In the world of financial technology (fintech), the promise of innovation doesn’t always translate into fairer practices. Recent headlines have cast a harsh spotlight on just how far some companies will go to inflate profits at the expense of those they claim to serve. But amid this wave of questionable tactics, one young entrepreneur, Pranam Daga, is charting a radically different course—one where ethical lending isn’t just a marketing phrase but the foundation of a business model that aligns social impact with profitability.

Exposing the Dark Side of “Feel-Good” Lending

In December 2024, the Federal Trade Commission (FTC) filed a complaint against a fintech company that had marketed itself as a benevolent alternative to payday loans. Behind the polished branding, the FTC’s investigation revealed a much bleaker reality:

  • Users were nudged—almost guilt-tripped—into paying 15% “tips” through manipulative dark patterns, raking in $149 million in “tips” over 18 months.
  • Its charitable meal donation program turned out to be more of a psychological trick than genuine philanthropy, with only about 10 cents on the dollar actually going to meals.

This case isn’t just an isolated scandal; it underscores an unsettling trend in fintech. The emphasis on slick user interfaces and “mission-driven” marketing often conceals exploitative business models. The question for industry insiders is: How do we break this cycle of hype over honest help?

The Real Root of the Problem: Delayed Wages

To find a sustainable, more humane solution, you first have to ask why so many people need short-term loans in the first place. As Pranam Daga points out, American workers are, by default, financing their employers. In most companies, people perform labor for two weeks or more before they see a paycheck. By the time payday arrives, unexpected expenses—medical bills, car repairs, or even groceries—can tip families into crisis mode.

“Every employee is secretly a lender,” Pranam explains. “They expend their effort first, and only get paid weeks later. Meanwhile, expenses don’t wait.”

It’s no wonder payday lending booms when nearly 39% of Americans can’t handle a $1,000 emergency without going into debt. Traditional payday lenders take advantage of this income lag, charging astronomical APRs—sometimes 600%—to those who can least afford it. Even well-intentioned newcomers can fall into exploitative practices if their fees or “tips” overshadow the actual service provided.

Building a Better (and Truly Ethical) Alternative

Instead of devising new ways to extract fees, Pranam zeroed in on the real culprit: the pay cycle. While working as a Resident Assistant at Purdue University, he first saw how even small, unexpected expenses could derail a student’s financial stability. Later stints—consulting top banks on compliance, rolling out a credit-builder at Goldman Sachs, and developing Varo Believe at Varo Bank—reinforced his belief that fintech solutions need to be transparent, accessible, and rooted in genuine customer well-being.

That vision coalesced when Pranam joined Clair, a company providing an on-demand pay solution. Rather than waiting for the conventional two-week or monthly pay cycle, Clair lets employees access money the moment they clock out—with no hidden fees, no interest, no strings attached.

“Hardworking people shouldn’t have to prove their worthiness to access the wages they’ve already earned,” Pranam says.

Pranam’s approach is refreshingly straightforward: clock out of your shift at 5 p.m., and by 5:01 p.m., those hours of pay are available for transfer to your bank or debit card—no hidden “tips” or psychological manipulation required. In an industry obsessed with complicated fee structures, Clair’s transparency stands out.

A First-of-Its-Kind Partnership with Gusto

A turning point came when Clair partnered with Gusto, a leading payroll platform serving over 1.5 million employees. This was more than a marketing alignment; it marked the first fully embedded Earned Wage Access (EWA) solution in a major payroll system. The integration means Gusto users don’t have to jump through third-party hoops to access their pay early—Clair is right there in the environment they already trust.

For Pranam, spearheading this initiative required both technical innovation and strategic foresight:

  • Real-Time Underwriting: He led the development of a proprietary underwriting model relying on payroll and attendance data, rather than traditional credit checks, to offer EWA responsibly.
  • Instant Payouts: Pranam oversaw the re-engineering of Clair’s funding rails to enable seamless, seconds-fast payments—no small feat given the limitations of existing banking infrastructure.
  • Embedded Experience: By weaving Clair directly into Gusto’s user interface, Pranam removed friction from the process, ensuring employees could unlock earnings without leaving the payroll platform.

The results are staggering: employees using Clair have collectively saved millions of dollars in overdraft fees and payday loan costs, while businesses report improved employee morale and retention.