EWA Report Blasted by American Fintech Council CEO

The CEO of the American Fintech Council blasted the Centre for Responsible Lending (CRL) for a report on earned wage access (EWA), calling it a ‘complete misunderstanding and mischaracterization of the industry” that, among other things, takes information out of context and uses ‘improper interpretations of source materials to convey biased rhetoric.’

In a statement on its website, the CRL first misnamed the process “earned wage advance: and lumped the process together with other fintech cash advance products. The CRL likened the process to payday loans, stating that fees can multiply into rates north of 300%. They fear more workers being trapped in a debt cycle.

The CRL urged state-level regulators to avoid industry-backed approaches like the ones passed in Missouri and Nevada. They remove EWA from state credit laws that address rate caps and consumer protections.

“At the state level, the best policy approach is to enforce existing credit laws and, if necessary, clarify that they cover earned wage advances and other fintech cash advance loans,” the CRL said. “Many, if not most, state small dollar loan laws are broad enough to cover EWAs and other cash advances, as well as evasions through ‘voluntary’ payments, such as ‘tips’. State financial regulators should consider enforcement actions under existing laws. If desired, additional clarity regarding the definition of a “loan” under a state’s credit laws could be provided through guidance, regulations or legislation to expressly cover these loans.”

The CRL said that states considering EWA legislation can only enact meaningful legislation if they treat the advances as credit and include measures like strict cost caps. ‘Bare minimum’ suggested protections begin with only allowing employer-integrated systems. They will enable the employer to serve as a gatekeeper, are closer to actual earned wages, usually don’t debit bank accounts and are more distinct from traditional payday loans.

Additional suggestions include strict cost caps, covering all costs, including tips, having a $0 default tip and using employer-only repayment. The CRL also suggested requiring licensure and data reporting to regulators, state licensing of lenders, and no late fees or debt collection.

AFC CEO Phil Goldfeder slammed the CRL report.

“The recently issued report by the Center for Responsible Lending (CRL) demonstrates a complete misunderstanding and mischaracterization of the earned wage access (EWA) industry and depends on improper interpretations of source materials to convey biased rhetoric to the detriment of consumers,” Goldfeder said. “The report relied on anecdotal information taken out of context and insufficient quantitative data for the magnitude of the authors’ claims. It does little to advance the dialogue about the proper regulatory framework for EWA providers in any pragmatic or useful manner.”

“The views and recommendations promulgated by CRL and further championed by NCLC are fruit from a poisoned tree and not in the best interest of consumers. Therefore, the findings should be viewed with caution by policymakers, regulators, and other researchers. It is my sincere hope that AFC can work constructively with consumer advocates to ensure the development of sound and data-driven policy recommendations that benefit consumers.”

Goldfeder urged groups with different views to work together. He concluded with a warning.

“We also want to avoid unintended outcomes of improperly devised and overly broad statutory definitions and recommendations that not only fail to address real consumer needs but also could result in consumers being deprived of the benefits of EWA and driven back to predatory and harmful alternatives.”


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