unlawfulcharges.comWhat Borrow actually charges
Cash App's Borrow product advertises small amounts of fast cash — $20 to $400 — for a flat 5% fee.
A flat 5% sounds modest. The number that matters, though, is not the percentage; it is the percentage measured against the time you have the money. The Borrow advance runs roughly four weeks. A 5% charge over four weeks is an effective annual rate of about 60%.
There is a second charge on top. If the balance is not repaid after a one-week grace period, Borrow adds a 1.25% weekly charge for as long as the balance is outstanding. Four weeks of that adds another 5% of the principal.
The advances are issued through Square Financial Services, Block's own bank; earlier Borrow loans came through First Electronic Bank.
None of this is hidden in the sense of being undisclosed — the 5% appears in the product. What is missing is the translation: the charge is presented as a flat fee rather than as a finance charge with a stated annual percentage rate, which is the form the law requires and the form a borrower would need in order to compare it to anything else.
Why a "fee" is a finance charge
The distinction Cash App draws between a fee and interest has no basis in the law that governs consumer credit.
Federal lending-disclosure law requires that the cost of credit be disclosed as a finance charge and as an APR. The test is functional. If a charge is imposed as an incident to or a condition of extending credit, it is a finance charge — regardless of what the lender calls it on the screen.
A 5% charge you pay because you took an advance, which you would not pay if you had not taken the advance, is the cost of that credit. Calling it a fee does not move it out of the statute; it just keeps the APR off the page.
That matters because the APR is the one number that makes credit comparable. A borrower shown "5%" cannot easily tell that they are looking at a product priced far above a credit card, and considerably above most personal loans. A borrower shown "about 60% APR" can.
Regulators have taken the same functional view of this product category. The Federal Trade Commission and the Department of Justice have sued Dave over its cash advance product, and the District of Columbia Attorney General concluded that EarnIn's product was a payday loan carrying over 300% APR in violation of the District's interest cap.
The arithmetic on a $100 advance
Here is what the charges look like on a small advance — the size most Borrow users take.
A $100 Borrow advance, repaid on schedule in roughly four weeks:
- Amount advanced: $100
- Flat 5% "fee" — the finance charge, not called interest: $5
- Total repaid: $105
An effective annual rate of roughly 60%.
The same $100 advance, not repaid after the grace period:
- Amount advanced: $100
- Flat 5% "fee": $5
- 1.25% weekly charge, four weeks: $5
- Total repaid: $110
Ten dollars to borrow one hundred, over a period measured in weeks.
These figures are illustrative, shown to demonstrate how the charges stack rather than as a statement of what any particular account was charged. But the structure is the point, and the structure does not change with the size of the advance: the shorter the term, the higher the effective rate that the same flat percentage produces.
Where 60% runs into state law
The second problem with an undisclosed effective rate is that it may exceed what a state permits anyone to charge.
States set usury caps on consumer credit. Many cap it at or below 36% — the figure that has become the widely used benchmark for what separates ordinary consumer lending from predatory lending. Several states cap it lower.
An advance carrying an effective rate near 60% sits above those caps. Where the rate exceeds a state's cap, the advance is an unlawful loan, and the consequences are not limited to a refund of the excess. Depending on the state, remedies can include forfeiture of all interest on the loan, statutory penalties, and in some states multiple recovery of interest paid.
Alongside those state usury provisions, the unfair and deceptive trade practices statutes of all 50 states independently prohibit marketing short-term credit in a way that obscures its true cost. Those statutes commonly carry statutory damages, treble damages for willful conduct, and attorney fees. Federal lending-disclosure law adds its own statutory damages for disclosure failures.
Who may qualify
You may have a claim if you used Cash App Borrow and:
- You were charged the flat 5% fee on an advance, or
- You were charged the 1.25% weekly charge after the grace period, and
- You were not told the cost of the advance as an annual percentage rate.
A few points worth stating plainly. You do not need to still use Cash App — former users may qualify. You do not lose the claim because you agreed to the fee when you took the advance; disclosure obligations and usury caps are set by law and cannot be waived in the app's terms. And the amount does not have to be large. These claims are built on many small advances rather than one big one, and users who took repeat advances over months are often the ones with the most at stake.
What helps most is your Cash App transaction history — the dates and amounts of each advance and each fee — and your linked bank statements, which show the same charges from outside the app.
Maginnis Howard represents consumers nationwide. There is no cost to have your account reviewed and no fee unless we recover for you.
The legal basis
Why this may be illegal
Cash App's "Borrow" product advertises fast cash of $20–$400, but charges a flat 5% fee on a roughly four-week advance — an effective APR of about 60% — plus a 1.25% weekly charge if the balance is not repaid after a one-week grace period. These charges function as the cost of credit, yet are presented as a flat "fee" rather than disclosed as a finance charge and APR. The loans are issued through Square Financial Services, Block's own bank; earlier Borrow loans came through First Electronic Bank. Where the effective rate exceeds a state's usury cap, the advances are unlawful loans.
The law
Federal lending-disclosure law requires the cost of credit to be disclosed as a finance charge and an annual percentage rate. Recharacterizing a finance charge as a flat "fee" to minimize the apparent cost can violate those disclosure requirements. Where the resulting effective rate exceeds a state's interest-rate cap (many states cap consumer credit at or below 36%; several are lower), the advances are unlawful loans subject to interest forfeiture and statutory penalties. The unfair and deceptive practices laws of all 50 states independently prohibit marketing short-term credit in a way that obscures its true cost.
What you could recover
Per-claimant actual damages = the sum of every "express," "instant," or "Lightning Speed" transfer fee, every pressured "tip," and every required monthly membership or subscription fee charged in connection with the advances, treated as the cost of credit. Where the effective annual rate (often 200%–400% or more) exceeds the claimant's state interest-rate cap, damages also include recovery of the unlawful charges and, in many states, statutory penalties (for example, forfeiture of all interest, or twice the interest paid). State consumer-protection statutes add statutory damages that vary by state (roughly $100 to $10,000 per violation, with enhanced or tripled damages in some states for willful conduct). Federal lending-disclosure law adds statutory damages of twice the undisclosed finance charge, with a floor of $200 and a ceiling of $2,000 for a one-time advance, or a floor of $500 and a ceiling of $5,000 where the product is an ongoing line of credit — but only for advances taken within one year before the claim is brought. Advances older than one year are recovered under the state-law claims, whose time limits are generally longer and vary by state. Attorney fees are recoverable under federal law and many state statutes. Typical individual claim range: $300–$7,500, depending on how many advances the claimant took, how recently, and the claimant's state.
How your claim would be handled
Claims like this are handled as individual arbitration cases — private proceedings, no courtroom. For Cash App (Block, Inc.), cases are typically administered through NAM.
The Advance, As Advertised* vs. What the Advance Actually Cost*
| The Advance, As Advertised* ($100 Cash App Borrow advance · roughly a 4-week term, advertised as a flat 5% fee) | $100.00 |
| Flat 5% "fee" — the finance charge, not called interest | +$5.00 |
| 1.25% weekly charge after the grace period (4 weeks shown) | +$5.00 |
| What the Advance Actually Cost* (Express-transfer fees, "tips," and required memberships are the cost of the credit — they just aren't called interest) | $110.00 |
Figures shown are illustrative examples, not records of an actual transaction; your amounts may differ.
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Check if you qualifyFrequently asked questions
Do I have to pay for this?
You don't pay anything unless we recover compensation on your behalf. Our legal team works on contingency, which means we only get paid if you do.
I thought the advance was free. Do I still have a claim?
Likely yes. The whole point of these claims is that the advances were marketed as 'free' or 'interest-free' while express fees, tips, and membership charges added up to a very high effective interest rate that was never disclosed as such.
What if I tipped voluntarily?
Regulators have found that these 'tips' are presented in ways designed to make consumers feel they are expected or required. If the tip functioned as the cost of borrowing, it counts toward your claim.
Do I need to still use the app?
No. Both current and former users who were charged these fees within the last four years may qualify.
What is Maginnis Howard?
Maginnis Howard is a consumer protection and personal injury law firm serving clients nationwide. You may find more details about us at www.carolinalaw.com.
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