On January 15, the CFPB issued an advisory opinion rescinding its 2020 advisory opinion on earned wage access (EWA) products. As previously covered by InfoBytes, the CFPB’s 2020 advisory opinion stated that a certain EWA product did not constitute the offering or extension of “credit” under TILA and Regulation Z if such product met all several identified conditions:

• providing the consumer with no more than the amount of accrued wages earned;
• provision by a third party fully integrated with the employer;
• no consumer payment beyond recovering paid amounts via a payroll deduction from the next paycheck, (and no other recourse or collection activity of any kind);
• and no underwriting or credit reporting.

In a 2024 proposed interpretive rule, the CFPB changed its view stating that EWA products are consumer loans subject to TILA (covered by InfoBytes here). The CFPB’s rescission of the 2020 opinion seeks to clarify its stance.

The CFPB explained that it is rescinding the 2020 opinion due to flaws in its legal analysis and resulting “regulatory uncertainty.” The agency identified four main flaws: (i) insufficient consideration of the term “debt” under state law; (ii) unjustified inferences about consumer liability; (iii) a lack of analysis of credit transaction features; and (iv) unpersuasive reliance on the 2017 Payday Rule.

The Bureau’s inclusion of “regulatory uncertainty” suggested that the 2020 opinion failed to clarify the status of EWA products under TILA and Regulation Z, leading the U.S. GAO to recommend that the CFPB clarify their status.

The rescission of the 2020 Advisory Opinion is effective immediately.