On 11/30/2020, the Consumer Financial Protection Bureau (CFPB) issued an advisory opinion regarding certain types of earned wage access (EWA) providers. In the document, the CFPB also provided an opinion on a legally ambiguous form of earned wage access that requires an employee to repay advances from a vendor. In the opinion, the CFPB indicates that programs that require an employee to pay back an on-demand transfer via a payroll deduction and charge fees may be considered extensions of credit. The CFPB has noted that there is no extension of credit in the case of wage deductions only if there are no fees or other restrictions.
The CFPB This follow-up order from December 30, 2020 was requested by a specific provider (PayActiv) that was at risk of being deemed noncompliant with the CFPB’s initial advisory opinion on earned wage access. Under CFPB policy, providers can request clarity on specific points in the face of regulatory uncertainty. Per the Bureau’s 11/30/2020 opinion identifying specific at-risk models that might be considered extenders of credit, such a provider had requested a review of their at-risk set of facts.