Published: December 2023

Opposition to Earned Wage Access Consumer Protection Act

More than a hundred advocacy groups wrote to U.S. Representative Bryan Steil, author of the draft Earned Wage Access Consumer Protection Act, to voice their opposition to the bill because its true effect would be to exempt FinTech companies and payday lenders from regulations designed to protect consumers.

Consumer Action joined 118 other advocacy organizations in a letter to U.S. Representative Bryan Steil, author of the draft Earned Wage Access Consumer Protection Act, to voice their opposition to the bill. The bill purports to regulate the business of offering and providing earned wage access services—presumably, based on the name, with protections for consumers—but in reality, largely codifies lenders’ current business model. Earned wage advances are loans to wage earners that are repaid on payday. The loans, often offered by FinTech companies, tend to be expensive (with an average APR of over 330%, according to California data based on nearly 6 million transactions), and repayment is debited from the employee’s bank account. The legislation would allow FinTech and other wage advance businesses to escape constraints imposed by the Truth in Lending Act (TILA), the Electronic Fund Transfer Act, and state fee and rate laws by characterizing their product as an advance—not a loan or credit. The costs of FinTech cash advances fall primarily on low-wage workers who need a living wage, not a product that just makes them pay to be paid.

Lead Organization

National Consumer Law Center

More Information

Read the letter here.

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