The Financial Technology Association (FTA) alongside the American Fintech Council (AFC) are advocating for a legal distinction for Earned Wage Access (EWA) services. Their goal? To differentiate these services from traditional loans. This initiative ties into the ongoing Vickery v. Empower Finance, Inc. and Moss v. Cleo AI, Inc. case.
What is Earned Wage Access (EWA)? It’s a service enabling employees to access earned yet unpaid wages before payday. No loan or credit check required. Consequently, the FTA and AFC argue that EWA services aren’t loans. They suggest EWA should stand as a unique financial product.
By establishing this distinction, the two fintech associations hope to protect EWA services from loan regulations. Why? Because loan regulations can be stringent, potentially impeding fintech sector growth and innovation.
FTA and AFC’s Amicus Brief Submission
How do they plan to achieve this distinction? The FTA and AFC have submitted an Amicus Brief to the Ninth Circuit. This brief, a legal document from non-parties with a vested interest in the case, seeks to provide the court with additional information or arguments.
The content of the Amicus Brief from the FTA and AFC remains confidential. However, it’s expected to present a compelling argument on why EWA services should not be classified as loans.
This case holds significance for the fintech industry as it could shape future EWA services regulation. Furthermore, it highlights the ongoing challenges fintech companies face when innovating within existing financial regulations.
The verdict of this case is still up in the air, and those in the fintech industry are eagerly awaiting the outcome. A ruling in favor of the FTA and AFC could provide more room for fintech companies to innovate and introduce new financial products and services.
