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Consumer Financial Protection Bureau (CFPB)

Allison London

Advisory Opinions Policy
November, 2020

According to the Bureau of Labor Statistics, nearly two-thirds of U.S. private businesses use biweekly, semimonthly, or monthly pay periods.

A study by the Financial Health Network found that 38 percent of respondents cited timing mismatches between income and expenses as a reason for using short-term, small-dollar credit.

Earned wage access products have recently emerged in the marketplace as an innovative way for employees to meet short-term liquidity needs that arise between paychecks without turning to more costly alternatives like traditional payday loans. EWA products seek to address the lag between consumers’ hours worked and receipt of their paychecks by facilitating advance access to earned but as yet unpaid wages.

The Bureau is issuing this advisory opinion under the Advisory Opinion Policy to resolve regulatory uncertainty regarding the application of Regulation Z to a "Covered EWA Program” (as defined in the Summary of Material Facts).  This advisory opinion clarifies that a Covered EWA Program does not involve the offering or extension of “credit” as defined by section 1026.2(a)(14) of Regulation Z.

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