The American Fintech Council (AFC), a trade group advocating for ethical fintech firms, forward-thinking banks, and the majority of top earned wage access (EWA) providers, has issued a report cautioning state officials and overseers against moves to broaden mandatory state lending registries to include non-credit-based EWA offerings.
Titled “Prioritizing Corporate Gains Over User Safeguards: Catalis’ Push to Broaden Problematic Registries,” the document argues that such requirements could compromise personal data security while offering negligible benefits for users.
The report highlights the numerous flaws in current registry frameworks, originally built in select states to monitor high-interest short-term loans.
These inherent weaknesses, even for their primary function, indicate they’re ill-suited for integrating EWA services.
Forcing contemporary, cost-effective financial solutions into obsolete structures might lead to elevated expenses for employees, streamlined operation disruptions, and tech hurdles that complicate proper supervision.
The AFC further points out that widening these registries would necessitate gathering more confidential details, heightening vulnerabilities to scams, improper data handling, and confidentiality violations.
Phil Goldfeder, the AFC’s chief executive said:
“Requiring earned wage access options, which aren’t classified as loans, to be logged in lender registries goes against core values of openness, clear oversight, and user safety,”
They added:
“Such initiatives wouldn’t aid individuals; instead, they’d sow disorder in the sector and undermine the advantages EWA delivers to employees—while imposing unnecessary expenses and bureaucratic obstacles on ethical operators. What both EWA participants and companies require are straightforward guidelines that acknowledge EWA’s distinct nature from conventional borrowing and recognize the substantial value provided by trustworthy EWA.”
Additionally, the document examines how Catalis, the exclusive manager of all active state short-term lending registries, has vigorously campaigned to maintain and extend its monopoly on these platforms, amid broad skepticism regarding their effectiveness.
Per the AFC, this self-serving dynamic has led to squandered public funds, inflated adherence burdens, and major data protection issues, without curbing debt repetition or boosting regulatory effectiveness.
Ian P. Moloney, the AFC’s top policy strategist said:
“Broadening these required registries to encompass EWA would endanger employees and provide minimal improvements in user defenses. Catalis has invested more than $500,000 in advocacy campaigns, masquerading as efforts for user welfare, but really aiming to boost its earnings. Effective user protection strategies ought to rely on solid evidence and target genuine results, rather than solidifying one company’s dominance.”
As a membership-driven entity focused on standards, the American Fintech Council stands as the alliance for financial technology enterprises as well as progressive financial institutions.
Representing more than 150 affiliates and collaborators, the AFC advances a clear, equitable, and user-focused banking landscape through backing innovative practices in finance and pushing for prudent regulations. Its members drive advancements in personal finance and develop solutions to more effectively assist overlooked groups and regions.
