Rushed and misguided interpretation by the CT Department of Banking could put more than 150 thousand Connecticut families at risk of losing safe, transparent and affordable financial options

Responsible EWA products are non-recourse and do not: require a credit check, underwriting, or base fees on creditworthiness; charge a fee in installments, charge interest, late fees, or penalties; or impact a user’s credit score

Hartford, CT (September 19, 2023) – The American Fintech Council (AFC), the premier industry association representing responsible fintech companies creating critical access to safe and affordable financial services, expressed serious concerns with recently issued guidance from the Connecticut Department of Banking on Earned Wage Access (EWA) products. The guidance, issued without public input, mischaracterizes EWA as a loan, removes important consumer financial choice, and potentially puts more than 150 thousand Connecticut families at financial risk.

“Connecticut families should have the ability to access the wages they have already earned from responsible and innovative companies providing an alternative to high-priced payday and other predatory options.” said Phil Goldfeder, Chief Executive Officer of AFC. “EWA is not credit and should not be treated as a loan or forced into a legacy regulatory framework that will only serve to harm the very Connecticut families the Department of Banking is trying to protect.”

In their recent letter to Commissioner Jorge Perez at the Connecticut Department of Banking, AFC highlighted that EWA is not a lending or credit product based on previous or updated Connecticut law. Unlike the provision of credit or a loan in Connecticut and elsewhere, EWA is non-recourse and does not: require a credit check, underwriting, base fees on creditworthiness; charge a fee in installments, charge interest, late fees, or penalties; or impact a user’s credit score. In addition, the legislation that served as the basis for the new guidance runs contrary to the business model of every EWA provider.

“The Act’s new small loan definition covers an advance made on a future potential source of money,” wrote AFC in their Letter. “Earned pay is not future pay… the Guidance provides no justification for considering earned but unpaid wages to be a future potential source of money and based on how EWA is structured, this makes the Guidance extremely confusing.”

AFC also raised serious concerns about the process that led to this guidance and the lack of publicly listed legislative intent that denied the industry and public the opportunity to engage in meaningful dialogue with the legislature.

“There was no public testimony or hearings available to the general public that enabled EWA companies or the wider industry to provide information on their programs directly to the members of the legislature who drafted and passed this legislation,” AFC continued in their Letter. “Further, at no point did the Department publicly communicate to the legislature during consideration of S.B. 1033 or make any other public statement that the Act would regulate EWA providers prior to its public Guidance less than three weeks before it was slated to go into effect.”

Earned wage access is an innovation that enables workers to access wages they have already earned without waiting for an arbitrary payday. Many AFC members that provide EWA services proudly operate in the State of Connecticut, partnering with over 1,300 businesses and enabling over 151,000 workers in the state to access their earned wages.

Read the full letter here.