NM: AFC Joint Industry Letter of Support of HB 59

New Mexico State Capitol
House Commerce & Economic Development Committee
490 Old Santa Fe Trail
Santa Fe, NM 87501
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Re: Support of HB 59

Dear Honorable Members of the House Commerce & Economic Development Committee:

Thank you for the opportunity to express our strong support for HB 59, which creates new consumer protections and establishes a clear framework for the licensing and regulation of Earned Wage Access (EWA) services in New Mexico.

EWA helps New Mexico workers make ends meet

In the face of rising costs and financial uncertainty, many of your constituents are struggling to make ends meet. With approximately one-third of Americans 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. This empowers workers to address costs as they arise, rather than having to plan around their employers’ pay periods.

EWA has already become an invaluable tool for over 100,000 workers in New Mexico, and more than 800 employers offer it as a benefit. 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 59 creates important consumer protections.

HB 59 creates a new, dedicated oversight system for EWA that is aligned with how this novel product operates. The bill proposes to regulate EWA service providers within a dedicated license issued by the Financial Institutions Division of New Mexico’s Regulation & Licensing Department. There are many other industries regulated by the Division, including consumer lenders, credit unions, agricultural lenders, and check cashers and sellers.

The regulatory framework proposed in HB 59 creates important consumer protections. It also empowers your state’s regulators to ensure EWA providers are operating in a way that protects consumers with penalties for those who fail to comply with consumer protection regulations. Key consumer protections in this bill include:

● Bans interest, late fees, and penalties: The bill prohibits the imposition of interest, late fees, or penalties, shielding workers from the 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: HB 59 mandates that providers offer at least one no-cost option for workers to access their earned wages ahead of payday.

● First-in-the-nation fee cap: The legislation sets a cap of $7.50 on fees for expedited transactions, ensuring expedited fees do not exceed that amount.

● Ensuring low-credit workers will always have access: HB 59 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, and can choose the EWA option that best suits their needs.

● Licensing and ongoing oversight: By establishing licensing requirements and empowering the Regulation & Licensing Department’s Financial Institutions Division to oversee compliance, HB 59 ensures that only reputable businesses can provide EWA services in New Mexico, and that they are held accountable for their practices.

For these reasons, HB 59 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 59 and provide your constituents with the tools they need to achieve financial stability.

Sincerely,

American Fintech Council
Brigit
Chamber of Progress
Cross River
DailyPay
EarnIn
Immediate
MoneyLion
Payactiv
Wage Stream
ZayZoon

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