15 Jan 2025
📑CFPB Rescinds Guidance on Earned Wage Products
Truth in Lending (Regulation Z); Consumer Credit Offered to Borrowers in Advance of Expected Receipt of Compensation for Work
Summary
The Consumer Financial Protection Bureau (CFPB) is issuing this advisory opinion to rescind an advisory opinion it issued in November 2020 that described how one particular type of "earned wage" product does not involve the offering or extension of "credit" as that term is defined in the Truth in Lending Act and Regulation Z.
Agencies
- Consumer Financial Protection Bureau
Business Impact
$$ - Med
The advisory opinion reverses previous guidance under the Truth in Lending Act regarding "earned wage" products, impacting how businesses structure payroll advances and potentially affecting compliance and operational risks. With an effective date of January 15, 2025, it indicates a shift in regulatory expectations, which necessitates businesses to reassess their financial products and payment structures.