Payactiv applauds the Consumer Financial Protection Bureau (CFPB)’s November 30 Advisory Opinion on earned wage access (EWA). The Opinion is a positive statement on the benefits of EWA and an important first step by the CFPB.
Here’s Payactiv’s high-level view:
- The CFPB’s Advisory Opinion praises employer-based earned wage access (EWA) as an important innovation.
- The Opinion rules that certain free EWA programs do not create a “debt,” and therefore are not “credit” under the federal Truth in Lending Act (TILA).
- The Opinion does not state that fee-based programs are credit, or address whether fee-based programs are covered by TILA.
- However, the CFPB invites providers who charge “nominal processing fees…[to] request clarification from the Bureau about a specific fee structure by, for instance, applying for an Approval under the Policy on the Complaince Assistance Sandbox.”
- Payactiv offers both a free program (Access FREEdom) and a nominal fee option ($1 Access Choice). Payactiv is exploring further clarification from the CFPB and we expect the CFPB will have more to say about EWA.
The Opinion expresses several key preferences that align with Payactiv’s Access FREEdom model:
- The Opinion requires EWA programs to be employer-sponsored, like Payactiv’s.
- The Opinion specifically endorses payroll deductions to settle EWA amounts. Payactiv is the only EWA provider with a 50-state payroll deduction model.
- The Opinion is limited to free programs, such as Payactiv‘s Access FREEdom.
- The Bureau makes clear that EWA must be based on verified, earned wages. Payactiv verifies earned wages through payroll integration.
We are proud to be at the forefront of employer-based EWA, with the only 50-state deduction model on the market.
* The CFPB Approval Order relates only to Payactiv’s Payroll Deduction EWA Programs and not to all Payactiv products or services. The Approval Order is a public document, and may be reviewed here.
