This responds to your request for an unofficial opinion regarding Georgia's usury law and the Georgia Payday Lending Act. Specifically, you requested clarification regarding whether certain transactions involving instant transfer fees charged by Earned Wage Access ("EWA") providers would be considered "interest" under Georgia's usury law and, consequently, under the Georgia Payday Lending Act.[1]

In your letter, you describe "instant transfer fees" as referring to optional, one-time, non­recurring fees that EWA providers charge employees for immediate access to a portion of their earned wages prior to payment of the wages by the employer of the consumer. You state that these fees are related to the service of providing the funds to the consumer faster than the standard processing time. You further state that the instant transfer fee is non-recourse, and the EWA provider does not engage in any collection activity to recover any outstanding instant transfer fee.[2] Additionally, you state that the instant transfer fee does not operate similar to an interest rate, because, as you explain, it is not assessed based on the outstanding balance of a consumer's credit account. 

Under Georgia's usury law, O.C.G.A. § 7-4-1 et seq., "interest" is statutorily defined to mean "a charge for the use of money computed over the term of the contract at the rate stated in the contract or precomputed at a stated rate on the scheduled principal balance or computed in any other way or any other form." O.C.G.A. § 7-4-2(a)(1)(3). Implicit within the phrase "computed over the term of the contract" is some form of "time value of money calculation." See 2003 Op. Att'y Gen. 03-8. 

This Office has previously opined concerning "origination fees" on loans. See id. As noted in that Opinion, "a transaction that involves an extension of credit and a charge that is based on a time value of money calculation generally will fall under the usury statute unless a statutory exception exists. A charge that is not truly based on a 'time value of money' calculation will not, then, be 'interest,' provided that the lender is actually providing a service for which the charge is assessed and provided that the charge bears a reasonable relationship to the cost of providing the service. These provisos have their origin in decisions of the appellate courts of Georgia." See id. 

Given that general legal framework, it would generally seem a flat, one-time instant transfer fee that does not involve a time value of money calculation would likely not constitute "interest" under Georgia's usury law, so long as the provider adequately and reasonably justifies the service being provided.[3]

Related to the topic of your request, it is worth noting that the Georgia Supreme Court "has uniformly and consistently held that a lender's charge for service, when no service was in fact rendered or to be rendered the borrower, is a charge for the use of the money advanced and is therefore interest." First Fed Sav. & Loan Assa v. Norwood Realty Co., 212 Ga. 524, 531 
(1956); see also Williams v. First Bank & Trust Co., 154 Ga. App. 879 (1980) ("service charge" constituted interest where there was no evidence that the bank performed any service in return for the fee) (lender's charge for service which was not in fact rendered or to be rendered the borrower is a charge for use of money advanced and is therefore interest). Transactions in which the lender introduces some consideration, token in nature or undesired by the borrower, for the purpose of disguising interest and circumventing usury laws have also been found unlawful. Tribble v. State, 89 Ga. App. 593, 596-97 (1936). Thus, if the EWA provider's instant transfer fee was not in fact tied to some legitimate and reasonable service, then a court might very well consider it to be interest and subject to usury laws.[4]

Based on the foregoing, it is my unofficial opinion that Earned Wage Access transactions, where consumers are charged a fee to obtain a portion of wages in advance of the employer's payment of wages, do not generally constitute the imposition of "interest" where the fees are based on the service of providing the funds and not based on the time value of the funds transferred, are imposed solely for the service of transferring the funds, and where the fees and the transferred amount are advanced on a non-recourse basis. 

[1] Our understanding is that Earned Wage Access providers include those in the business of providing consumer-directed wage access services or employer-integrated wage access services, or both, and structured either as a credit or non-credit product. 

[2] It is further our understanding that as part of the transactions you have described, the EWA provider is not able to pursue the recovery of the wages that it advances in the event the customer's transfer of wages to repay the transfer fails. 

[3] If the fee does, however, require some time value of money calculation, then it would likely constitute "interest," and Georgia's usury laws would apply to that transaction.

[4] Additionally, it is possible that a court could consider an excessively high transfer fee, particularly when compared to the amount of the wages being made available, to be usurious. See generally 1980 Op. Att'y Gen. 80-21 ("every fee must be judged on its own particular merits, so the amount, variability, and justification should be weighed in determining whether to treat it as .. .interest."). Further, a transaction can be found to be usurious if the transaction involves the reserving and taking, or contracting to reserve and take, either directly or indirectly, a greater sum for the use of money than the lawful interest. O.C.G.A. § 7-4-1; Golden Atlanta Site Dev., Inc. v. Tilson, 299 Ga. App. 646 (2009). 

Prepared by Assistant Attorney General Zachary Johnson