Arkansas has become the sixth state (and the first in 2025) to enact a law that establishes a financial services oversight regime for earned wage access services, also known as on-demand pay services, which allow workers to access earned but unpaid income before payday. The bill (HB 1517) became Act 347 upon the governor's approval on March 20, 2025. Act 347 will impose substantive requirements on providers. Arkansas joins five other states (Kansas,Missouri,Nevada,South Carolina, andWisconsin) that have enacted similar laws.Californiahas also adopted regulations (but not laws) for earned wage access services.
Exemptions
The law does not impose any licensing or registration obligations on persons engaging in the business of offering earned wage access services to a consumer who resides in Arkansas (i.e., acting as a "provider"), but it does impose substantive requirements. The law does not apply to corporations organized under general banking laws, savings and loan laws, or credit union laws.
Arkansas also excludes from the definition of the term "provider" any entity that reports a consumer's payment or nonpayment of outstanding proceeds, fees, or tips to consumer reporting agencies (as defined in the Fair Credit Reporting Act). This exclusion could incentivize an entity to furnish information to consumer reporting agencies, because such conduct could enable the entity to avoid the law's substantive requirements applicable to providers. Given that earned wage access services typically do not involve consumer repayment obligations, an entity offering such services should carefully consider the basis of any such report about a consumer's payment or nonpayment and exercise caution, because a number of other states expressly prohibit such reporting.
Conduct Requirements
The law imposes substantive conduct requirements on providers, including:
- No credit scores. Providers may not require credit reports or credit scores to determine a consumer's eligibility for earned wage access services.
- Advertising practices. A provider may not advertise, or cause to be advertised, statements about the provider's earned wage access services that are false, misleading, or deceptive, or that omit information necessary to make the statement not false, misleading, or deceptive.
- Tip practices. Providers who solicit, charge,
or receive tips must:
- In their agreements for earned wage access services with consumers and elsewhere, clearly and conspicuously disclose any tip opportunities, the voluntary nature of tips, and the fact that the offering of earned wage access services, including the amount and frequency of available proceeds, is not contingent upon the payment of tips
- Immediately before each transaction, clearly and conspicuously disclose that the tip may be zero and is voluntar
- Refrain from misleading consumers about the voluntary nature of tips or representing that tips will benefit any specific individuals or group of individuals
- No interest or penalties. Providers may not charge interest, late fees, deferral fees, or other penalties for a consumer's nonpayment of outstanding proceeds, fees, or tips.
- No credit card payments. Providers may not accept payments via credit card or charge card.
- No sharing fees or tips with employers. Providers may not share with an employer any fees (including expedited delivery fees and subscription or membership fees) or tips received from or charged to a consumer for earned wage access services.
- Overdraft fees. A provider who seeks payment by debiting a consumer's account at a depository institution must comply with the applicable provisions of the Electronic Fund Transfer Act and must reimburse the consumer's overdraft or nonsufficient-funds fees caused by the provider in certain circumstances.
- No debt reporting or collection. Providers may not compel or attempt to compel a consumer to pay outstanding proceeds, fees, or tips by lawsuits; third-party collections on the provider's behalf; or sales to third-party collectors or debt buyers for collection.
The law also provides regulatory certainty for providers who observe additional substantive conduct requirements, including:
- Free option. Providers must offer consumers at least one reasonable no-cost option to obtain proceeds and clearly explain how to elect that option whenever they offer a consumer the option to receive proceeds for a fee.
- Consumer disclosures. Before entering into an agreement with a consumer, a provider must inform the consumer of their rights under the agreement and fully and clearly disclose all fees associated with the earned wage access services.
- Delivery methods. Providers may provide proceeds to a consumer by any method agreed upon by the consumer and provider.
- Compliance with privacy laws. Providers must comply with all local, state, and federal privacy and information security laws.
Relation to Other Laws
The law clarifies that providers who comply with a subset of the law's substantive requirements (as noted above) for earned wage access services are not deemed to be engaged in lending, money transmission, or debt collection in the state, or in violation of the state's laws governing the sale of, assignment of, or an order for earned but unpaid income. To the extent this clarification applies to a provider, it may not apply to an entity that is excluded from the term "provider" (e.g., on the grounds that the entity reports a consumer's payment or nonpayment of outstanding proceeds, fees, or tips to consumer reporting agencies).
Compliance Timelines
The law becomes effective 90 days after the legislature adjourns. The law does not include a grandfathering provision.
Next Steps
Providers should promptly evaluate their systems, procedures, and disclosures for compliance with Arkansas' new requirements. Industry participants should also be familiar with the Arkansas law because it, along with the laws and regulations in California, Kansas, Missouri, Nevada, South Carolina, and Wisconsin, may shape similar actions pending in other states.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
