Earnin cash advance app is subpoenaed by New York regulator: source

New York regulators have launched an investigation into Earnin, a Silicon Valley-backed cash advance app, over concerns it circumvents state loan laws, The Post has learned.

The investigation follows an exclusive report by The Post last week that questioned whether the increasingly popular app’s voluntary ‘tips’ requests in exchange for paycheck advances amounted to loans on high-interest wages, which have been banned in 15 states, including New York.

Linda Lacewell, acting superintendent of the New York Department of Financial Services, subpoenaed the company on Wednesday for 21 different categories of documents, according to a source familiar with the investigation.

This includes records of the names of Earnin’s New York customers, the size and number of their transactions, and commands to convert the “tip” amounts he requested for advances into annual percentage rates, or APR – and assume fees count as interest, the source said.

Last week, The Post reported that Earnin was encouraging users to tip between zero and $14 on a $100 weekly loan. Users who don’t tip seem to have their credit limited. Meanwhile, a $14 tip would equate to an APR of 730%, nearly 30 times more than New York’s 25% cap.

The DFS requires any documents Earnin gave or presented to venture capitalists as well as any research “to encourage consumers to voluntarily leave tips,” the person said.

The state is also investigating any disclosure — or lack thereof — made to New Yorkers about the Truth in Lending Act, the source said.

Experts told the Post that Earnin operates in a legal “grey area” because he indicates the money is not a loan and could violate TILA by not disclosing interest rates.

The regulator is also asking for company information, such as organizational charts, company bylaws and policies, and profits and losses for the past six years, the person said.

Earnin’s parent company, Activehours, has until April 16 to respond, the source told the Post.

A spokeswoman for Earnin did not immediately respond to a request for comment.

The Post first reported on March 22 how Earnin — backed by Silicon Valley investors including Andreessen Horowitz, DST Global and Spark Capital — has left some users in debt as it avoids state and federal lending laws that make fees more transparent.

Earnin CEO Ram Palaniappan denied the company was a payday lender and declined to answer questions about compliance with TILA, which would require the company to disclose APRs to customers.

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