Lawmakers Need to Oppose Predatory Earned Wage Access Loans

Oppose Predatory Earned Wage Access Loans

The legislature is considering weakening rules that protect moderate and low income wage earners from predatory Earned Wage Access Loans. This will trap consumers in a cycle of relending.

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Dear Decision Maker,

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I'm your constituent, and I'm asking you to oppose legislation that will allow "Earned Wage Access" (EWA) loans to prey on low and moderate income workers in Connecticut.

EWA companies charge expedite fees, subscription fees, and solicit tips and donations from consumers to garner over 330% APR on average on loan transactions.  Connecticut is currently in good company as one of 20 states, plus the District of Columbia, that legally require payday lenders, like EWA companies, to disclose the annual interest rates of their loans and to cap those rates at no more than 36%, but 36% isn’t good enough for the EWA companies.

Consumers take out multiple small loans, typically $40-100 each, which increases the fees they are compelled to pay for expedite services and for tipping.

The high fees trap consumers in a cycle of relending because the reduction in their take-home pay due to the loan advance, plus the fees, compels them to keep borrowing.

EWA companies claim that their products are not loans, and that there is no interest. EWA loans are structured in the same way as payday loans: they advance money to consumers using the lender’s own capital, with repayment taken from the consumer’s next paycheck. It is a high-cost loan disguised as wage access.

Please uphold CT’s strong law and oppose legislation related to EWA.

Sincerely,

[First Name] [Last Name]
[Your Address]

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