“A payday advance that is repaid on payday is a payday loan, and fintech cash advance apps that call themselves ‘earned wage access’ are just high-cost lending in disguise,” said Lauren Saunders, associate director of the National Consumer Law Center. “The CFPB has seen through fintech payday lenders’ new clothes, making clear that worker payday loans that hide 300% APRs in coerced, so-called ‘tips’ and other junk fees must disclose their true costs just like other payday loans. A tip is paid to a human being who serves you; it is not a legitimate way to disguise the cost of predatory loans.”
Press release from CRL | July 18, 2024“The CFPB has provided much-needed clarity that existing federal consumer protection laws, like TILA, apply to wage advance products,” said Nadine Chabrier, senior policy and litigation counsel at the Center for Responsible Lending (CRL). “This guidance will require EWA lenders to include all costs in the price of credit, promoting fair competition that will allow consumers to comparison shop for the best deal.”
Press release from CFA | July 18, 2024“Workers have always relied on wages to repay advances from lenders. At the end of the day, an advance on wages is still a loan that has to be repaid, and no amount of hair-splitting can change it,” said Adam Rust, Director of Financial Services for the Consumer Federation of America. “Policymakers should be skeptical whenever lenders insist on regulatory exemptions from rules that apply to their competitors. The CFPB’s interpretive rule will level the playing field and promote competition among short-term small-dollar lenders.”
Press release from CFPB | July 18, 2024 | CFPB Data Spotlight | July 18, 2024WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today proposed an interpretive rule explaining that many paycheck advance products, sometimes marketed as “earned wage” products, are consumer loans subject to the Truth in Lending Act.
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