Hartford Business Journal

12 HARTFORDBUSINESS.COM | MAY 5, 2025 Politics & Policy Rep. Jason Doucette (D-Manchester), co-chair of the Banking Committee, said he has been working with fintechs and consumer advocates to get passed a broad-based compromise bill that would ease restrictions on earned wage access services in the state. CONTRIBUTED PHOTO Payday Debate Fintechs try again to ease restrictions on 'earned wage access' services in CT The proposal The bill would exempt salary advances to employees in the state from the small loan law's APR and finance charge requirements, even if the APR exceeds the 36% cap. It does, however, cap the total finance charge for income advances at $5 per advance, or $30 per 30-day period. The bill also requires EWA providers to offer a zero finance charge option for consumers. Rep. Jason Doucette (D-Man- chester), co-chair of the Banking Committee, said this year's bill is "a broad-based compromise between the industry players and the regulators." He said EWA companies have been involved in talks with the Banking Department and the legislature on achieving that compromise, but that the bill may go through more changes. The committee, he said, voted on the bill "as it was originally proposed and drafted at the begin- ning of the legislative session, with the understanding that there are going to be ongoing conversations about some outstanding issues." Sen. Eric Berthel (R-Watertown), the ranking Republican member on the legislature's Banking Committee who has raised concerns about EWA customers "being basically ripped off with fees," said he supports the compromise bill. The Banking Department has weighed in on the proposal and By David Krechevsky davidk@hartfordbusiness.com I f you're not familiar with compa- nies such as Brigit, DailyPay, EarnIn or Payactiv, you've likely never faced an emergency where you needed money from your paycheck before payday. You may also be unfamiliar with these financial technology companies because they mostly haven't operated in Connecticut since January 2024. That's when new guidance on the industry from the state Department of Banking took effect. Issued in September 2023 in response to changes adopted that year by state lawmakers, the new rules require so-called "earned wage access" (EWA) companies to be licensed and regulated as small loan providers. More importantly, state lawmakers also changed the formula used to determine a small loan's annual percentage rate (APR), adding into the equation tips and subscription or convenience fees. Those are key revenue sources for EWA providers, which allow customers to access already earned wages before payday. The changes pushed many of their customer transactions well over the 36% APR cap for small loans set by state law. As a result, most direct-to-con- sumer EWA providers have stopped operating in Connecticut since the new rules went into effect, according to a report from the Center for Responsible Lending (CRL). Some still partner with employers to provide workers access to their money before payday, offering one- to three business day electronic transfers, or instant transfers to provider-sponsored debit cards. But even those providers have stopped offering "instant" deposits with fees for expediting the trans- action, according to the Center for Responsible Lending. EWA providers are lobbying state officials and legislators in hopes of getting some relief that would make it easier for them to fully resume serving customers in the state. Legislators have also heard from consumers who have argued earned wage access services offer a valuable tool during a personal financial emergency. On the other hand, opponents — including AARP, the National Consumer Law Center and Center for Responsible Lending — argue that the state needs to strictly regulate the industry to protect consumers. It's an issue the Banking Committee attempted to address during the legislature's short session last year, but a bill never went anywhere. The 13-member committee has had a bit more success during the current session, raising and approving legislation — Senate Bill 1396 — that has bipartisan support. Whether the bill will be brought up for a vote in the Senate and House, though, remains an open question.

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