CFPB cracks down on popular paycheck advance programs. Here’s what that means for workers
https://www.cnbc.com/2024/07/19/what-cfpbs-rule-on-paycheck-advance-programs-means-for-workers.html
by cnbc_official
CFPB cracks down on popular paycheck advance programs. Here’s what that means for workers
https://www.cnbc.com/2024/07/19/what-cfpbs-rule-on-paycheck-advance-programs-means-for-workers.html
by cnbc_official
1 comment
The Consumer Financial Protection Bureau is cracking down on so-called paycheck advance programs, which [have grown popular](https://www.cnbc.com/2024/01/28/why-one-expert-called-earned-wage-access-payday-lending-on-steroids.html) with workers in recent years.
Such programs, also known as earned wage access, allow workers to tap their paychecks before payday, often for a fee, according to the CFPB.
The CFPB [proposed an interpretive rule](https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-interpretive-rule-to-ensure-workers-know-the-costs-and-fees-of-paycheck-advance-products/) on Thursday saying the programs — both those offered via employers and directly to users via fintech apps — are “consumer loans” subject to the Truth in Lending Act.
More than 7 million workers accessed about $22 billion in wages before payday in 2022, according to a CFPB [analysis](https://www.consumerfinance.gov/data-research/research-reports/data-spotlight-developments-in-the-paycheck-advance-market/) of employer-sponsored programs also published Thursday. The number of transactions jumped more than 90% from 2021 to 2022, the agency said.
Such services aren’t new: Fintech companies debuted them in their earliest form more than 15 years ago. But their use has accelerated recently amid household financial burdens imposed by the Covid-19 pandemic and high inflation, experts said.
Read more: [https://www.cnbc.com/2024/07/19/what-cfpbs-rule-on-paycheck-advance-programs-means-for-workers.html](https://www.cnbc.com/2024/07/19/what-cfpbs-rule-on-paycheck-advance-programs-means-for-workers.html)