Right-Wing Money Is Lobbying for Modern Payday Lenders
Consumer advocates want “earned-wage access” apps to be regulated as payday loans, in order to prevent them from taking advantage of consumers in dire straits. Fintech companies have backed right-wing-funded efforts to counter such legislation.
The financial technology industry is demanding that its services be treated as a new form of innovation that should not be subject to existing legislation. (sdominick / Getty Images)
Lawmakers are partnering with an ultraconservative, billionaire-backed bill mill to make it easier for financial technology companies to rip off workers trying to access paycheck advances through their smartphones.
The American Legislative Exchange Council (ALEC), a nonprofit organization known for drafting model bills pushing pro-corporate, right-wing causes, is circulating a legislative template to establish industry-favored regulations for “earned-wage access” providers — a new app-based financial technology that provides cash advances to users by letting them access their paychecks before they’re issued.
Although many financial technology companies claim these products are a new innovation, earned-wage access products are similar to predatory payday loans, which have faced strict regulations and bans in a number of states due to high fees and harsh repayment plans. Payday loans have often targeted low-income communities, and people’s inability to repay them can create debt spirals and lead to lower credit scores, repossessions, and court hearings, among other disastrous consequences.
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