For the past two legislative sessions, an emerging financial technology company that offers a different kind of paycheck advance has backed efforts to carve its industry out of Colorado’s regulations on payday loans and lending.
But so far, the effort hasn’t been successful. And now the company, EarnIn, is facing a lawsuit filed by the Colorado Attorney General’s Office under the same laws it was lobbying to change.
The lawsuit, filed Aug. 27 against EarnIn, is the first of its kind in Colorado. It accuses the company of violating state law by charging effective interest rates for pay advances that were, on average, 10 times higher than those allowed for payday loans.
Lawyers from the attorney general’s office allege that EarnIn used deceptive practices to rake in tips. They contend that its “earned-wage access” products — which, in exchange for a fee, provide instant, small-dollar payments to customers — should be treated like loans.
If the lawsuit succeeds, it would refute the claims by the industry, and some lawmakers, that the payments aren’t a loan but a new type of financial product that needs its own bespoke regulations. The industry spent more than $500,000 on lobbying in recent years in Colorado, alongside thousands more in campaign donations, as it backed efforts to create that proposed oversight framework.
In a statement, Attorney General Phil Weiser said the California-based EarnIn had 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.”
The lawsuit targets one type of earned-wage access product, which is directly marketed to consumers and is accessible through smartphone apps. Customers receive payments as an “advance” on their wages, usually in small dollar amounts that are then repaid automatically to the company — typically when customers’ paychecks hit their bank account. The suit does not challenge a similar product that’s offered directly through employers.
Between January 2023 and July 2025, EarnIn loaned roughly $300 million to Colorado consumers and collected more than $16 million in combined tips and fees for “lightning speed” transfers, the attorney general’s office wrote. (EWA companies also often offer free transfers that are delivered a few days later.)
When weighing those fees as interest, the lawsuit alleges, the loans carried an average annual interest rate of 388%, far . A $3.50 fee for a $50 advance, for instance, translates to an annual interest rate of 365%.
Many of EarnIn’s loans went to repeat customers: Fewer than 57,000 Coloradans took out more than 3.1 million loans between early 2023 and summer 2025, the suit alleges. The filing also describes three customers who each took out hundreds of loans and paid thousands of dollars in fees during that period, with the fees amounting to average annual interest rates that ranged from 1,421% to more than 2,200%.
In a statement Wednesday, David Durant, EarnIn’s general counsel and chief legal and regulatory officer, said the company “firmly disagreed” with the lawsuit’s allegations. He said the lawsuit “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,” Durant wrote.
Growing legal challenges, new laws
Colorado’s lawsuit joins a growing list of legal challenges to the earned-wage access industry. Attorneys general in , and , have filed similar lawsuits in recent years, as have .
As that legal opposition has mounted, state legislatures have debated — — laws that carve earned-wage access services out of existing loan regulations. The EWA companies argue, as Durant did, that what they offer isn’t a loan at all and should be regulated using specifically crafted rules.
Critics have countered that the products are just a modern spin on payday lending and should be treated as such.
While a consumer can technically avoid repaying the loan without penalty, EarnIn has direct access to a customer’s bank account to secure repayment; that access can be difficult to revoke, the state’s lawsuit alleges. As with other EWA companies, a customer cannot use the app again until they’ve repaid the service.
Ninety-two percent of customers either paid a fee or left a tip — which, the suit alleges, were intentionally crafted to be difficult to avoid. In one case, it took 13 clicks to reduce a suggested $11 tip to $0, the AG’s office wrote. When factoring in tips and fees, customers repaid 99.23% of the money owed to EarnIn, according to the lawsuit.
In its bid to set its own regulatory framework, the industry has that would’ve required EWA companies to receive licensure before operating in the state. The latest bill, in 2026, would have applied both to direct-to-consumer products and to those provided through employers, and it would have effectively exempted EWA services from the more stringent requirements levied against payday lenders.
As a result, the measure also would have made moot much of the state’s forthcoming lawsuit against the company, said Andrea Kuwik of the Bell Policy Center, which opposed the legislation.
Indeed, EarnIn knew that the attorney general was investigating it as the company and others like it lobbied lawmakers, the lawsuit indicates. In January 2025, shortly before lawmakers first debated an EWA bill, Weiser’s office agreed to hold off on suing EarnIn, legal filings show.
Durant, the company’s general counsel, said that EarnIn had worked for a year with Weiser’s office and that the office “preferred a legislative solution.”
“The legislation we backed last session would have licensed EWA providers, put them under state supervision, and capped what providers can charge,” Durant wrote. “Supporting more oversight of our own product is the opposite of trying to avoid it, and it’s the same position we’ve taken in states across the country.”
Lawrence Pacheco, a spokesman for the AG’s office, said that the prior agreement not to sue EarnIn was unrelated to the legislative debate.
$500,000 spent on lobbying
Amid that debate, EarnIn and four other companies spent more than $500,000 on lobbying in Colorado in the past two years. EarnIn also donated $7,500 to outside spending committees backing Republican and Democratic candidates in late 2025 and early 2026, part of more than $41,000 in donations from four of the companies to spending committees supporting candidates from both parties and to lawmakers who sponsored the legislation.
All of that money was donated starting in late 2024, weeks before lawmakers first debated the industry’s regulations.
The companies’ lobbying did not pay off. In a repeat of the 2025 debate, this year’s bill cleared an initial committee vote only to die before reaching the House floor.
Rep. Sean Camacho, a primary sponsor of the EWA bills, said he was aware the attorney general’s office was “looking into certain companies for certain practices” ahead of the legislative debate earlier this year. That’s why “we wanted to run this bill, because we wanted to make sure best practices” were enshrined in state law, he said.
“What we were trying to do is protect working people by having a comprehensive framework in which EWA operates,” Camacho, a Denver Democrat, said. “We understand people need access to capital and traditional lending sources. This is a new thing in the marketplace, and from our view, it was unregulated and needed some work.”
But consumer-protection groups, which opposed the legislation, had long maintained that direct-to-consumer EWA services could always be regulated under existing rules.
The lawsuit affirmed that the companies have “really predatory, deceptive practices that should be following Colorado’s payday consumer protections,” said Kuwik, Bell’s policy and research director.
She said the legislature may need to set specific rules for employer-integrated EWA products, meaning those pay advances that are offered as part of an employer’s benefits package. But she said the state’s lawsuit made clear that direct-to-consumer advances, like EarnIn’s, should be treated like payday loans.
“The suit that they brought … just has all of (that) specific information about EarnIn that, again, just really validates everything that we’ve been saying,” Kuwik continued.
The lawsuit seeks a ruling that would prohibit EarnIn from violating state lending laws, and it also seeks refunds for excess charges and other penalties and fees.
