Substitute Senate Bill No. 1396, also known as Public Act No. 25-155, establishes new definitions and regulations for "earned but unpaid wage or salary income" and related income advances for borrowers in Connecticut. The bill repeals Section 36a-555 and introduces terms such as "earned but unpaid wage or salary income advance," which refers to small loans based on unpaid wages. It also clarifies the role of "earned but unpaid wage or salary income advance providers." The legislation modifies existing language by expanding the definition of "finance charge" to include various fees associated with small loans and updating the definition of "small loan" to include advances based on earned but unpaid wages. These changes will take effect on October 1, 2025.

The bill further mandates that providers of these advances must offer at least one no-cost option for borrowers and clearly disclose the selection process. It limits the number of advances a borrower can receive based on their earned income and requires repayment schedules to align with the borrower's next paycheck. Additionally, it prohibits excessive fees, aggressive collection tactics, and the solicitation of voluntary finance charges without prior disclosure. The legislation aims to protect consumers from high-interest rates and predatory lending practices while ensuring that small loans and wage advances are more accessible and transparent.

Statutes affected:
Raised Bill:
BA Joint Favorable:
File No. 291:
APP Joint Favorable:
Public Act No. 25-155: