An Indiana poverty watchdog group is raising concerns after a federal bill regulating Earned Wage Access apps advanced through a House committee. The Indiana Community Action Poverty Institute opposes the measure, which would prevent states from regulating the financial services as traditional loans.
Earned Wage Access Apps
Earned Wage Access apps allow workers to access portions of their earned wages before their regular payday. The Indiana Community Action Poverty Institute recently released a report examining the use of app-based paycheck advance services. The organization said some users can face high fees and optional tips that may significantly increase the cost of accessing wages early.
The group warned that repeated use of these services could contribute to a cycle of borrowing for some consumers. The federal legislation would establish rules for Earned Wage Access services and limit states from classifying the products as loans. Supporters of the measure say the approach would create consistent standards for the financial services industry.
Opponents argue the services should receive stronger consumer protections because of potential costs for users. The Indiana Community Action Poverty Institute said additional oversight is needed to protect consumers who rely on paycheck advance apps. The group’s report said some users may face costs that, when calculated as annualized rates, can exceed 300%.
Original reporting: WOWO News/Talk (Fort Wayne) — read the source article.
