On March 20, the Arkansas governor signed into law Arkansas Act 347, known as the Earned Wage Access Services Act. Sponsored by Representative David Ray (R) and Senator Ben Gilmore (R), this legislation aims to regulate earned wage access (EWA) providers. Notably, “providers” is defined to include a person engaged in the business of offering earned wage access, but not an employer that advances a portion of earned wages directly to employees or independent contractors.

Key Provisions

Providers are not deemed to be engaging in lending, money transmission, or debt collection if they comply with the Act’s requirements, including:

  • Customer Service: Providers must implement procedures to respond to customer questions.
  • Disclosures: Providers must fully and clearly disclose all fees associated with the EWA services and inform consumers of their rights under the agreement before entering into a contract.
  • No-Cost Option: Providers must offer at least one reasonable option to obtain proceeds at no cost to the consumer and clearly explain how to elect this option.
  • Voluntary Tips and Donations: If a provider solicits, charges, or receives a tip, gratuity, or other donation from a consumer, it must clearly disclose that these are voluntary and not contingent on the provision of services.
  • Cancellation Rights: Consumers must be allowed to cancel the use of the EWA services at any time without incurring a cancellation fee.
  • Privacy and Security Compliance: Providers must comply with all applicable local, state, and federal privacy and information security laws.
  • Reimbursement for Fees: Providers must reimburse consumers for any overdraft or nonsufficient funds fees caused by the provider’s errors in seeking payment.

Prohibited Practices

The Act prohibits providers from:

  • Sharing Fees with Employers: Providers cannot share with an employer any portion of the fees, voluntary tips, gratuities, or other donations received from consumers.
  • Using Credit Reports: Providers cannot require a consumer’s credit report or score to determine eligibility for earned wage access services.
  • Accepting Credit Card Payments: Providers cannot accept payment of outstanding proceeds, fees, voluntary tips, gratuities, or other donations from a consumer by means of a credit card or charge card.
  • Charging Penalties: Providers cannot charge late fees, deferral fees, interest, or any other penalties for failure to pay outstanding proceeds, fees, voluntary tips, gratuities, or other donations.
  • Compelling Payment: Providers cannot compel payment by suing the consumer, using third-party collections, or selling outstanding proceeds to a third-party collector.
  • Misleading Consumers: Providers cannot mislead or deceive consumers about the voluntary nature of tips, gratuities, or donations, or engage in false, misleading or deceptive advertising

The Act does not apply to state or national banks or credit unions.