The CFPB recently issued an advisory opinion clarifying certain Earned Wage Access (EWA) programs do not involve an offer of “credit” under Regulation Z, which implements the Truth in Lending Act (TILA). This advisory opinion was issued concurrently with the CFPB’s finalization of its Advisory Opinion Policy, previously covered by WBK.
EWA products allow employees to receive advance access to earned but unpaid wages, and therefore, to meet short-term liquidity needs without turning to more costly alternatives like traditional payday loans. Typically, these programs involve an EWA provider (Provider) enabling employees to request a certain amount (or share) of accrued wages, disbursing the requested amounts to the employees prior to payday, and later recouping the funds through payroll deductions or bank account debits on the subsequent payday.
Specifically, the CFPB concluded that EWA programs incorporating the following features do not involve the offering or extension of credit and are not covered by Regulation Z: