CO: Joint Industry Letter of Support of HB 1020

Colorado General Assembly
House Committee on Business Affairs and Labor
200 E Colfax Avenue Denver, CO 80203

Re: Support of HB 1020

Dear Honorable Members of the Business Affairs and Labor Committee:

Thank you for the opportunity to express our strong support for HB 1020, which creates new consumer protections and establishes a clear framework for the licensing and regulation of Earned Wage Access (EWA) services in Colorado.

EWA helps Colorado workers make ends meet

In the face of rising costs of living and stagnating wage growth, many Coloradans are struggling to make ends meet. With approximately 35% of residents living paycheck-to-paycheck, the need for accessible and affordable financial solutions has never been more urgent. EWA offers workers a much-needed lifeline by allowing working families to access wages they’ve already earned before their scheduled payday, for low fees or no fees.

EWA has already become an invaluable tool for over 350,000 workers in Colorado, with more than 2,000 employers offering this service as an employee benefit – including hundreds of small businesses. By giving employees access to their already earned wages, EWA helps them avoid costly alternatives like high-cost online payday loans, credit card debt, and late fees.

HB 1020 creates a new, dedicated oversight system for EWA that is aligned with how the product operates. The bill proposes to regulate EWA service providers within a dedicated chapter in Title 5 of the Colorado Revised Statutes. There are many other industries regulated under this title, including consumer lenders, deferred deposit lenders, student loan service providers, and debt management service providers.

In doing so, HB 1020 creates important consumer protections and oversight of the industry, and also ensures providers know the guardrails around which to innovate to provide further value for workers. Key consumer protections within HB 1020 include:

● Bans interest, late fees, tips, and penalties: The bill prohibits the imposition of interest, late fees, or penalties, shielding workers from the kinds of high-cost practices often associated with payday loans, pawn loans, auto loans, short-term installment loans, and other types of predatory lending.

● Requires at least one free option The bill mandates that providers offer at least one free option for employees to access their earned wages.

● First-in-the-nation fee cap: The legislation sets a cap of $7 on fees for expedited transactions, ensuring expedited fees do not exceed that amount.

● Ensuring low-credit workers will always have access: HB 1020 ensures that no credit checks or credit reporting will be involved in EWA transactions, which means even workers with poor or no credit are always able to access this beneficial service.

● Bans recourse in an EWA transaction: The bill gives users the ability to cancel an EWA transaction at any point without penalty, while also ensuring that providers cannot pursue recourse or debt collection in the event of insufficient funds at payday or an employer does not make payroll. This ensures there is no recourse in an EWA transaction, ever.

● Fee disclosures and transparency: The bill creates clear fee disclosures for optional fees, so consumers are well-informed about any optional fees.

●Licensing and ongoing oversight: By establishing licensing requirements and empowering the Attorney General to oversee compliance, HB 1020 ensures that only reputable businesses can provide EWA services in Colorado, and that they are held accountable for their practices.

For these reasons, HB 1020 ensures workers can access their earned wages responsibly and at no cost. By distinguishing EWA as an innovative service that allows access to earned wages, this bill controls for the consumer risks unique to EWA, which are different from those posed by credit or other financial products.

We strongly urge you to support HB 1020 and provide Coloradans with the tools they need to achieve financial stability.

Sincerely,

American Fintech Council
Ashley Urisman, Director of State Government Affairs

Brigit
Tara Rider, Vice President, Policy and Government Relations

Chamber of Progress
Robert Singleton, Senior Director of Policy and Public Affairs

DailyPay
Nancy Coleman-Chavez, Public Policy & Government Affairs Manager

Immediate
Matt Pierce, CEO

Payactiv
Molly Jones, Head of Public Policy

Paychex
Sarah Faye Pierce, Head of Government Relations

WageStream
Kevin Lefton, Global General Counsel

ZayZoon
Garth McAdam, General Counsel