Earned-wage access is a new kind of financial technology that may or may not be a loan. A new report from the Government Accountability Office sheds light on the need for clarity on that issue.
Delegate Amanda Batten is a Republican from James City County who says it’s about time for some oversight over these financial products already in widespread use. "The legislation that I was working on would have codified that these earned wage access providers can't sue the consumer to get their money back," Batten says. "So if the consumer empties out the bank account, closes the bank account and refuses to pay back the lender, the lender has no recourse."
Twenty years ago, lawmakers took action to add new language to the Virginia code that allowed payday loans and car-title loans.
History may be repeating itself, says Jay Speer at the Virginia Poverty Law Center. "This was like deja vu all over again for me because this is exactly what the payday lenders said and then it took us 20 years to get the payday lenders and the car-title lenders to leave the state. So that's why we were not crazy about putting a stamp of legitimacy on this," Speer says.
The U.S. Consumer Financial Protection Bureau is expected to make a determination before the next session of the General Assembly, when Delegate Batten plans to introduce similar legislation again.
This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.
