CT: AFC Letter to AARP on Earned Wage Access products in Connecticut

December 24, 2024

Nora Duncan
State Director
AARP Connecticut
21 Oak St,
Suite 104
Hartford, CT 06106

Dear Ms. Duncan,

I am writing on behalf of the American Fintech Council (AFC) to address your recent newsletter highlighting AARP’s priorities for the 2025 legislative session, including your opposition to Earned Wage Access (EWA) services. AFC is a standards-based trade association that represents EWA providers of all sizes across the United States, in addition to other responsible financial services companies.

While we appreciate and join in AARP’s efforts to advocate for affordability and consumer protections, we are deeply concerned about the organization’s mischaracterization of EWA, which is inconsistent with AARP's mission and contradicts its own financial product offerings. By increasing the availability of EWA products, AFC members have assisted millions of consumers in ensuring that they are able to access their earned wages before receiving their next paycheck.

EWA services have become an essential tool for workers navigating the financial challenges of living paycheck to paycheck. These services allow workers to access their own wages and avoid resorting to expensive alternatives such as punitive overdraft fees which we both oppose, late payments, or high-interest or predatory loans. Contrary to the claims in your newsletter, most EWA providers do not charge any mandatory fees, making these services entirely free or far less costly than other financial options.

Further, EWA is a critical tool for the older Americans that AARP seeks to serve. These workers value EWA as a tool to weather financial emergencies and for the protection it provides from having to draw down retirement savings accounts. In surveys to EWA users, they often cite using EWA in place of retirement savings. It is a valuable service for the very population AARP represents.

Your newsletter describes EWA as “predatory” and alleges that these services “strip wealth” from underserved communities. Yet, AARP itself offers financial products, which includes fees, mandatory interest, and penalties for late payments.

For example, the AARP-branded credit card charges $10 mandatory minimum payment to obtain a cash advance, $39 for late payments, and interest that builds on unpaid balances. The AARP credit offering is not inherently problematic, but does include a higher fee structure than the very EWA services AARP is criticizing.

We invite you to join us in pushing for actual solutions for people that need low or no-cost options to quickly meet a financial obligation. Instead, AARP’s opposition to EWA undermines financial flexibility for those who need it most, including many older adults living on fixed incomes. EWA offers a timely, affordable solution for managing unexpected expenses without resorting to other high-cost credit options. By opposing this service, AARP is effectively endorsing a status quo that has left consumers in a worse financial situation and paying more in fees.

It is also worth noting that every other state in the country has chosen to not follow the Connecticut Department of Banking’s lead in limiting EWA services, which AARP contends is a good thing. Other states understand that there must be a balanced approach to regulating EWA because when the product goes away, short-term liquidity needs do not. In fact, one of our members did a study in April 2024 concluding that 87% of their current and former Connecticut users reported paying more, not less, in fees for financial products and strategies they’ve used since DOB shut down EWA in January 2024.

Finally, AARP’s characterization of EWA as similar to payday lending is legally and factually inaccurate. Payday loans are high-interest, short-term loans that create debt traps for borrowers. EWA, on the other hand, provides access to wages already earned without accruing interest. This critical distinction is recognized by financial experts nationwide and six states, including California, which have acknowledged the unique structure of EWA services as distinct from traditional credit products.

If AARP truly wants to advocate for affordability and consumer protections, we urge you to reevaluate your stance on EWA and to recognize it as an innovative tool that provides workers—including those nearing retirement—with the financial flexibility they need to manage their daily lives.

We welcome the opportunity to meet with AARP Connecticut leadership to discuss how fintech solutions like EWA can coexist with your mission to support affordability and consumer protections for Connecticut residents. We believe a collaborative dialogue will help us find common ground in achieving these shared goals.

Sincerely,

Ashley B. Urisman
Director, State Government Affairs
American Fintech Council