If I told you I was going to give you money now and forcibly take it back from you a few days from now, that is a loan. If you paid me a fee for this, you’d probably presume this to be interest on your loan. But what if instead of paying me a fee, I told you to “just pay me a tip” instead? Sound too good to be true? That’s because it is.

Big tech is learning to ruthlessly engineer its way around laws, with the evolving precision of a self-learning algorithm. Some lawyers and engineers in Silicon Valley have gotten together with this sole purpose in mind: how do we offer something identical to a loan, sitting on the edge of legality with utmost effort to try and not cross the line?

The idea is this: leveraging a theory called libertarian paternalism, a new fintech outfit offers to be paid in “tips”, and since the tip amount is technically allowed to be lowered to $0, they can say “there is no required fee or payment” for the service. The entire ruse is to trick people into thinking something is free, when an overwhelming proportion of people do not even understand that to be the case in the first place. And, the “default” tip is set to a high, predatory level.

Never mind that a loan without interest is still a loan (we even have a term for it: a no-interest loan). This controversial theory alleges that because something can technically be dialed down to $0, even though in practice nearly nobody does so, the service is “free”.

There has been lots of research into defaults and human psychology, and the defaults we choose can effectively dictate ultimate user behavior. And pardon a diversion into the policy of organ donation for a second, but according to research by Stanford, whether or not the default is to donate or not donate your organs makes all the difference in the world. In countries where being an organ donor is the default, over 90% of people end up being organ donors. When the default is to not be a donor, and you have to opt in, uptake is just 15%.*

If the difference between 15% and over 90% of people choosing an outcome is dictated by the phrasing of the question, did all these people actually “choose” to be or not be organ donors? And looping back to the matter at hand, what good is a tip if only a small minority determine they can tip nothing?

It’s because the goal was never the tip. The goal was to find a clever way around loan interest caps, and the tip was the “secret code” to get there.

Consumers should be very wary of well-monied tech companies out there marketing misleading “free” programs that nonetheless end up still charging almost everyone. And from a consumer protection standpoint, where the charge is to police unfair and deceptive business practices, regulators should be even more concerned.

Fintech “tips” in this vein very well may be the quintessential unfair and deceptive business practice. Tips, and other “end runs” around lending laws are too cute by half. They’re too good to be true. And worse, they trick millions of unsuspecting consumers into accepting deceptive services.

We should pray an approach to regulation that treats the law as just another engineering challenge doesn’t become the norm with big tech.

* https://sparq.stanford.edu/solutions/opt-out-policies-increase-organ-donation