Published: October 2021

CFPB urged to reverse earned wage actions that could create dangerous FinTech payday loopholes

A coalition of 96 consumer, labor, civil rights, legal services, faith, community and financial organizations and academics is urging the Consumer Financial Protection Bureau (CFPB) to revoke or significantly revise two actions taken in late 2020 regarding earned wage access (EWA) products. The group argued that the CFPB’s EWA advisory opinion and PayActiv approval order, which declared that certain EWA programs are not deemed “credit,” threaten to create loopholes in federal credit and fair lending laws and are being misused to promote FinTech exemptions in state laws that regulate predatory payday lending products.

The Consumer Financial Protection Bureau’s (CFPB) 2020 decision on earned wage access products, issued with no public input, threatens to open a gaping hole in fair lending laws for FinTech payday loans. Advocates argue that earned wage access products are loans—advances on pay, usually for a fee—and that carving a loophole for them will lead workers to get caught in debt traps and cycles where they are paying to be paid. The coalition urged the CFPB to revoke its PayActiv approval order to prevent the CFPB name from being used to carve holes in predatory lending laws around the country.

Lead Organization

National Consumer Law Center (NCLC)

Other Organizations

Americans for Financial Reform Education Fund | Center for LGBTQ Economic Advancement & Research (CLEAR) | Center for Responsible Lending | Child Welfare League of America | Consumer Action | Consumer Federation of America | Consumer Reports | Consumers for Auto Reliability and Safety | Credit Builders Alliance | Heartland Alliance | Leadership Conference on Civil and Human Rights | NAACP | National Association of Consumer Advocates | National Association of Consumer Bankruptcy Attorneys (NACBA) | National Center for Law and Economic Justice | National Community Action Partnership | National Community Reinvestment Coalition | National Consumer Law Center (on behalf of its low income clients) | National Employment Law Project | PolicyLink | Prosperity Now | Public Good Law Center | Revolving Door Project | Service Employees International Union | SPLC Action Fund | The Strategic Organizing Center | U.S. PIRG | Woodstock Institute

More Information

Click here to read the coalition letter in full.

For more information, please visit NCLC.


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