AFC is committed to working with regulators to create standards for this nascent industry that balances necessary consumer protection with critical access to financial services

AFC requests Agency make important distinction that EWA is not credit and should not be treated as a loan

Annapolis, MD (August 16, 2023) – The American Fintech Council (AFC), the premier industry association representing responsible fintech companies creating critical access to safe and affordable financial services has responded to the Maryland Office of Financial Regulation expressing concern about the Department’s recently issued guidance on Earned Wage Access (EWA) products. AFC has requested an opportunity to meet and offered to collaborate to ensure Maryland consumers maintain access to critical financial services provided by responsible and transparent providers.

“EWA is not credit and when offered responsibly, it creates options and an important tool for families to avoid predatory financial products.” said Phil Goldfeder, Chief Executive Officer of AFC. “We look forward to meeting with the Maryland Office of Financial Regulation to help them design regulatory standards that recognizes the critical value of responsible and transparent companies.”

In their recent letter to Commissioner Antonio Salazar at the Maryland Office of Financial Regulation, AFC highlighted that EWA is not a loan and should not be treated as credit. Unlike the provision of credit or a loan, EWA is non-recourse and does not require a credit check, underwriting, determine fees on creditworthiness, does not charge interest, late fees or penalties and does not impact a user’s credit score. Unlike a lender, responsible EWA providers cannot and do not pursue collections of EWA payments if it is not reimbursed. The amount of the transaction is later deducted from the employee's paycheck or debited from an employee’s account. AFC urged the Commissioner to consider these criteria to ensure that critical protections for the consumer remain intact and that the product remains safe and affordable.

“As the trade association representing the largest earned wage access (EWA) providers, we believe in a strong standard and have supported the creation of regulatory frameworks around the country for EWA products that ensure key consumer protections,” wrote AFC in their letter. “We would like to work with the Department on some clarifications in order to preserve key EWA product features that are highly beneficial to Maryland workers.”

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 Maryland, partnering with over 1,000 businesses and enabling over 85,000 workers in the state to access their earned wages. Industry survey data demonstrates that EWA helped consumers avoid and replace payday loan fees, bank and credit union overdraft fees, bill late fees, and loan payment late fees.

Read the full letter here.