EarnIn Faces Colorado AG Lawsuit After Backing Earned-Wage Access Legislation

DENVER — Earned-wage access provider EarnIn, which participated in efforts to establish a separate regulatory framework for wage-advance services in Colorado, is now facing a lawsuit from Attorney General Phil Weiser alleging that its direct-to-consumer “Cash Out” product is unlawful high-cost payday lending disguised as early access to earned pay.

The lawsuit, filed Aug. 27 against Activehours Inc., doing business as EarnIn, alleges that the company made more than 3.1 million advances totaling roughly $300 million to 56,778 Colorado consumers from January 2023 through July 2025. The state says the company collected more than $16 million in tips and expedited-transfer fees during that period.

State Calls Cash Outs Loans

EarnIn markets Cash Out as access to wages consumers have already earned, emphasizing that the product carries “no interest” and “no hidden fees.” The company has maintained that the advances are not loans because they are nonrecourse and consumers have no legal obligation to repay if an attempted withdrawal fails.

Colorado’s attorney general sees the transactions differently.

According to the complaint, consumers must authorize EarnIn to debit their bank accounts for repayment, and the company can repeatedly initiate debit attempts until it is paid. The AG alleges the company collects finance charges through voluntary “tips” and Lightning Speed fees for expedited funding, without the licensing and disclosures required for consumer lenders. The lawsuit alleges that this operational reality—not the product’s marketing label—makes Cash Outs loans under Colorado law.

The state alleges that more than 92% of transactions carried either a tip or an expedited-transfer fee, producing an average annual percentage rate of nearly 388%. In some instances, the state says, the effective APR exceeded 1,000%.

“Colorado voters acted decisively in 2018 to rein in predatory payday lending,” Weiser said in announcing the action. “EarnIn’s product, however, provides consumer loans at high interest rates that are styled as accessing their pay.”

The action specifically targets EarnIn’s direct-to-consumer Cash Out product, rather than products that are integrated with employers or payroll systems. That distinction may be significant as states seek to draw regulatory lines within the diverse earned-wage access market.

A Legislative Disconnect

The suit lands after EarnIn participated in Colorado’s 2025 debate over House Bill 25-1020, a measure that would have created a distinct licensing and regulatory structure for earned-wage access providers. EarnIn representative Sam Sadle testified on the bill during a Feb. 24, 2025, House Finance Committee hearing, listed as seeking amendments to the legislation.

As introduced, HB 25-1020 would have required earned-wage access providers to obtain a state license. Crucially, the bill’s framework would have treated a licensed provider as something other than a creditor, debt collector, collection agency, lender or money transmitter while providing EWA services. The proposal was ultimately postponed indefinitely by the House Finance Committee on Feb. 27, 2025.

The legislation reflected the central policy debate surrounding EWA: whether the product is a low-cost tool for accessing wages already earned or a form of short-term credit that should be regulated under existing small-dollar and payday-lending laws.

Supporters argued that a separate framework could recognize the product’s purportedly nonrecourse structure while imposing safeguards such as licensing, fee caps, consumer disclosures and free-access options. Critics—including consumer advocates and labor groups—argued that EWA providers should be covered by Colorado’s existing lending laws when they advance funds and collect repayment from consumers’ bank accounts.

Colorado voters approved Proposition 111 in 2018, imposing a 36% APR limit on payday loans. In the 2025 legislative debate, consumer advocates warned that certain EWA products could recreate the same high-cost, repeat-use dynamic that the ballot measure sought to curb.

Tips and App Design at Issue

The AG’s complaint also focuses on EarnIn’s user interface and the purportedly voluntary nature of the fees. The state alleges that the app used design practices to steer users toward tips, including default tip amounts, multiple screens and extra steps for consumers attempting to select a $0 tip, and messaging such as “pay it forward.”

The attorney general contends that the tips did not support other users, as the phrasing could imply, but instead flowed to EarnIn. The state characterizes those practices as unfair or deceptive under the Colorado Consumer Protection Act.

The complaint cites examples of repeat use that the state says demonstrate the product’s potential to create high-cost borrowing cycles. One Colorado consumer allegedly took 1,151 advances and paid $4,038.50 in Lightning Speed fees, with advances averaging an alleged 1,421% APR. Another allegedly took 1,033 advances and paid $8,561.22 in tips and fees at an average alleged APR of 1,539%.

Colorado also points to a 99.18% repayment rate for EarnIn transactions as evidence that the company’s advances operated as loans despite the company’s contention that repayment is not legally required.

Collection Implications

For creditors, collectors, fintechs and compliance teams, the case is another reminder that regulators may examine a product’s actual economics, repayment mechanisms and interface design—not simply its contract terms or branding—when determining whether it constitutes credit.

Several factors alleged in the EarnIn complaint could receive scrutiny in other products marketed as noncredit or fee-based services:

• Bank-account authorization and recurring debit attempts used to obtain repayment.

• “Optional” tips or service charges that consumers pay at a high rate in practice.

• Expedited-delivery fees tied to the timing of access to funds.

• User-interface features that make avoiding a charge more burdensome than accepting it.

• High repeat-use levels that indicate a product may function as a recurring liquidity bridge.

• Marketing claims that a product involves no interest, no fees or no obligation to repay when product mechanics suggest otherwise.

The case also matters to third-party collection and debt-buying businesses because proposed Colorado EWA legislation has contemplated explicit limits on collection activity. A later measure, HB 26-1046, would have prohibited EWA providers from compelling payment through consumer lawsuits, third-party collection activity or sales of outstanding proceeds to debt collectors or debt buyers, subject to limited fraud-related exceptions. That bill did not advance beyond the House Appropriations process.

Remedies Sought

Weiser and the state’s Uniform Consumer Credit Code administrator are seeking restitution for affected consumers, disgorgement of allegedly improper proceeds, civil penalties, injunctive relief and other remedies.

The lawsuit does not resolve the broader legal question for all earned-wage access programs. But it presents a clear enforcement theory: where a direct-to-consumer provider advances money, requires bank-account repayment authorization, extracts significant tip or speed-fee revenue and experiences near-universal repayment, Colorado may treat the transaction as regulated consumer credit regardless of its earned-wage-access label.

For the industry, the clash illustrates the limits of pursuing a specialized EWA regulatory category while continuing to offer products that regulators may view as materially indistinguishable from high-cost short-term lending.