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Lux, Marshall

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Lux, Marshall

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Author's Publications: search.filters.isAuthorOfPublication.94a7ed3c-1015-4616-882b-4befc6bc3a3d

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    Earned Wage Access: An Innovation in Financial Inclusion?
    (Mossavar-Rahmani Center for Business & Government, 2023-06) Lux, Marshall; Chung, Cherie
    Since the early 2010s, fintech companies have both gone directly to employees or partnered with employers to provide access to a portion of employees’ earned wages before payday. The growth of these companies, known as Earned Wage Access (EWA) companies, was accelerated significantly during the COVID-19 pandemic. Millions of workers and hundreds of employers are now advancing billions of dollars of wages each year. Despite this rapid growth, jurisdiction over the product remains unclear, and the product sits in a legal gray area. Consumer advocates, regulators on the state and federal level, the EWA industry, and employers have all acknowledged the need for regulatory clarity. This working paper investigates the origins of EWA, provides an overview of the current business models and players, explores the implications of EWA product design with a focus on consumer financial health, and identifies areas of ambiguity in the current regulation. It recommends that moving forward, regulators should outline what constitutes a “Covered” EWA program by focusing on models that contract directly with employers, disallowing tips, and clarifying guidance on subscription models and other allowable finance charges. Beyond this, providers need to be transparent about the fees they charge and the rights they ask consumers to waive while upholding high – and statutory – data usage and privacy standards. Such guidance would ensure the continued benefits of employer-sponsored EWA, delivered in a meaningful and sustainable context that improves employee welfare while preventing unfair harms.
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    Grow Now, Regulate Later? Regulation urgently needed to support transparency and sustainable growth for Buy-Now, Pay-Later
    (Mossavar-Rahmani Center for Business and Government, 2022-04) Lux, Marshall; Epps, Bryan
    “Buy Now, Pay Later” (BNPL) companies have seen significant growth in the past few years in the U.S. market. BNPL products are expected to account for a considerable portion (12%) of ecommerce sales by 2025. Despite BNPL’s significance in the American economy, most BNPL products are far less regulated than their near substitutes. BNPL product design often places it in a legally confusing position (or solidly outside of regulatory oversight). Regulators have struggled to react at a pace consistent with the pace of BNPL growth. To support sustainable growth of BNPL in the US, greater transparency is needed for consumers, investors, lenders, and regulators. This working paper explores the implications of BNPL uncertainties with a focus on consumer risk, options for self-regulation, and recommendations for regulatory and policy intervention. It investigates the origins of the challenges and opportunities presented by BNPL and explains how interventions can help maximize the social and commercial value of BNPL.