General Assembly Raised Bill No. 1396 seeks to amend Section 36a-555 of the general statutes to enhance regulations surrounding earned but unpaid wage or salary income advances in Connecticut. The bill introduces new definitions, including "earned but unpaid wage or salary income," which pertains to wages owed to borrowers that have not yet been disbursed by their employers, and "earned but unpaid wage or salary income advance," defined as a small loan provided for this unpaid income. The legislation allows advances of up to 100% of the unpaid wages for a pay period and includes definitions for "bona fide services" and "independent contractor." Additionally, the bill streamlines existing language by removing outdated terms and replacing them with clearer definitions, with the changes set to take effect on October 1, 2025.

The bill also revises regulations for small loans, specifically those related to earned but unpaid wage advances, by establishing new requirements for lenders, such as developing borrower complaint policies and offering at least one no-cost advance option. It prohibits practices like requiring credit reports for eligibility and charging late fees for nonpayment. Furthermore, it repeals and replaces certain subsections of section 36a-558, rendering any non-compliant small loans void and unenforceable. The legislation sets specific APR limits for small loans, outlines permissible loan features, and aims to enhance consumer protection by ensuring transparency and fairness in lending practices.

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