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Gig Workers Are Falling Into the Payday Loan Trap
New tech, old problems
The ads are all over Snapchat and Hulu. They’re shot to look like the same slice-of-life vertical video you’re already watching, showing normal people who want to do normal things — take a girlfriend to a movie, change a baby’s diaper, buy “my bridezilla sister a last minute wedding gift” — all made possible by the Earnin app, which lets you “stop waiting for payday.”
Earnin offers the workers of tomorrow — the Uber drivers, the DoorDash deliverers, the Wag walkers — a portion of their hourly or contractor earnings almost immediately. Like any payday loan service, the idea is to cash out for hours worked before your check clears, and Earnin pays itself back when you receive your direct deposit. Assuming all goes according to plan, anyway. It doesn’t always, revealing kinks in the service and the difficulties faced by people who use it.
(This is Medium’s second story about Earnin. You can read the first, about the app’s security, here.)
TheBlessedDriver, a YouTuber who vlogs about the gig economy, explained in a recent video that because Grubhub has eliminated its daily pay options, she uses Earnin to get paid every day, up to $500 a week. Similar to services like DoorDash, Grubhub hires gig workers to deliver food that customers order online from a variety of restaurants. Grubhub pays its delivery drivers on Thursdays; DoorDash charges $1.99 to get paid same-day. This is why a service like Earnin holds such appeal: If you’re working on demand, why not get paid on demand?
But, TheBlessedDriver cautions, after you get money from Earnin, you could end up with an overdraft charge if there’s a gap between when you’re supposed to get your money and when Earnin debits your account. It happens all the time.
People who use payday loan services to float them to their next paycheck may naturally find themselves closer to the financial abyss than others.
The Better Business Bureau (BBB) said last year that it had received a “pattern of complaints” about Earnin, “concerning consumers alleging having their bank account debited prior to their payday or having unauthorized…
