Nearly 30 New York Credit Unions Urge Albany to Pass the Stop Taking Our Pay (STOP) Act, To Crack Down on Racial Wealth Extraction and Exploitation of Low-Wage Workers
Longstanding Community Financial Institutions Blast Big Tech Payday Loan Apps for Ensnaring Workers in Debt and Fueling New York’s Affordability Crisis
Albany, NY – RealEstateRama – On Wednesday, 29 credit unions from across New York State delivered a letter to Governor Kathy Hochul, Senate Majority Leader Andrea Stewart-Cousins, Assembly Speaker Carl Heastie, State Senate Judiciary Committee Chair Luis R. Sepúlveda and State Assembly Banks Chair Clyde Vanel, urging lawmakers to crack down on predatory payday loan apps by passing the Stop Taking Our Pay Act (STOP) Act (S8939–Brouk, Rochester/A9644–Raga, Queens).
The letter described how so-called “Earned Wage Access” companies push predatory payday loans through deceptive smartphone apps that claim to offer “no-interest” cash advances. In reality, these apps charge high fees and “tips” that translate to triple-digit annual interest rates — blatantly violating New York State’s usury laws, which cap interest rates at 25 percent APR. One common loan made to New Yorkers carries an effective interest rate above 750% APR, according to a lawsuit brought by NYS Attorney General Letitia James against DailyPay and MoneyLion, two major payday lending apps.
Numerous studies show that payday loan apps erode workers’ financial stability, with app users facing higher overdraft rates, and the average user locked in a cycle of repeat use. Research by New Economy Project finds that the apps have siphoned nearly $700 million from New Yorkers’ paychecks since 2019.
In contrast, New York’s credit unions are locally-rooted institutions committed to building community wealth and resilience. Several of the letter signatories are also Community Development Financial Institutions (CDFIs) — mission-driven to provide affordable services to low-income, immigrant communities and communities of color. Unlike Big Tech payday lenders, New York credit unions provide loan products with low-interest rates well below New York’s usury cap.
In the letter, the credit unions warned that payday loan apps are extracting enormous sums from workers while evading New York’s usury laws and undermining mission-driven local financial institutions that provide responsible, affordable loans.
New York State has a proud history of preventing payday lenders from extracting money from hard working New Yorkers — and it is critical we keep these companies from taking advantage of workers now. At a time when housing costs, insurance, and groceries continue to cost more, New Yorkers need greater access to responsible and affordable financial resources, and protection from predatory actors.
QUOTES
“For over 40 years, Genesee Co-op has served the historically redlined and low-income communities of Rochester with responsible financial services. This includes offering affordable, fairly priced loans to our members to help them build wealth and deal with emergencies. We offer an alternative for people that are routinely locked out of mainstream borrowing and the payday lenders who try to exploit them,” said Dan Apfel, Chief Executive Officer of Genesee Co-op Federal Credit Union. “We know predatory lending when we see it, and despite their many claims to the contrary, these apps are engaged in just that. New York’s leaders must pass the STOP Act, and if they are truly concerned about expanding access to affordable financial services, they can start by properly funding our state’s Community Development Financial Institutions Fund.”
“Cornerstone Community FCU is the largest credit union headquartered in Western New York, with six locations and over 44,000 members. We are a community-owned organization committed to contributing to the economic growth of our region, and our roots go back nearly 70 years. We are dedicated to providing innovative, accessible and affordable financial services, and the payday loans pushed by Big Tech ‘EWA’ companies do not meet our standards,” said Jeffrey Sentiff, Chief Banking Officer at Cornerstone Community FCU. “All lenders in New York should abide by our state usury laws, with no special carveouts for moneyed interests. We strongly support passage of the STOP Act.”
“The Lower East Side People’s Federal Credit Union is a 40-year-old nonprofit cooperative with a mission to promote economic justice and opportunity in NYC neighborhoods. Most of our members are low-income, immigrant New Yorkers. We are glad to see low rates of payday loan app usage among our members — a sign to us that we are meeting local needs for affordable financial services,” said Linda Levy, executive consultant and retired CEO of Lower East Side People’s FCU. “In those cases, however, where a member does try out a payday loan app, we’re disturbed by the way these apps quickly become debt traps, forcing our members to repeatedly cough up triple-digit interest fees. There should be no exceptions to our state’s ban on usurious interest rates; we strongly support passage of the STOP Act.”
“As a Community Development Financial Institution, Brooklyn Coop protects our community members from the cycle of debt that predatory Earned Wage Access loan apps are specifically designed to create,” said Amanda Trainor, Special Projects Coordinator at Brooklyn Cooperative Federal Credit Union. “These apps take advantage of low-wage workers and Black and brown communities, and are structured to induce repeat borrowing and dependency. While our state has a commendable history of protecting New Yorkers from usury, we must pass the STOP Act now to crack down on this new wave of financial technology predators.”
“Alternatives Federal Credit Union is a Community Development Financial Institution (CDFI) that serves counties in Central New York, the Southern Tier, and the Finger Lakes Region. We’re dedicated to building and protecting wealth for people with diverse identities who have been historically marginalized by the financial industry, especially those with low wealth or identifying as Black, Indigenous, or people of color,” said Kevin Mietlicki, Chief Executive Officer of Alternatives FCU. “In these especially difficult times, many New Yorkers are living paycheck to paycheck, and they need higher pay as well as access to truly affordable financial services. Instead of giving a greenlight to predatory Big Tech smartphone apps, Albany should pass the STOP Act and increase funding for our state’s CDFI fund.”
“Credit unions were founded to combat usury. It is in our DNA,” said Emma Smalley, Chief Executive Officer of Good Neighbors Credit Union. “We must continue this work as the face of usury changes. For credit unions like ours, this work will include not only policy work, but education and democratic empowerment of our members.”
“Here at Southern Chautauqua, we don’t judge New Yorkers who are struggling to make ends meet. When you’re trying to pay rent, put gas in the tank, and feed a family all at once, you do what you can to get by,” said John Felton, Chief Executive Officer at Southern Chautauqua FCU. “But we are deeply disturbed by the fintech companies that take full advantage of people’s desperation, charging unaffordable fees and trapping New Yorkers in debt cycles — because even if the first cash advance seems to solve the initial crisis, when that advance comes due, they face a new crisis: there’s no cash to pay for the advance and exorbitant fees, and so they repeat the destructive process again and again. We must pass the STOP Act to ensure all fintech lenders abide by New York’s usury law, and we hope to work with the State and other partners to help all New Yorkers break the debt cycle and achieve financial security.”
“Our nearly twenty-year-old credit union based in the Bronx is a member-driven financial institution whose goal is to develop economic stability within the community and our membership. We provide banking services that are not currently available in the community, and always in the interest of helping people — not making a profit,” said Rachel Macarthy, Chief Executive Officer of New Covenant Dominion Federal Credit Union. “We’re very concerned about the rise of Big Tech cash advance apps. These fintech corporations claim to offer a service, but in actuality they’ve simply rebranded predatory payday lending for the smartphone. For the sake of our communities’ financial health, we call on Albany to rein in these new predatory lenders by passing the STOP Act.”
Contact: Katy Lasell, New Economy Project,
