Financial Danger: Payday Loan Apps in the Deep South

In furthering its mission to build wealth and economic opportunities across the Deep South, HOPE has long worked to address the harms of predatory lending practices which siphon hard-earned resources from people in the region. This has been true whether these loans have been made through storefronts, online, or via bank-partnership loopholes. And now, today, the delivery is through apps on people’s phones.

In conversations with community partners and in HOPE’s everyday work to help people buy their first car or first home, HOPE regularly hears stories about the distress caused by these payday loan apps. These concerns span across our footprint, including the heart of the Mississippi Delta.

This blog highlights recent research on these payday loan apps, often referred to as Earned Wage Access (EWA) products, and provides examples of consumer complaints to the Consumer Financial Protection Bureau (CFPB) highlighting challenges people in the Deep South face with these products. The analysis finds that these apps share the same long-standing concerns as other forms of payday loans, particularly their high costs and the resulting financial distress. It underscores the need for increased consumer protections that HOPE has historically supported, such as enforcement of usury limits in state law and the federal Military Lending Act.

What Is Earned Wage Access?

Earned Wage Access (EWA) products are marketed as a way for workers to access a portion of wages they have already earned but have not yet been paid, before their scheduled payday. The product comes in two forms. Employer-integrated EWA links directly to an employer’s payroll system, allowing the provider to verify hours worked and advance funds against confirmed earnings. Direct-to-consumer EWA, by contrast, requires no employer partnership; workers connect a bank account, share their work history, and receive advances based on estimated earnings.

Although often marketed as “free” or “0% interest,” these products often carry a set of varying fees, such as membership or subscription fees, fees described as voluntary tips, or fees for an expedited instant transfer of funds. Research shows nearly all transactions carry a fee of some type¹ and providers utilize practices to maximize excess fees² In both employer-integrated and direct-to-consumer products, repayment of the advance and fees is automatically deducted in full from the borrower’s next paycheck.

Patterns of Harm: What the Research Shows

These products are sold as a way to tap your paycheck early. The pitch sounds reasonable: your money, just sooner. But a growing body of research tells a different story about how these products actually function in people’s lives. Across both employer-integrated and direct-to-consumer products, there is consistent evidence of triple-digit annual percentage rates (APR), repeat advances, and consequent financial distress.

For employer-integrated models, the CFPB estimates an average cost of 106% APR, assuming an average advance amount of $106 with a $3.16 fee, repaid in full from a borrower’s next payday in 10 days.³ And, the CFPB found on average, people had 28 advances in a year for something that is marketed as a short-term help.

Similar patterns exist with direct-to-consumer advances, though typically at higher costs. The average advance through these payday loan apps is upwards of 300% APR. The CFPB found one provider with a typical APR of 290%, for a $144 loan due in 7 days with an $8 fee.⁴ A report by the Center for Responsible Lending (CRL), examining payday loan app usage across 5,000 people, found an average APR of 383% for loans repaid in 7 to 14 days.⁵ A 2023 report by the U.S. Government Accountability Office found users of a direct-to-consumer app took advances 26 to 33 times per year.⁶ Roughly 75% of users take out another advance on the same day they repaid the last one, or the day after.⁷

Research also shows other financial harms related to these payday loan apps, such as overdraft fees. For example, CRL’s report found that incidence of overdraft fees increased following someone’s first advance through a payday loan app.⁸ And, the burden of overdraft is most concentrated among people with the highest use of payday loan app transactions, thus deepening the financial stress for already the most financially vulnerable workers.⁹

The research confirms in numerous ways that this is not emergency help, but rather a debt trap. Payday loan apps simply move a slice of next week’s paycheck into this week, which means next week’s paycheck arrives smaller, and the cycle begins again. While these numbers paint a stark picture of the debt trap nature of these products, voices from the consumer complaint narratives provide a snapshot of the implications for people in the Deep South.

What CFPB Complaints Reveal

Complaints from people in the Deep South to the CFPB have surged in the last two years, including against companies providing EWA products. Nearly 500 complaints have been filed in the last 2 and half years alone, representing 60% of all complaints since 2016.¹⁰ Complaints filed in 2026 are on-pace to exceed those in 2025. 

In 2025, both Louisiana and Arkansas passed legislation under the guise of regulating these products.¹¹ In reality, these bills remove these products from protections that other loan products are subject to, including, for example, Arkansas’s voter-affirmed constitutional usury limit. In both states, the number of complaints in each state filed since the new laws went into effect exceeds the amount filed in the 12 months prior.¹²

Of the complaints across the region, more than 400 of these complaints included narratives from consumers. Many span issues and products beyond the company’s EWA product delayed direct deposits, challenges with the company’s other products and loans, and recurring customer service issues.

In Their Own Voices

The following section highlights Deep South consumers’ challenges with the payday advance products, specifically. The narratives provide an on-the-ground look of people’s experiences, mirroring the patterns of harm reflected in the empirical research. Financial distress stemming from the cycle of repayment and re-borrowing is evident. For example, a consumer in Tennessee expressed, I took these loans out and they are taking all my money. If I borrow $500 or $600 and repay they will take me down to $200 or $300 for no reason and it has caused me to take out other loans and has caused me to have payday loan debt that is out of hand.¹³Someone in Georgia, who describes the repeated use of the payday loan app, in-between paydays, noted how repayment of an existing advance, left him with just $17 dollars in his account, and still faced with $500 in rent, noting,

The complaints also provide insight into the confusing fee structures. For a consumer in Georgia, a “fee-free” $190 advance became a $200 repayment after the app added a tip the consumer says was never authorized, despite the consumer repeatedly selecting “$0.00” during the application process.¹⁵ A borrower in Louisiana on a fixed income of $940 a month shared how, for several months, she was repaying $470 for a $450 advance, paying an extra $25 fee to “boost” her eligible withdrawal amounts over several months, often leaving larger hole in her budget than could be filled by the repayment of the previous month’s advance.¹⁶

Finally, just like payday loans, one key feature is the repayment of the loan in full, plus the fees, from a borrower’s next paycheck, either an employer withholding repayment from their next paycheck or the app taking repayment before a borrower’s direct deposit reaches their account. Consumers highlight the pain of these unaffordable payments and the resulting consequences of putting them in the red:

• In Arkansas, one consumer woke up to find her account overdrafted by $570 after the company made repeated collection attempts following a disputed repayment date, saying. “This has financially ruined my household.”¹⁷

• A consumer in Tennessee, described how after the auto repayment went through, “…my account is now overdrawn by {$49.00}, and I was charged a {$30.00} overdraft fee. I do not get paid again until next Friday and now have no money to buy food, gas, or cover basic living expenses.”¹⁸

• A Georgia consumer whose hours at the job were cut was planning to use the remaining $220 in their account to “pay for a place to say, but I had to repay the app so of course they took all I had because I was owing {$250.00} plus interest so like {$260.00}. Now my account is negative…Please ask them to give me my full {$250.00} back so I can survive please. Life is so hard for me right now.”¹⁹

Conclusion

Based on both empirical data and stories from across the region, concerns are growing throughout the Deep South about the financial harms of payday loan apps. The experiences with these apps mirror HOPE’s long-standing concerns about high-cost loans, which lead people into cycles of debt and push economic opportunity further out of reach. These products undermine financial stability across the Deep South by eroding household budgets, making it more difficult for families to build savings and achieve long-term economic security.

As with other forms of payday lending, HOPE will continue to push for stronger consumer protections to prevent these debt traps, including enforcing existing state law interest rate caps, such as those in Arkansas and Georgia, and the 36% cap under the federal Military Lending Act for active-duty service member families. Ensuring that low-income and working families are not needlessly stripped of their hard-earned money by predatory loans is an essential step in closing wealth gaps in the Deep South.

Footnotes

1. Univ. of Washington Evans Policy Innovation Collaborative, “Earned Wage Access Financial Services,” June 2025, at 10 and 11, https://evans.uw.edu/wp-content/uploads/2025/08/EWA-Report-1.pdf  ↩︎
2. National Consumer Law Center, Picking Workers’ Pockets: Unfair, Deceptive and Abusive Practices by Earned Wage Payday Lenders, Jan. 2026, https://www.nclc.org/resources/picking-workers-pockets-unfair-deceptive-and-abusive-practices-by-earned-wage-payday-lenders/ ↩︎
3. “Data Spotlight: Developments in the Paycheck Advance Market | Consumer Financial Protection Bureau.” 2024. Consumer Financial Protection Bureau. July 18, 2024. https://www.consumerfinance.gov/data-research/research-reports/data-spotlight-developments-in-the-paycheck-advance-market/. ↩︎
4. Id. ↩︎
5. Christelle Bamona and Lucia Constantine, Escalating Debt: The Real Impact of Payday Loan Apps Sold as Earned Wage Advances (EWA). Durham, NC: Center for Responsible Lending, September 2025. https://www.responsiblelending.org/sites/default/files/nodes/files/research-publication/crl-payday-loan-apps-ewa-sep2025.pdf ↩︎
6. “Financial Technology: Products Have Benefits and Risks to Underserved Consumers, and Regulatory Clarity Is Needed Report to Congressional Committees United States Government Accountability Office.” 2023. https://www.gao.gov/assets/gao-23-105536.pdf. ↩︎
7. Constantine, Lucia, et al. Not Free: The Large Hidden Costs of Small-Dollar Loans Made Through Cash Advance Apps. Durham, NC: Center for Responsible Lending, April 2024. https://www.responsiblelending.org/sites/default/files/nodes/files/research-publication/crl-not-free-hidden-costs-apr2024.pdf. ↩︎
8. Christelle Bamona and Lucia Constantine, Escalating Debt: The Real Impact of Payday Loan Apps Sold as Earned Wage Advances (EWA). Durham, NC: Center for Responsible Lending, September 2025. https://www.responsiblelending.org/sites/default/files/nodes/files/research-publication/crl-payday-loan-apps-ewa-sep2025.pdf ↩︎
9. Id. ↩︎
10. MoneyLion Inc., Albert Corporation, Dave Operating, LLC, Bridge IT, Inc., Activehours, DailyPay, Inc., and Payactiv. The distribution of complaints across providers in the HOPE footprint closely mirrors national patterns in terms of share of complaints per company.  ↩︎
11.  Louisiana, HB 368 (2025),  https://www.legis.la.gov/legis/BillInfo.aspx?i=248355; and Arkansas, HB 1815 (2025),https://arkleg.state.ar.us/Home/FTPDocument?path=%2FBills%2F2025R%2FPublic%2FHB1517.pdf. ↩︎
12. In Louisiana, people  filed 31 complaints since August 1, 2025, which is more than the number of complaints filed in the 12 months prior (22). In Arkansas, 17 complaints have been filed since the law’s effective date of August 5, 2025, which is more than the number of complaints filed in the 12 months prior (15). ↩︎
13. CFPB Complaint 14546171, July 9, 2025. ↩︎
14. CFPB Complaint 13562581, May 16, 2025. ↩︎
15. CFPB Complaint 5540997, May 4, 2022. ↩︎
16. CFPB Complaint 10729594, Nov. 8, 2024. ↩︎
17. CFPB Complaint 20571983, Mar. 2026. ↩︎
18. CFPB Complaint 14919234, July 28, 2025 ↩︎
19. CFPB Complaint 13806055, May 30, 2025. ↩︎