Committee hears testimony opposing H.99 exemption for earned-wage-access services

The Vermont House Committee on Commerce and Economic Development on Feb. 4 heard testimony on H.99, a bill that would classify certain earned-wage-access (EWA) services outside Vermont's existing consumer-lending laws. Witnesses representing consumer-advocacy groups, older-adult advocates and the banking industry disagreed sharply over whether the products are loans and how they should be regulated.

Monica Burks, policy counsel with the Center for Responsible Lending, told the committee that the industry's products behave like short-term payday loans and urged the committee not to roll back Vermont's consumer protections. "These are just payday loans," Burks said, summarizing her view of how EWA products are structured and used.

Burks cited findings from the California Department of Financial Protection and Innovation and the Consumer Financial Protection Bureau to describe how many consumers pay repeated fees. She told the committee the California regulator found an average APR of about 334% (based on a 10-day repayment), that roughly 73% of consumers tipped on transactions, the average tip was about $4, and most advances were between $40 and $100. Burks said the CFPB found employer-integrated advances averaged about $106 and that average users accessed EWA roughly 27 times per year; other studies showed similar repeat use. "By depriving a consumer of that number [APR] ... they cannot make an informed decision," she said.

Colin Hilliard, listed in the transcript as advocacy director for ARP Vermont, told the committee his organization shares concerns about treating EWA as outside lending laws. "We see this bill is designed to exempt EWAs from Vermont's lending laws by declaring that these are not, loans," Hilliard said, adding that AARP-style membership groups worry that tips and expedited fees should be subject to state rate caps.

Representing the banking industry, Chris D'Elia, president of the Vermont Bankers Association, urged caution in how the committee frames regulation. D'Elia warned against inserting novel privacy requirements (such as biometric-data and geolocation rules) into this bill and recommended a comprehensive privacy approach instead. He also raised objections to adding a private right of action in the banking-title section of statute and recommended that consumer-enforcement mechanics remain under customary statutory sections.

Committee members pressed witnesses on practicalities and alternatives. Members read and discussed examples of existing lower-cost options: East Rise Credit Union's payday-alternative loan (described during the hearing as roughly $500 with repayment spread over months and a required cooling period between loans) and large-bank programs such as Bank of America's "balance assist" product (described during the hearing as a $500 product with a $5 fee and specific eligibility rules). A committee member who reviewed East Rise's posted eligibility criteria noted conditions reported at the hearing: membership and direct-deposit requirements of about five months and restrictions on the number of loans within a 180-day period; Bank of America eligibility was read as requiring a year of account history and limits on the number of balance-assist loans in 12 months.

Witnesses and some committee members discussed enforcement and reporting. Several said publicly filed complaints to the Vermont Department of Financial Regulation (DFR) have been limited; Monica Burks and Colin Hilliard suggested that internal complaint reporting by companies and DFR review would provide additional visibility into consumer harm. At least one committee member asked staff to explore requiring companies to report internal complaints to DFR and for DFR to include those complaints in a report back to the committee.

The hearing also covered disclosure and calculation practices. Burks and Hilliard argued that tips and expedited fees are effectively finance charges and that APR disclosure is necessary for consumers to compare options. Bank and industry witnesses noted APR calculation depends on term length and other variables, and urged clarity about which fees must be included when computing APR.

No formal vote was taken on H.99 during the Feb. 4 hearing. Committee members indicated they would continue deliberations: DFR representatives said the agency intended to act in some fashion regardless of committee timing, and the committee planned further discussion and drafting direction to staff (including staff member Maria) in the coming days.

The committee scheduled additional hearings and internal discussion time to refine draft language, including possible reporting requirements, APR-disclosure language and the statutory home for enforcement mechanics. The transcript records that lawmakers asked DFR and staff to prepare options for the committee's next meeting, with no final decisions recorded at the Feb. 4 session.