Earned Wage Access Legislation & Biden Admin’s Opposition to IL’s Interchange Fee Law

Statehouse Shift Ahead for Earned Wage Access?

In recent years earned wage access apps, which allow workers to obtain access to their earnings before they receive their paychecks, have exploded in popularity. And providers including DailyPay, Dave, EarnIn and Payactiv, have been lobbying aggressively for state laws regulating the products as a new financial service that isn’t subject to interest rate limits or annual percentage rate disclosure requirements.

So far, they’ve been successful. In the past year and a half state lawmakers in Kansas, Missouri, Nevada, South Carolina and Wisconsin have all passed industry-friendly bills, which impose licensing and other requirements on providers.

Consumer groups, however, contend the products are just another form of payday loan. The only state that has taken that position is Connecticut, where the Department of Banking issued guidance defining earned wage access advances as small loans.

But that could change next year, as a result of new draft regulations from the federal Consumer Financial Protection Bureau, which determined that earned wage access apps are consumer loans subject to the Truth in Lending Act.

“The CFPB interpretive rule signals to state lawmakers and regulators that: We looked at this product, we analyzed how it operates, we analyzed it against legal standards, and we see it as a loan,” said Monica Burks, policy counsel for the Center for Responsible Lending. “It’s a signal to our state lawmakers that they should look at their own code and probably come to the same conclusion.” (PLURIBUS NEWS)

Biden Administration Seeks to Block IL Interchange Fee Law

The Biden administration sided with banks suing Illinois over its first-in-the-nation law curtailing “interchange fees” on the tax and tip portion of debt and credit card transactions. In a legal brief, the federal Office of the Comptroller of the Currency, an independent bureau within the Treasury Department, wrote that the Illinois Interchange Fee Prohibition Act—passed as part of the state’s budget process earlier this year and scheduled to take effect next summer—is “bad policy” and conflicts with federal law. (CAPITOL NEWS ILLINOIS)

—Compiled by SNCJ Managing Editor KOREY CLARK

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