Substitute Senate Bill No. 1396, also known as Public Act No. 25-155, introduces significant changes to the regulation of earned but unpaid wage or salary income advances in Connecticut. The bill repeals Section 36a-555 and replaces it with updated definitions, including "earned but unpaid wage or salary income" and "earned but unpaid wage or salary income advance," which refers to small loans based on unpaid wages. These advances are capped at amounts less than $750 and must be verified by an income advance provider. The bill also modifies existing definitions and clarifies the roles of employers and income advance providers, while ensuring that all finance charges are transparently included in the calculation of the annual percentage rate (APR).

Additionally, the bill establishes stricter conditions for small loans, including a prohibition on predatory practices such as prepayment penalties and adjustable rate provisions. It mandates that providers offer at least one no-cost option for borrowers and clearly disclose the selection process for this option. The legislation aims to enhance consumer protection by ensuring transparency in the lending process, limiting excessive fees, and preventing aggressive collection tactics. The effective date for these changes is set for October 1, 2025, with the overall goal of safeguarding borrowers from predatory lending practices while promoting fair access to their earned income.

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