General Assembly Substitute Bill No. 1396 seeks to amend Section 36a-555 of the general statutes to enhance consumer protections related to earned but unpaid wage or salary income advances in Connecticut. The bill introduces new definitions, such as "earned but unpaid wage or salary income" and "earned but unpaid wage or salary income advance," which clarify the nature of compensation owed to borrowers. It establishes that the amount of an advance cannot exceed the unpaid income for a given pay period. Additionally, the bill replaces existing definitions of "finance charge" and "employer" with more detailed descriptions, introduces the concept of "bona fide services," and repeals certain subsections of existing law to streamline the legal framework surrounding small loans.

The legislation also imposes new regulations on income advance providers, requiring them to create policies for addressing borrower complaints, offer at least one no-cost option for advances, and ensure borrowers are informed about finance charges. It prohibits sharing finance charges with employers and allows borrowers to cancel applications without fees. Furthermore, the bill sets limits on interest rates for small loans, specifies permissible fees, and disallows certain loan provisions that could harm borrowers. The act is set to take effect on October 1, 2025, and aims to ensure transparency and fairness in the lending process while protecting consumers seeking wage advances.

Statutes affected:
Raised Bill:
BA Joint Favorable:
File No. 291:
APP Joint Favorable: