For a price, apps provide pay advances toworkers

Americans have become accustomed to summoning just about anything on demand, fromgroceries to car rides. Nowit’s just as easy to get paid when you want.

As the coronavirus pandemic squeezes household budgets, workers and employers are increasingly turning to pay-advance apps with friendly-sounding names like Earnin, Dave, Brigit and Rain. They allow users, for a sometimes-optional fee, to request money before payday. One even offered a program for those waiting for jobless benefits.

And many customers see them as lifelines.

“I turned to those pay-advance apps to compensate where I couldn’t,” said TashaAyala-Spain, anAmerican Airlines employee from Upper Darby, Pa., whose hours were slashed this year. She has used Dave and Earnin to get advances of up to $200 per pay period.

“It wasn’t like a loan to a bank,” said Ayala-Spain, who sometimes worked 50hour weeks before the pandemic, loading and unloading baggage, mail and medical equipment from airplanes. “You don’t have to pay interest.”

The appeal is obvious: For a few dollars or less, users can cover a bill that comesduein themiddle of a pay cycle or get cash for an unexpected expense, like a wildfire or hurricane evacuation. By tapping their earned but unpaid income early, they can avoid overdraft fees, late charges or worse — more predatory lenders. And come payday, the advance is repaid from

theirbankaccount or directly from their paycheck.

But these services, which millions have downloaded, come with question marks. Some customers have sued, regulators across the country are looking into their practices, and consumer advocates fear the apps are glossy packaging for the kind of lending that can leave users stuck in an expensive cycle of debt.

“It’s possible it’s helping them cover their bills and avoid overdraft and higher cost loans,” said Alex Horowitz, a senior officer for the Pew Charitable Trusts’ consumer finance project. “It’s also possible it’s leaving them without enough money on payday so they turn to them again.”

The apps generally come in two flavors. Some, like Earnin and Dave, are open to the public and can requireaccess toyour transaction history or work time sheets. Earninmay use your phone’s GPS to check work attendance. Others, like PayActiv, DailyPayandRain, are offered through employers as a workplace benefit.

Their popularity has grown rapidly. Last year,

workers tapped their paychecks through workplace providers an estimated 37 million times, gaining access to more than $6 billion, nearlydouble theamount in 2018, according to Aite Group, a research company. And DailyPay said the number of users who tapped money for coronavirus-related reasons increased 400 percent during the early months of the pandemic.

“Maybethe user’sincome hasn’t been affected by COVID, but someone else in their household has had their hours reduced or has been laid off, resulting in less overall income,” said Leslie Parrish, a senior analyst with Aite.

In recent months, hundreds of companies — including Kroger, Wayfair, Dollar Tree, Staffmark, HCA Healthcare and Mercy Hospitals — have begun offering the apps to employees.

“I cannot change the level of salary, but what I can change is the timing,” said Safwan Shah, founder and chief executive of PayActiv, which added 410 employers as clients from March to August — more than double the additions a year earlier.

Kriston Jae Bethel / New York Times Tasha Ayala-Spain, whose hours with American Airlines have been cut, says she relies on the apps.