Federal: AFC Letter to Secretary of the Department of the Treasury, Scott Bessant

The Honorable Scott Bessent
Secretary
Department of the Treasury
1500 Pennsylvania Avenue, NW  
Washington, D.C. 20220

Re: Developing a Pragmatic Regulatory Framework for Earned Wage Access

Dear Secretary Bessent,

On behalf of The American Fintech Council (AFC), I am writing you to congratulate you on your confirmation as Secretary of the Department of the Treasury (Treasury) and commend you on your willingness to take on the additional responsibility as Acting Director of the Consumer Financial Protection Bureau (CFPB or the Bureau). As Treasury Secretary, I have no doubt that you will seek to develop a fiscal policy that will ensure the U.S. economy maintains its globally standing and American workers remain strong. In your present additional capacity as Acting Director of the CFPB, you have a significant opportunity to aid U.S. workers in their everyday lives by developing a pragmatic regulatory framework for Earned Wage Access (EWA).

AFC is the premier trade association representing the largest financial technology (Fintech) companies, including the biggest providers and largest number of EWA companies. Our mission is to promote a transparent, inclusive, and customer-centric financial system by supporting responsible innovation in financial services and encouraging sound public policy. Our members are also improving access to financial services and increasing overall competition in the financial services industry by lowering the cost of financial transactions, allowing them to help meet demand for high-quality, affordable financial products.

EWA services help to reconnect work and reward for the benefit of employees. EWA provides workers with a crucial service by enabling them to access the wages they earned between paychecks and helps to break the arbitrary pay period cycle. Responsible EWA providers, who constitute AFC’s membership offer crucial services for consumers to access their pay prior to payday in a way that makes the most sense for the induvial consumer’s situation. Nationally, our members have already assisted millions of consumers in ensuring that they are able to handle unexpected expenses when they inevitably come up before their next paycheck.

This optionality in EWA products, while beneficial from a consumer and economic perspective, presents a unique opportunity to develop clear regulatory guardrails. To that end, AFC has publicly advocated for a clear and consistent regulatory framework for innovative financials services and products that avoid duplicative or diverging requirements and accurately reflects the nuances of the innovative service. Further, AFC consistently advocates for a strong, unified approach to regulation that properly balances consumer protections with innovation that ensures regulators protect against actual, not perceived, harms to consumers. In practice, we have also developed Standards for Earned Wage Access to help inform the best approach to regulating EWA and ensure responsible actors operate within the EWA market.

Unfortunately, at the state level, we are seeing a patchwork approach towards regulating EWA develop. At present, over 20 states have either pursued or showed intention to pursue legislation or regulation of EWA. We recognize and appreciate the intent of these various state legislatures and regulators to expeditiously pursue a path that will ensure their citizens remain protected; however, some states are settling for speed over quality. While AFC is supportive of the legislation that has developed a bespoke regulatory framework for EWA, such as in Nevada and Missouri, we disagree with the approach of shoehorning EWA products into existing lending laws, pursued by other states. Regardless of how states have chosen to pursue the regulation of the emerging EWA market, we believe that pragmatic federal engagement on this matter is necessary.

Nearly a year ago, AFC made this same request to then-CFPB Director Rohit Chopra.  Unfortunately, the then-Director disregarded our request and instead pursued regulatory activities that sought to further confuse industry participants and ultimately remove the existing Bureau policy with which the industry relied.  Our belief on the best policy outcome remains the same: to pursue a formal legislative rulemaking on EWA. Pursuit of a formal legislative rulemaking on EWA, which, as prescribed under the Administrative Procedures Act, would provide the public with the ability to adequately convey the myriad views on this subject and ensure that the Bureau duly considers these views. Further, a formal legislative rulemaking on EWA would provide the necessary clarity for EWA providers to operate effectively in the market and to resolve the politically motivated and myopic policy decisions made in the final moments of the previous administration.

Again, I want to congratulate you on your confirmation as Treasury Secretary and willingness to take on the additional responsibility of Acting Director of the CFPB. In your capacity as Acting Director, we respectfully request that you develop a pragmatic regulatory approach to EWA, by pursuing a full notice and comment rulemaking process under the Administrative Procedures Act. We appreciate your consideration of our request and look forward to continuing to find opportunities to collaborate on the pragmatic regulation of responsible innovations in a manner that ultimately serves consumers best.

Sincerely,

Ian P. Moloney
SVP, Head of Policy and Regulatory Affairs
American Fintech Council

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[1] American FintechCouncil’s (AFC) membership spans EWA providers, lenders, banks, paymentsproviders, loan servicers, credit bureaus, and personal financial managementcompanies.
[2] Among other provisions, AFC’sstandards require members to register and/or obtain appropriate licenses; offera “no cost” option to all users; provide strong fee disclosures represented ina clear and transparent manner; and allow users the ability to cancel their EWAservice at any time. For additional information on AFC’s Standards for EWA, seehttps://fintechcouncil.org/what-we-do.
[3] See Nev. Rev. Stat. Ch. 400. and RSMo.§ 361.749.
[4] American Fintech Council, “AdvocacyLetter to CFPB in Support of Developing a Pragmatic Regulatory Framework forEWA”, (Feb. 7, 2024), available at https://www.fintechcouncil.org/advocacy/american-fintech-council-letter-to-cfpb-on-developing-a-pragmatic-regulatory-framework-for-ewa.  
[5] Consumer Financial Protection Bureau, “Truth inLending (Regulation Z); Consumer Credit Offered to Borrowers in Advance ofExpected Receipt of Compensation for Work”, Fed. Reg. 89, no. 147 (Jul. 31,2024): 61358; and Consumer Financial Protection Bureau, “Truth in Lending(Regulation Z); Consumer Credit Offered to Borrowers in Advance of ExpectedReceipt of Compensation for Work” Fed. Reg. 90, no. 9 (Jan. 15, 2025): 3622.