Consumer groups team up to battle EWA lobby

A heated regulatory battle is brewing over Earned Wage Access (EWA), a benefit many retailers and operators use to attract talent. A new coalition of 24 state advocacy groups is forming to lobby against industry-backed laws. The core issue is whether EWA should be legally classified as a ‘loan.’ If these consumer groups succeed, EWA providers would face the same strict interest rate caps and disclosure requirements as traditional lenders. For business owners, this could mean the EWA tools you currently offer employees might become more expensive, more difficult to administer, or even unavailable in certain states. The advocacy groups argue that EWA products currently bypass consumer protections and resemble high-interest payday lending. Conversely, industry lobbyists are pushing for a federal law that would define EWA as a non-credit service. This federal push aims to prevent a ‘patchwork’ of different state rules. If the state-level advocates win, expect a wave of new compliance hurdles for any employer-integrated financial wellness tools you use. You should monitor your current EWA provider’s legal standing to ensure your benefits package remains compliant with evolving state laws.

Source: American Banker — Top News

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