IPA Responds to CFPB’s Proposed Rule on Earned Wage Access

The Innovative Payments Association (IPA) has submitted a detailed comment letter to the Consumer Financial Protection Bureau (CFPB) in response to the Bureau’s proposed 2024 Paycheck Advance Interpretive Rule. This proposed guidance has sparked significant concern within the electronic payments industry, particularly regarding how the CFPB defines and regulates earned wage access (EWA) products.

Key Concerns with the Interpretive Rule

In our letter, we outlined several areas where the proposed Interpretive Rule diverges from prior guidance and raises critical questions:

• Mischaracterization of EWA as “Debt”: The CFPB’s interpretation would classify all EWA products—even those with non-recourse features—as consumer debt. IPA strongly disagrees, noting that many EWA models do not impose any obligation to repay and lack the hallmarks of traditional credit.
• Departure from Previous Guidance: The Interpretive Rule appears to contradict the CFPB’s 2020 Advisory Opinion, which concluded that certain non-recourse EWA programs did not constitute credit under Regulation Z. The current proposal does not adequately address or justify this departure.
• Overbroad Application of TILA and Regulation Z: Treating all EWA products as credit under the Truth in Lending Act would impose significant compliance burdens and could hinder access to helpful financial tools for consumers, particularly when the products do not function like traditional loans.
• Definition of “Finance Charge”: The rule’s classification of expedited delivery fees and voluntary tips as finance charges creates practical challenges and could lead to misleading disclosures that do not reflect the nature of EWA services.
  
  

A Call for Greater Study and Stakeholder Engagement

We are urging the CFPB to pause and engage in additional study and dialogue before finalizing any new rule. EWA products are not one-size-fits-all, and thoughtful regulation should account for the diversity of models in the market. Importantly, many of these tools were developed in response to consumer demand and prior CFPB guidance promoting financial innovation.

Download the comment letter to read our full response, including citations, case references, and proposed alternatives.

Download Comment Letter