H4456 declares that fintech payday loans are not loans and their costs are not interest subject to Massachusetts’ protections against predatory lending.
Currently in Massachusetts, loans under $6,000 are limited to “23% per annum of the unpaid balances of the amount financed calculated according to the actuarial method plus an administrative fee of $20.” H4456 exempts fintech payday loans from this rate cap, declaring that “fees, voluntary tips, gratuities, or other donations paid by a consumer to a licensee in accordance with this part shall not be considered interest or finance charges.” The bill also declares that loans styled as earned wage access services are not “a loan or other form of credit or debt.”
While framed as a technology bill and leading with a licensure regime, the heart of this bill is to circumvent existing usury protections and introduce payday lending to the Commonwealth.