The "Earned Wage Access Consumer Protection Act" requires earned wage access providers to offer a no-cost option for obtaining earned wages if they charge a fee. The act also includes conforming amendments to the Consumer Financial Protection Act of 2010 and the Truth in Lending Act concerning the definition of earned wage access services and the exclusion of earned wage access providers from the term "creditor." This bill aims to protect consumers accessing their earned wages while regulating the services provided by earned wage access providers.
Earned Wage Access Consumer Protection Act
This bill addresses the regulation of earned wage access products. Earned wage access products provide consumers with access to their earned wages before their scheduled pay day.
The bill specifies that earned wage access products are not subject to regulation under the Truth in Lending Act (TILA). TILA requires consumer credit products to disclose borrowing costs, finance charges, and the total cost of the loan.
Under the bill, providers of earned wage access products
- must provide an alternative no-cost option for receiving earned wages if the provider offers an option to receive earned wages for a fee;
- are prohibited from bringing civil suits or from pursuing collection to compel repayment, except in cases of fraud; and
- must reimburse the consumer for overdraft fees or penalties imposed on a consumer by their depository institution if incurred because of an error by the provider.
Providers must inform consumers of their rights under an agreement for an earned wage access product and disclose all associated fees before the consumer enters into an agreement. Providers must also inform consumers how to obtain earned wages without paying a fee or tip in a clear and conspicuous manner.
Providers are prohibited from sharing fees or tips with the consumer’s employer. The bill also limits the form of payment providers may accept from consumers and limits certain additional fees for failure to pay.
A provider may not set a default tip at an amount greater than $0 for such services.