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Calls for Greater Financial Clarity Around Earned Wage Access Needed Argues AFC

The American Fintech Council (AFC), the industry association representing responsible fintech companies and innovative banks, offered testimony before the Washington State House Committee on Consumer Protection and Business recommending key amendments to legislation recently introduced.

Phil Goldfeder, CEO, AFC
Phil Goldfeder, CEO, AFC

Phil Goldfeder, AFC CEO and former member of the New York State Assembly, appeared in Olympia where he urged legislators to amend legislation. The reasoning behind it, is to better protect Washington families without stifling innovation, competition or access.

“As a former state representative, I understand how pragmatic legislation, when implemented correctly can change the lives of the families we represent but I’ve also seen the unintended consequences,” said Goldfeder.

“Not all fintech is created equal. AFC’s diverse members represent a cross-section of responsible fintech companies that embrace transparency and are rooted in regulatory compliance and consumer protection. They are committed to working with state policymakers and regulators to develop reasonable regulation that balances consumer access to financial services with strong and appropriate consumer protections.”

AFC testified before the committee and commended the inclusion of a 36 per cent interest rate cap on predatory payday loans but offered important suggestions on HB 2083 and HB 1874 specifically related to the proper understanding and nature of the relationship between responsible community banks and their fintech partners. Creating access to credit without compromising on consumer protection or regulatory compliance is critical when drafting, passing, and implementing new state legislation and regulation.

Earned wage access or loan?

In addition, AFC raised concerns related to the expansion of certain lending definitions that would mischaracterise earned wage access (EWA) products as loans.

“EWA is not a loan and should not be regulated as such,” said Goldfeder in his remarks before the committee. “These bills would expand the language related to lending that would inadvertently apply Washington’s lending statute to EWA, and, in turn, limit the ability for EWA providers to offer their products to Washington consumers. We developed standards for the EWA industry and would support robust regulation specifically related to this emerging product.”

EWA services provide employees access to wages they have already earned before arbitrary biweekly or monthly pay periods and serve as an important alternative to predatory high-cost and payday loans.

Additional standards recently released by AFC include strong transparency and disclosures, non-recourse, no interest, late fees or penalties, no debt collection, no credit reporting, no collection activity of any kind, and a requirement that a ‘no cost’ option be offered to all EWA users.

AFC is committed to supporting its members who believe in regulatory standards that balance access to financial services, innovation, and regulatory compliance. Their advocacy is paving the way for the future of financial services.


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