On July 18, the CFPB proposed an interpretive rule to clarify that many paycheck advance products, or “earned wage” products, were consumer loans and therefore subject to TILA. The CFPB seeks to require lenders to provide workers with clear disclosures about the costs and fees associated with earned wage products, pursuant to TILA’s implementing Regulation Z. The CFPB also published an online report examining these types of products.

The interpretive rule proposes to replace a 2020 advisory opinion that stated that one particular type of earned wage product does not constitute “credit” because it is not a “debt.” The interpretive rule now cites to many definitions of the term “debt,” including that of the FDCPA, to support a broad reading of “debt” under TILA.

The proposed interpretive rule also recognizes certain fees as finance charges, such as tips and fees for expedited delivery. The CFPB states that earned wage access providers must reflect the appropriate finance charges on the disclosures that the provider provides to the consumers.

The report published by the CFPB in conjunction with the interpretive rule examined earned wage loans and revealed that on average, workers take out 27 such loans each year, and these loans often have an APR exceeding 100 percent. The report also highlighted that a significant number of workers pay fees for earned wage access, with the majority of fees being for expedited transfer services.

Public comments on the proposed interpretive rule must be received by August 30.