it misrepresented the true risks and operations of the service.

Mary Perks and Stanley Alexander, individually and on behalf of all others similarly situated, filed a complaint on Sept. 3 in the U.S. District Court for the Northern District of California against ActiveHours Inc., doing business as Earnin, alleging violation of the Consumer Legal Remedies Act, violation of the California's Unfair Competition Law.

The plaintiffs allege they were defrauded by the defendant, who misrepresented to them that they would have access to money immediately and would be able to avoid bank fees. 

The suit states the defendant's service works by users allowing Earnin to monitor their hourly pay so that the defendant can then advance or loan a portion of their anticipated earnings after the users have worked.

"Users may then use Earnin’s service to advance or loan a portion of their anticipated earnings immediately after the users work the hours giving rise to those earnings," the suit states. "When the user’s paycheck is later deposited, Earnin withdraws the advanced or loaned amount from the user’s bank account, even though Earnin knows the account has insufficient available funds."

The plaintiffs allege the use of the defendant's services causes users to incur fees for overdraft and non-sufficient funds.

Due to the defendant's alleged failure to disclose all of the information truthfully, the plaintiffs allege they have suffered undue harm, such as financial and emotional stress. The plaintiffs allege that had they known about the charges that would be incurred through their use of Earnin, they would not have used the service. 

The plaintiffs are seeking a trial by jury; statutory, punitive and compensatory damages; attorneys' fees; court costs; interest and just relief. The plaintiffs are represented by Jeffrey Kaliel and Sophia Goren Gold of Kaliel PLLC in Washington, D.C. and Lynn A. Toops and Lisa M. LaFornara of Cohen & Malad LLP in Indianapolis.

U.S. District Court for the Northern District of California case number 5:19-CV-05543

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U.S. District Court for the Northern District of California, San Jose Division

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