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ICBA told the Consumer Financial Protection Bureau that its proposed interpretive rule on “earned wage access” products defines “debt” too broadly.
Details: In a comment letter, ICBA said that while it appreciates the CFPB’s intention of curbing costly EWA products, the bureau’s definition does not align with its 2020 advisory opinion of EWA products. ICBA said the broadened definition creates the potential for ambiguity among consumers and those in the financial services industry and may preclude responsible lenders from providing wage access.
Background: EWA products, also known as paycheck advance products, provide consumers access to their wages ahead of the normal pay cycle to assist with unexpected circumstances and provide an alternative to predatory payday loans.
CFPB Actions: The CFPB in July proposed guidance that says many such products are consumer loans subject to the Truth in Lending Act. In 2020, the CFPB released an advisory opinion on covered EWA programs, clarifying that they did not constitute “credit” as defined by Regulation Z.