Issue link: https://nebusinessmedia.uberflip.com/i/1534934
HARTFORDBUSINESS.COM | MAY 5, 2025 13 POLITICS & POLICY Member FDIC At NBT Bank, our goal is to help you reach yours. Our relationship managers provide the expert guidance and custom solutions it takes to help grow your business. Our local commitment builds strong, long-lasting partnerships that maximize your potential for success. Fraud Protection & Secure Banking Solutions Local Perspective & Decision Making Capital and Treasury Management Solutions www.nbtbank.com/ct Maureen Kennedy, Dante Fazzina, Deb Oakliff, Steven Brandfield, Andreas Kapetanopoulos, Kate VanValkenburg, Heather Piteo, Dale Stewart, Steven Essex Let our experienced Connecticut commercial banking team create real opportunity for your business. recommended several tweaks. The department's General Counsel and Chief of Staff Joseph Chambers has suggested in written testimony prohibiting earned wage access providers from making an advance to a consumer who has already been serviced by another provider. That is not an uncommon occur- rence, according to the Center for Responsible Lending. They call it "loan stacking," in which a consumer uses multiple apps to borrow from their unpaid wages or salary. According to CRL, one state resident "used as many as seven apps in the same month." On average, workers used 1.5 apps every month. CRL also noted that consumers with at least six advances in one or more months accounted for 32% of all users and 81% of all advances. "Roughly one in four took out 25-plus advances in a year," it said. To prevent this, Chambers suggested that each provider be required to submit information to a third-party database that tracks all advances made to Connecticut consumers, and to use the database to verify that a provider did not violate the law. Two-sided debate There is evidence consumers in Connecticut want to use EWA services. A new survey commissioned by EWA provider DailyPay and conducted by UConn public policy professor Kerri M. Raissian confirms that. She led a quantitative online research survey, between Feb. 25 and March 9, in which over two-thirds (67%) of respondents stated that EWA providers had helped their finan- cial situation before Connecticut's rules took effect. The survey found that EWA customers were primarily using advances to pay for food or groceries (85%), transportation or gas (63%) and rent or a mortgage (59%). The survey results also noted that in the absence of EWA services, consumers went without what they needed (36%), relied on more expen- sive methods — including using a credit card (26%) — or borrowed from friends and family (31%) to afford necessities. The Center for Responsible Lending, however, noted in its report that EWA products may exacerbate overdrafts, negatively impacting a consumer's overall financial health. Of the Connecticut users who experienced overdrafts, "63% expe- rienced increased overdrafts after their initial advance," CRL said. Lauren Saunders, associate director of the National Consumer Law Center, submitted testimony on the bill that warned legislators not to be fooled by the generally small advances consumers take. "Given the small amount of advances and how quickly they are repaid, a $5 fee alone could be 183% APR for a $100, 10-day loan and 456% APR for a $40, 10-day loan," she said. EWA providers argue their services don't constitute a loan. Doucette said legislators understand the two sides, but will continue to move with caution. "We're skeptical of some of the arguments that we heard, partic- ularly last year from the industry, that these products aren't loans and that they should not be regu- lated in any way as a loan," he said. "We sort of are hoping that the two sides can work something out." How frequently CT consumers use earned wage access services annually Source: Center for Responsible Lending 1-3 25% 22% 20% 26% 2% 6% 24% 20% 15% 10% 5% 0% 4-8 9-12 13-18 19-18 25+ Number of advances per year (across all apps) SHARE OF USERS