The American Fintech Council (AFC), an industry association representing fintech companies and banks, released policy and regulatory standards for fintech companies offering earned wage access (EWA) products this week. The AFC also announced support for federal EWA legislation introduced by Rep. Bryan Steil. AFC CEO Phil Goldfeder appeared in Madison, Wisc. to testify before the State Assembly Committee on Financial Institutions in strong support of AB 574, legislation that balances important consumer protection and access to vital service.
“AFC differentiates itself as an association by developing industry best practices and regulatory gold standards for nascent innovative products and companies offering critical access to financial services,” said Goldfeder. “Responsible providers are currently serving millions of families and ensuring they have low or no cost access to their pay when they need it, and we will continue to advocate in Washington and states across the country on behalf of our members.”
The AFC said it has publicly advocated for a clear and consistent regulatory framework for EWA that avoids duplicative or diverging requirements and accurately reflects the nuances of the financial service. They added that their newly released standards clearly state that the offering is not a loan and should not be regulated as one. Unlike a loan, EWA services provide employees access to wages earned before arbitrary biweekly or monthly pay periods. Additional standards include strong transparency and disclosures, non-recourse, no interest, late fees or penalties, no debt collection, no credit reporting, no collection activity of any kind, and a requirement that a “no cost” option be offered to all EWA users.
In line with these new standards, AFC is proud to support the Earned Wage Access Consumer Protection Act, recently introduced by Stein (R-WI) and said it looks forward to helping to build strong bipartisan support for this groundbreaking legislation.
“AFC supports the Earned Wage Access Consumer Protection Act because it recognizes the important distinction between EWA services and lending products by establishing clear definitions for what constitutes services, creating functional disclosure requirements and consumer protections that fit the parameters of the service, and ensuring that services are not subjected to legacy lending laws,” wrote Ian P. Moloney, SVP and head of federal and state policy in AFC’s support letter to Steil. “While AFC remains in favor of the consumer protection principles afforded by existing lending laws, we maintain that its provisions are ill-suited for application to (such) services as EWA is not a loan.”
Goldfeder recently travelled with members to Madison to testify before the State Assembly Committee on Financial Institutions in support of AB 574. The AFC said legislation introduced by Rep. Alex Dallman and Sen. Rob Stafsholt balances important consumer protection and access to vital EWA services utilized by thousands of Wisconsin families.
“The provisions of AB 574 properly balance responsible innovation with a pragmatic, consumer-protected regulatory framework that fits the EWA industry,” said Goldfeder in his public testimony. “This new legislation establishes clear standards for acceptable services regulated under its licensing regime in a manner that reflects the nuances and optionality of the industry while also protecting consumers from irresponsible actors.”
The AFC successfully championed first-in-the-nation legislation in Nevada and Missouri and said it was the only association to appear in Carson City and Jefferson City on multiple occasions. They support the next generation of fintech companies and banks at the intersection of technology and financial services. They are committed to robust industry standards that can provide certainty for fintech companies and innovative financial institutions.