Skimming Fees From Texans’ Paychecks

Is Earned Wage Access Becoming The Next Generation of Payday Lending?

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Earned Wage Access (EWA) cash advance products are becoming an increasingly popular way for some Texans to access cash before payday. Although these products have potential to be an alternative to high-cost credit products like payday loans, research and data tell a different story. Earned Wage Access products often carry high charges, comparable to payday loans, can lead to an increase in the amount of overdraft fees paid by those who use the products, and can lead to a cycle of reborrowing to fill the financial hole caused by the previous advance.

Through analyzing recent market research, litigation complaints, and consumer complaints, this report offers insight into the harms people face when using Earned Wage Access products and the need for meaningful regulatory guardrails. The top concern with Earned Wage Access is the cost of the cash advances – there are currently no limits to the number and amount of fees, tips, and other costs that these companies can collect from Texans who use their products. Additionally, some Earned Wage Access models require people to divert their full paycheck to the company. Currently, these companies are not held to enforceable standards to protect people’s unpaid wages that they hold, pay people on time, or pay people the right amount. This gap in accountability leaves Texans financially vulnerable to software glitches, company bankruptcy, and other problematic business practices.

Other concerns include misleading borrowers about the actual cost of the cash advance, causing customers to incur overdraft fees due to company error, and taking money out of local economies by manipulating people to use debit cards offered by the Earned Wage Access companies that hold the funds in out-of-state banks.

We recommend that Earned Wage Access products be regulated as loans and subject to important state consumer protection laws. At a minimum, guardrails for these companies must include establishing a reasonable maximum amount that these companies can charge people and adopting necessary standards to protect people’s unpaid wages that are in the possession of an Earned Wage Access company.

Report Authors

Select Top Findings For This Report

  • Most users of Earned Wage Access are low income — with an annual salary of less than $50,000 — and use Earned Wage Access products frequently, ranging anywhere from 10 to 36 times a year.
  • When calculated as a loan, Earned Wage Access cash advances can carry APRs ranging from 284% to 956%, depending on the company, making them nearly as expensive — or even more costly — than traditional payday loans.
  • Complaints about Earned Wage Access submitted to the Better Business Bureau and the Consumer Financial Protection Bureau have risen steadily over the past few years, with more complaints submitted in 2024 alone than in 2022 and 2023 combined.
  • Nearly a third of consumer complaints (32%) involved people getting their paycheck late or in the wrong amount due to errors caused by the Earned Wage Access company. These errors led to cascading financial harms, such as late bill payments.
  • Consumer complaints also highlight major issues such as poor customer service, billing and balance errors, problems with company-sponsored debit or savings accounts, overdrafts, and high fees.