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Chicago debt collection attorneyAs the economic repercussions of the COVID-19 pandemic persist across both Illinois and the entire nation, consumers have been looking for new ways to fund their daily expenses from paycheck-to-paycheck. Enter the cash-advance app, clever applications on their smartphones that link to their bank accounts and offer small cash advances each pay period provided the user meets certain requirements. Among them are such apps as Earnin, Dave, Branch, and Brigit, with countless others cropping up every day on your smartphone’s digital marketplaces. With these apps becoming more and more popular, many financiers and finance companies funding such major joint “fintech” ventures might be wondering how they can ensure appropriate debt collection. Overall, though, that might be the least of their worries at this point. Here are a few reasons why.  

Regulatory Issues

While to many consumers, these cash-advance apps might seem like a brave new world of brand-new trending apps that could really save them from some tough times, many financial experts argue that these apps are really payday lenders disguised as newfangled technology. The reason? Because many of them collect “optional” tips on every payday advance, many of which amount to interest rates comparable to standard (and high) payday-loan rates. In many cases, these apps are offered in states where payday loans of certain high interest rates are outlawed, or payday loans are entirely against the law. Such regulations have already taken their toll on the app Earnin, which was forced to disable the “tip” option a year ago in New York.  

How Cash Advance Apps Attract Borrowers and Ensure Repayment

These apps stay afloat for four primary reasons:

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