A payday loan app supported by rap legend Nas is facing scrutiny from regulators in 11 states and Puerto Rico for practices Forbes called "predatory."

Earnin has been valued at more than $800 million but has drawn scorn from state officials across the country for "tips" that resemble the high-interest rates seen by payday lenders. The loans have become so crippling for so many Americans that 16 states have outright banned payday loans altogether.  

Payday loan companies have seen a resurgence since the Trump administration made a point of removing rules put in place by Barack Obama to protect people from outrageous interest rates.

Forbes says Black families are twice as likely to take out payday loans due in no small part to the $17,600 gap in average household wealth between Black households and white ones. 

In June, Nas said the app was "creating a fairer financial system that supports one another." He has not spoken about Earnin publicly since then.

Due to pressure from New York regulators, Earnin was forced to remove the feature at the heart of the app. In March, the New York Department of Financial Services subpoenaed Earnin for violating state usury laws. 

Earnin users can withdraw up to $1,000 before their paycheck comes. Depending on how large your withdrawal is, users are asked to pay a "tip" that regulators say resemble exorbitant interest payments.

“Earnin is a free product, and users can tip us if they’d like to,” CEO Ram Palaniappan told The New York Post in March. “We’re proud of the fact that we are helping customers move away from predatory lenders with high APRs.”

Yet, according to leaked company documents, people who pay higher tips more regularly are given access to 10 times as much money.

“If I order food at a restaurant and I don’t like the service and I don’t leave a tip, that doesn’t mean I didn’t get the food,” Brookings Institution fellow Aaron Klein told American Banker. “Whether or not Earnin’s tips are voluntary or de facto mandatory, that’s for the lawyers and the DFS to investigate and I’m glad they are investigating.”

Earnin was forced to remove this feature entirely in New York and have since denied that tip size affected how much money users had access to since the subpoena came down.

“There have been no changes to Earnin’s max model for New York customers since the company received a subpoena from NYDFS,” Earnin spokesman Eric Kuo told The New York Post.

Despite their regulatory struggles, Earnin has 10 million downloads since it was created in Silicon Valley in 2013.

Nas' Queensbridge Ventures invested heavily in the app along with Silicon Valley titans Andreessen Horowitz, DST Global and Spark Capital.

Forbes said the app was trying to operate in a gray area by skirting the 1968 Truth in Lending Act. The law forces lenders to tell people how high the interest rates will be and what their total costs will be. 

Palaniappan has made a point of fighting new payday lending laws and continues to hide certain business practices. Palaniappan and other Earnin staffers even suggested hiring a private detective to follow a reporter looking into their business practices. 

Associate Director of the National Consumer Law Center Lauren Saunders told American Banker in April that Earnin was trying to replicate the success of other lenders while using tactics from the past. 

“True early wage access providers are companies that have agreements with the employer and are integrated with payroll and are not making loans and seeking repayment from the customer," she said. "Earnin seems to be trying to look like they’re giving you your pay, but they have no relationship with the employer and in my mind it’s a payday loan.” 

EarninFinancePayday-LoanRam-Palaniappan