SB281 Alabama 2025 Session

Updated Feb 23, 2026

Notable

Summary

Primary Sponsor: Shay ShelnuttSenator
Republican
Session: 2025 Regular Session
Title: Consumer Protection; platforms providing services allowing employees to access earned income prior to paycheck not considered a lender or debt collector; standards on platforms imposed
Summary: SB281 would allow earned wage access platforms to operate without being treated as lenders or debt collectors if they follow new consumer protection standards.
What This Bill Does
It creates a new chapter defining earned wage access services and sets rules providers must follow. If providers meet these standards, they are not considered lenders, money transmitters, or debt collectors in Alabama. It requires clear disclosures, rights information, complaint handling, cancellation options, and fair handling of proceeds and tips, along with privacy protections. It becomes effective on October 1, 2025.

Who It Affects
Earned wage access platforms/providers: must follow the new consumer protection standards to avoid being labeled as lenders or debt collectors.
Consumers/employees using earned wage access services: gain required disclosures, rights, cancellation options, and protections around fees and repayment practices.
Employers offering or facilitating earned wage access: may be affected by how EWA is offered and disclosed to workers.

Key Provisions
Adds Chapter 30 to Title 5 to define terms like consumer, earned wage access services, proceeds, and provider.
Earned wage access providers are not deemed to be lending, money transmission, or debt collection if they comply with Sections 5-30-3 and 5-30-4.
Section 5-30-3 requires providers to: have policies for consumer questions/complaints; disclose all rights and fees before an agreement; inform of changes; allow cancellation without a fee; offer a no-cost option to obtain the same proceeds; protect privacy and security; provide proceeds by an agreed method; reimburse overdraft fees caused by attempting to collect; disclose voluntary nature of tips clearly.
Section 5-30-4 prohibits: forcing repayment through lawsuits, outbound calls, third-party collectors, or sale to debt buyers; using credit scores to determine eligibility; accepting card payments for repayment; charging late, deferral, interest, or finance charges; conditioning proceeds on tip payments; misleading consumers about tips being required or beneficial to specific individuals.
Effective date: October 1, 2025.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Businesses & Financial Institutions