The Consumer Financial Protection Bureau was hit with a barrage of public comments last week regarding its earned wage access rule proposal ahead of a Friday deadline for that feedback.
Much of the commentary fell along the same battle lines that have been drawn for months, since before the federal agency issued its interpretive rule proposal in July labeling earned wage access payments as loans. Many companies in the industry have long argued that their services don’t constitute lending and therefore lending laws shouldn’t apply.
The federal agency took action after studying an array of on-demand pay tools that have emerged in the market, and said it aimed to help companies offering the services understand how the bureau would apply existing laws to the nascent industry. “Paycheck advance products are often marketed to and designed for employers, rather than employees,” CFPB Director Rohit Chopra said when the rule proposal was issued. “The CFPB’s actions will help workers know what they are getting with these products and prevent race-to-the-bottom business practices.”
For their part, most earned wage access providers and their trade associations, including the American Fintech Council, have opposed the proposed rule. Some companies, including DailyPay, urged the CFPB in their comments to withdraw the rule. Others, including Wagestream, also criticized the agency for its rulemaking approach, saying it wasn’t meeting “fairness standards” for transparency and public comment.
The Fintech council also noted that the CFPB’s position now, under President Biden, diverged inappropriately from prior guidance issued during the Trump administration. To read more click here.