Earned Wage Access and the End of Payday Lending
101 Boston University Law Review 706 (2021)
55 Pages Posted: 28 Jan 2020 Last revised: 29 Apr 2021
Date Written: January 6, 2020
Fintech companies have developed a financial product that allows employees to gain access to wages that they have already earned before their scheduled payday. The fee for getting an earned wage advance is usually small, making this product an extremely attractive alternative to payday loans—the go-to resource for lower-income Americans for the past three decades.
This Article is the first legal academic paper to analyze the earned wage advance market, assess the likelihood it will displace payday lending, and reveal some of the dangers lurking beneath the low-cost surface of these transactions. It argues that earned wage access products have the potential to end the thirty year reign of payday lending. But, earned wage advances do not fit neatly into existing legal categories, so policymakers need to establish legal certainty in the market to facilitate growth while at the same time ensuring that the law protects consumers.
Keywords: payday loans, earned wage advance, earned wage access, consumer credit, alternative financial services
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