CFPB Says Earned Wage Access Products Are Not Loans

The Consumer Financial Protection Bureau (CFPB) said Monday (Dec. 22) that certain earned wage access (EWA) products are not credit and are not covered by Regulation Z of the Truth in Lending Act.

The regulator said this in an advisory opinion that was filed with the Federal Register on Monday and is set to be published there on Tuesday (Dec. 23).

It also withdrew a proposed interpretative rule issued by the CFPB in June 2024 that would have identified all EWA as Regulation Z credit and would have identified expedited delivery fees and some tips as finance charges under Regulation Z.

“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,” CFPB said in the advisory opinion. “In addition, nothing in this advisory opinion interprets provisions of law outside of Regulation Z. The CFPB continues to seek stakeholder feedback and evaluate whether it should take further legal steps with respect to EWA products, including steps that might encompass non-Covered EWA and/or other provisions of law besides Regulation Z.”

The proposed interpretative rule that was withdrawn in this advisory opinion would have created a new classification for earned wage access products and would have required lenders to disclose more information to borrowers, more extensively detailing fees, interest and the total costs inherent in accessing wages early, PYMNTS reported at the time.

At least some critics charged that the proposed interpretative rule would have curtailed access to credit, according to that report.

PYMNTS reported in September that regulatory certainty around earned wage access remained high due to the proposed interpretative rule and, more recently, the seismic changes going on at the CFPB itself.

The Innovative Payments Association (IPA) said in a Monday press release that it applauded the regulator’s new advisory opinion on earned wage access and its clarification that EWA products are not loans.

“This clarification ensures that American workers can continue to safely access their earned wages without being pushed toward higher-cost alternatives,” IPA President and CEO Brian Tate said in the release.

The American Fintech Council Chief Policy Officer Ian P. Moloney said in a Monday press release that the CFPB’s advisory opinion is “a constructive first step” and brings “greater clarity to a product that millions of workers rely on to manage their finances.”

“This Advisory Opinion properly and explicitly clarifies the core principles of EWA, accurately defining it as a product that allows workers early access to wages they’ve earned for work they’ve already performed,” Moloney said. “Importantly, the CFPB recognizes key features of EWA that distinguish it from credit, including a recognition that optional expedite fees or voluntary tips do not constitute finance charges.”