Presenting a Loan as Not a Loan
Payday loan companies are known for their very high interest rates and their ability to trap consumers into loans that are very difficult to pay off. The complaint for this class action alleges that Activehours, Inc., which does business as Earnin is a payday lender, but uses different terms in its business that it hopes will let it circumvent lending laws.
Plaintiff John Underwood served in the US Air Force for twenty-three years and retired disabled on a pension in 2010. Looking for a cash advance, the complaint for this class action says, he found Future Income Payments (FIP), which in 2012 agreed to give him $10,000 in exchange for Underwood’s transfer of some of his pension to FIP for sixty months. The complaint says that the assignment of a military pension or military disability benefits is forbidden by law, but FIP tries to get around this as well as its usurious interest rates by claiming that the transaction is not a loan but a “purchase and sale” of a “future income stream.”