The United States House Committee on Financial Services has advanced H.R. 9330, the Earned Wage Access Consumer Protection Act, a bill that would establish a comprehensive federal regime for the regulation of earned wage access (EWA) services and establish nationwide rules and consumer protections, including those reinforcing the non-credit nature of the EWA services and others governing disclosures, fees, tipping practices, privacy, cancellation rights, and other provider conduct.
Consistent with the non-credit nature of EWA services, which allow workers to access earned but unpaid income that they are not obligated to repay to the provider, the bill would limit access for a given worker to not more than the amount of the worker’s earned but unpaid income; prohibit providers from using lawsuits, arbitration or other debt collection mechanisms to seek payment from consumers; prohibit providers from imposing on consumers late fees, interest, or other charges if a consumer fails to pay disbursed earned wages; and bar providers from furnishing information to a consumer reporting agency about a consumer’s EWA activities. This same principle is carried through to other federal consumer credit laws. For example, consistent with recent CFPB guidance, the bill would affirm that EWA services are not subject to the Truth in Lending Act’s credit disclosure regime. The bill would instead impose an EWA-specific disclosure regime that is tailored to how EWA services operate.
The bill also requires providers that offer EWA services for a fee to also offer consumers the option to obtain the same amount of earned wages at no cost to the consumer, along a clear and conspicuous description of how to obtain the no-cost services. The extent consumers choose to incur fees for optional services or to pay voluntary tips, providers would be required to provide transaction-specific disclosures and ongoing tabulations.
The bill also contains several other substantive consumer protections. For example, it would grant consumers service cancellation rights and would require providers to reimburse consumers’ overdraft and NSF fees in certain situations. The bill also protects consumer privacy by imposing upon earned wage access providers the Gramm-Leach-Bliley Act’s privacy standards, which are already applicable to banks and other financial institutions. The bill also prohibits discrimination against consumers on the basis of race, color, religion, national origin, sex (including on the basis of pregnancy, childbirth, or related medical conditions), marital status, or age.
The bill’s three paragraphs addressing preemption of state law have drawn some attention, but two of them actually affirm state law, and the preemptive effects of the third are rather narrow. First, the bill affirms the validity of state laws that do not conflict with the bill (and even then, preemption exists only to the extent of the conflict). Federal preemption of conflicting state law is a basic Constitutional principle and should not be controversial. Next, the bill affirms that state laws of general applicability (including laws relating to fraud, deceit, unfair or deceptive acts or practices, contracts, property, or taxation) are not preempted. Finally, one paragraph preempts state laws that treat EWA services as credit or prohibit or substantially restrict the offering or provision of EWA services. In other words, state laws that do not conflict with the bill and that do not label EWA as credit or effectively deprive their residents of access to EWA services should not be preempted.
Against this backdrop, it is worth noting that a dozen states have already enacted laws or regulations tailored to EWA services and their operations. Among these states, the EWA-specific consumer protections that most have adopted are generally similar to those found in this bill. Further, most of these states do not treat EWA as credit, and even the few that do have made special accommodations for EWA services because their credit regulatory regimes otherwise did not fit EWA services. Goodwin previously analyzed each of the twelve EWA-specific state laws and regulations when enacted: Arkansas, California, Connecticut, Indiana, Kansas, Louisiana, Maryland, Missouri, Nevada, South Carolina, Utah, and Wisconsin.
If enacted, the Earned Wage Access Consumer Protection Act would create federal framework that preserves the nationwide availability of EWA services, reinforces their non-credit treatment, and provides a host of consumer protections.