A co-author of the Consumer Financial Protection Act of 2010 believes California’s new earned-wage access (EWA) rule is a positive step that other states can look to when building their own rules. Tom Scanlon is now the general counsel and chief compliance officer at Rain, an EWA provider. His blog post is available here.
He called the California Department of Financial Protection and Innovation’s (DFPI) rule a milestone for promoting a better ecosystem. Rain believes other states can use the DFPI rule to promote the right kinds of consumer protections.
Scanlon lauded California’s multi-stage process, saying that when all stakeholder concerns are accounted for, responsible regulations can be delivered.
“State officials who lead state financial services agencies continue to evaluate EWA products as distinct from standard extensions of credit to consumers,” Scanlon writes. “Several states have enacted new laws that regulate services, and the trend is towards the creation of a new regulatory structure for EWA. The California Rule best demonstrates this state-level trend toward responsible oversight of an EWA provider.”
Scanlon identifies four key takeaways from California’s rule. The first is that employer-integrated providers are not covered. Only firms must comply with these new rules.
Providers must register with the DFPI. They must maintain their operations so they can timely file reports and maintain compliance.
“The DFPI has announced that examinations of providers could begin as early as late 2025,” Scanlon wrote.
Consumers are protected by the legislation. Scanlon said the registration system’s main benefit is to assure consumers that a provider is a business and not a scam, as providers are subject to supervision and inspections.
Scanlon said Rain believes the DFPI framework is the best path forward for companies delivering employer-integrated services. He added that “Consumers should be supported by responsible regulations for EWA to help them understand how an EWA product is safe to use.”
