WASHINGTON, D.C. – The Financial Technology Association (FTA) today submitted a comment letter raising concerns with the Consumer Financial Protection Bureau (CFPB)’s proposed interpretive rule regarding earned wage access (EWA) products. FTA reinforced that EWA products are legally distinct from traditional credit and urged the Bureau to work with and defer to Congress on crafting an appropriate regulatory framework for earned wage access.
”Millions of American workers use Earned Wage Access products to tap into their already earned wages and manage routine or emergency expenses ahead of payday,” said Penny Lee, President and Chief Executive Officer of the Financial Technology Association. “The rules and regulations governing EWA should account for its features distinct from traditional credit to ensure workers don’t lose access to it. For this reason, Congress is the appropriate forum to develop comprehensive rules for EWA.”
Earned Wage Access products give workers access to their already earned wages between pay cycles, which can be as infrequent as once or twice a month. Surveys show that roughly two-thirds (67%) of employees believe the traditional pay cycle is outdated, underscoring the need for modern payroll solutions like EWA. These products differ from traditional loans as they are non-recourse and have no interest, mandatory fees, or impact on credit scores.
Instead of moving forward with its interpretive rule, the Bureau should maintain its previous guidance that EWA products differ from traditional credit options and work with Congress to develop appropriate rules for the product. FTA has endorsed federal legislation, H.R. 7428, the Earned Wage Access Consumer Protection Act, that defines EWA as a non-credit product, establishes licensing regimes, and creates important consumer protections and disclosure requirements. Numerous states have enacted similar bipartisan laws to govern EWA.
The Bureau should also build on its open banking efforts by advancing an open payroll framework that can help expand the benefits of EWA. As the current 1033 proposal does not include payroll data, including this information in future phases of the rulemaking would put workers in control of their wages. Having access to their payroll data would allow workers to share accurate and timely earnings data with providers, which would improve EWA offerings.
Click here to read FTA’s full comment letter.
ABOUT US
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.
FTA Comment Letter on CFPB’s Proposed Earned Wage Access Interpretive Rule
WASHINGTON, D.C. – The Financial Technology Association (FTA) today submitted a comment letter raising concerns with the Consumer Financial Protection Bureau (CFPB)’s proposed interpretive rule regarding earned wage access (EWA) products. FTA reinforced that EWA products are legally distinct from traditional credit and urged the Bureau to work with and defer to Congress on crafting an appropriate regulatory framework for earned wage access.
”Millions of American workers use Earned Wage Access products to tap into their already earned wages and manage routine or emergency expenses ahead of payday,” said Penny Lee, President and Chief Executive Officer of the Financial Technology Association. “The rules and regulations governing EWA should account for its features distinct from traditional credit to ensure workers don’t lose access to it. For this reason, Congress is the appropriate forum to develop comprehensive rules for EWA.”
Earned Wage Access products give workers access to their already earned wages between pay cycles, which can be as infrequent as once or twice a month. Surveys show that roughly two-thirds (67%) of employees believe the traditional pay cycle is outdated, underscoring the need for modern payroll solutions like EWA. These products differ from traditional loans as they are non-recourse and have no interest, mandatory fees, or impact on credit scores.
Instead of moving forward with its interpretive rule, the Bureau should maintain its previous guidance that EWA products differ from traditional credit options and work with Congress to develop appropriate rules for the product. FTA has endorsed federal legislation, H.R. 7428, the Earned Wage Access Consumer Protection Act, that defines EWA as a non-credit product, establishes licensing regimes, and creates important consumer protections and disclosure requirements. Numerous states have enacted similar bipartisan laws to govern EWA.
The Bureau should also build on its open banking efforts by advancing an open payroll framework that can help expand the benefits of EWA. As the current 1033 proposal does not include payroll data, including this information in future phases of the rulemaking would put workers in control of their wages. Having access to their payroll data would allow workers to share accurate and timely earnings data with providers, which would improve EWA offerings.
Click here to read FTA’s full comment letter.
ABOUT US
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.