Earned-wage access providers and other financial technology companies that allow customers to pay “tips” and “donations” are on the defensive after a US regulator fired a warning shot over the popular practice.
The Consumer Financial Protection Bureau for the first time sued a fintech for allegedly misleading people into leaving tips or donations, on top of other fees the company charged, tricking people into paying interest rates far higher than advertised. Research found that most people will leave tips if they’re asked to do so, even for financial technology products like earned-wage access—something that’s especially true for younger consumers.
The ...
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