WASHINGTON— The Consumer Financial Protection Bureau said certain earned wage access products are not credit and therefore are not subject to Regulation Z of the Truth in Lending Act, marking a shift from a proposal the agency advanced last year.
The CFPB said the determination was laid out in an advisory opinion filed with the Federal Register and published on Tuesday.
In the same action, the agency withdrew a proposed interpretive rule issued in June 2024 that would have treated all earned wage access, or EWA, products as credit under Regulation Z and classified expedited delivery fees and some tips as finance charges.
CFPB Stresses Message
“This advisory opinion does not state, and nothing in it should be understood to state, that EWA products that are not Covered EWA are credit under Regulation Z,” the Consumer Financial Protection Bureau said.
The Bureau added that it continues to seek feedback from stakeholders and is evaluating whether additional legal steps are warranted, including actions that could involve other EWA products or provisions of law beyond Regulation Z.
How Product Works
Earned wage access products allow workers to obtain a portion of wages they have already earned before their scheduled payday. Supporters argue the services provide a lower-cost alternative to overdraft fees or short-term loans, while critics have raised concerns about fees and consumer protections.
The withdrawn proposal would have created a new regulatory classification for EWA products and required providers to make additional disclosures about fees, interest and total costs associated with early wage access, according to prior reporting. Some industry critics said the proposal risked limiting access to the products.
Industry Groups Reaction
Industry groups were positive about the announcement:
- The Innovative Payments Association said in a statement that it applauded the advisory opinion and the clarification that earned wage access products are not loans. Brian Tate, the group’s president and chief executive officer, said the clarification would allow workers to continue accessing earned wages without being pushed toward higher-cost options.
- The American Fintech Council also praised the decision. Chief policy officer Ian P. Moloney called the advisory opinion “a constructive first step” that brings greater clarity to a product used by millions of workers to manage their finances.
