Abstract
Over the past decade, a new financial product called earned wage access (EWA) has emerged and is being marketed to workers. These products allow workers to access wages they have already earned but have not yet received in a paycheck, usually incurring a fee for the advance. While the companies selling these products claim to financially empower workers who live paycheck to paycheck, consumer advocates have noted EWA’s concerning similarities to payday lending. As EWA use has proliferated, regulators have begun addressing it head on. The primary debate is whether to consider these products loans subject to federal and state lending laws.
This Note aims to place EWA within the context of the payday lending industry and assess the recent actions taken by the Consumer Financial Protection Bureau and states to regulate it. Part I traces the history of payday lending, how states have approached regulating that industry, and the normative justifications for permitting or prohibiting it. Part II discusses how EWA compares to payday lending in terms of risks and benefits. Lastly, Part III examines the emerging regulatory responses and evaluates them in light of the discussions in Parts I and II. I conclude that the crux of the current debate––whether or not EWA products are loans––sidesteps the more important question of how regulators can shape these products to be a viable alternative to payday loans for consumers in need of short-term liquidity.
Recommended Citation
Matthew Johnson,
Earned Wage Access: A Loan by Any Other Name?,
20
Nw. J. L. & Soc. Pol'y.
35
(2024).
https://scholarlycommons.law.northwestern.edu/njlsp/vol20/iss1/2
