HI: Testimony in Opposition to Hawaii SB 2664

TO: The Senate Committee on Commerce and Consumer Protection

FROM: Ian P. Moloney, Senior Vice President, Head of Policy and Regulatory Affairs, American Fintech Council

DATE: February 14, 2024

SUBJECT: Senate Bill 2664

Position: Oppose.

Testimony:

Thank you Chair Keohokalole, Vice-Chair Fukunaga, and members of the Senate Committee on Commerce and Consumer Protection for allowing me the opportunity to testify in opposition to Senate Bill 2664 (SB 2664). My name is Ian Moloney, I am the Senior Vice President, Head of Policy and Regulatory Affairs at the American Fintech Council (AFC).

AFC’s mission is to promote an innovative, transparent, inclusive, and customer-centric financial system by supporting responsible innovation in financial technology (Fintech) and encouraging sound public policy. To that end, we have developed a specific set of standards for determining what constitutes a responsible Earned Wage Access (EWA) provider.

Simply put, EWA is not a loan and should not be regulated as such. As written, SB 2664 would shoehorn EWA into existing Hawaii lending laws and develop definitions that are incongruous with other state and federal laws. Categorizing EWA as a loan would make operating in Hawaii unviable for responsible actors and would fundamentally change the current service offering.

As I mentioned, the American Fintech Council believes in properly regulating Earned Wage Access. In our view, the best path forward is to develop a new and distinct regulatory framework for EWA that only allows responsible actors to offer the product in Hawaii. As we have successfully done in other states, we commit to working with you to develop this framework.

In closing, I respect the bill sponsors’ efforts to ensure that Hawaiians are adequately protected as they engage in EWA services. However, as I noted, SB 2664 may not be the right path to attain this goal and could ultimately harm consumers. According to data we collected from our members, over 100,000 Hawaiians already use the responsible EWA services provided by our members. My sincere hope is that we can find a path forward to draft pragmatic legislation that will establish the proper guardrails for the industry while allowing responsible EWA providers to continue offering their much-needed services across Hawaii. I thank the committee for your consideration of my perspectives and am happy to answer any questions.