Connecticut Enacts Strict Regulations on Earned Wage Access Industry

Recent legislation in Connecticut has dramatically reshaped the landscape of earned wage access (EWA) in the United States. As of October 1, 2025, the state has implemented one of the most stringent laws governing EWA services, a trend that is gaining traction across the nation. This legislation is part of a broader movement, as six states have introduced new EWA laws in 2025, doubling the number of states with such regulations.

Connecticut’s law categorizes EWA as a small-dollar loan, diverging from the classification in most other states. Key provisions include a cap on advances at $750, a limit of one advance per pay period unless users can access at least 75% of their wages, and a ceiling on finance charges of $4 per advance or $30 monthly. The law also mandates that providers verify earned income through electronic or payroll data and requires them to monitor for excessive advance requests, known as stacking.

This regulatory environment has been contentious since at least 2023, when Connecticut’s regulators declared on-demand pay to be subject to state usury laws, effectively banning EWA services. As a result, many providers exited the market, causing consumers to seek out predatory payday loans. Darcy Tuer, CEO of EWA provider ZayZoon, remarked, “We learned in Connecticut, if you shut [EWA] off, [consumers] flock to payday lenders.” This shift prompted a study by the University of Connecticut School of Public Policy, which revealed that consumers turned to high-cost payday loans after EWA services were curtailed.

In response to the regulatory challenges, ZayZoon decided to continue operating in Connecticut but at a loss, stating, “We made it free. People need [EWA], but the problem is that under that regulation we could not build our business under that model.”

Industry and Advocacy Groups React

Connecticut’s EWA law is a focal point for both industry stakeholders and consumer advocacy groups. Industry representatives are advocating for more inclusive regulations that would allow greater access to EWA for consumers. They plan to engage with the state legislature in the upcoming sessions. In contrast, consumer advocacy organizations view the law as a significant achievement, with Yasmin Farahi, deputy director of state policy at the Center for Responsible Lending, calling it the “gold standard” for consumer protection. She noted that the law includes substantial safeguards that were hard-earned through dedicated advocacy efforts.

Some groups argue that EWA should be regulated like payday loans, advocating for a 36% interest rate cap. Laura Saunders, associate director at the National Consumer Law Center, emphasized the importance of limiting costs to protect consumers, stating, “If states are going to give these providers any leeway on what they charge, it’s absolutely essential to do what Connecticut did.”

Maryland’s Regulatory Landscape

Maryland is emerging as another significant player in regulating the EWA industry. In May 2025, the state became the tenth in the U.S. to enact regulations governing EWA services. Similar to Connecticut, Maryland classifies EWA as a credit product. Recently, the City of Baltimore filed a lawsuit against EWA provider MoneyLion, alleging misleading marketing practices and illegal interest charges. Mayor Brandon Scott commented, “MoneyLion has preyed on Baltimoreans, trapping our most vulnerable residents in borrowing cycles that made it harder and harder for them to pay bills and put food on the table.”

The lawsuit claims that MoneyLion operates similarly to a payday lender, imposing fees that exceed the 33% annual percentage rate (APR) cap established in Maryland. MoneyLion has yet to respond to these allegations. Furthermore, New York Attorney General Letitia James has also initiated legal action against both MoneyLion and DailyPay, signaling a growing scrutiny of the EWA industry.

As states like Connecticut and Maryland tighten regulations, the future of earned wage access remains uncertain. The ongoing dialogue between lawmakers, industry representatives, and consumer advocates will determine how EWA services will evolve in the coming years. The stakes are high, as consumers increasingly rely on these financial products for timely access to their earned wages.