EWA Regulation in California: IPA Pushes for Nuance

The Innovative Payments Association (IPA) is urging California's Department of Financial Protection and Innovation (DFPI) to refine its proposed regulations for Earned Wage Access (EWA) providers. The IPA argues that the current draft lumps together all EWA products, potentially creating unnecessary burdens and misleading consumers.
Key Concerns:

• One-size-fits-all approach: The IPA believes the proposal fails to acknowledge the diversity of EWA models. Not all EWA products function like loans.
• Misleading consumer information: The current rules might confuse EWA fees with separate payroll card fees.
• Unfair classification: The IPA argues that some EWA models shouldn't be classified as loans under California's Financing Law (CFL).

What the IPA Wants:

• Recognition of EWA Model Variety: The DFPI should acknowledge that EWA products come in different forms, with some not resembling loans.
• Clearer Fee Definitions: The rules should distinguish between EWA fees and payroll card fees to avoid misleading information.
• Exemption for Non-Loan EWA Models: The IPA urges the DFPI to exempt certain EWA models from the CFL, reflecting their non-credit nature.
  
  

The IPA believes a more nuanced approach is essential for regulating EWA effectively and protecting consumers. They emphasize the importance of regulatory clarity for this relatively new financial tool.

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