Truth in Lending (Regulation Z); Non-application to Earned Wage Access Products

<NOTICE> CONSUMER FINANCIAL PROTECTION BUREAU <SUBJECT>Truth in Lending (Regulation Z); Non-application to Earned Wage Access Products</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Consumer Financial Protection Bureau. <HD SOURCE="HED">ACTION:</HD> Advisory opinion. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Consumer Financial Protection Bureau (CFPB) is issuing this advisory opinion to resolve regulatory uncertainty regarding: (1) the applicability of the definition of credit under Regulation Z, which implements the Truth in Lending Act (TILA), to earned wage access (EWA) products that conform to the description of “Covered EWA” provided in part I.C.2 of this advisory opinion; and (2) the applicability of the definition of finance charge under Regulation Z to certain EWA-related charges (expedited delivery fees, tips) to the extent any EWA products meet the Regulation Z definition of credit. The CFPB is also withdrawing a proposed interpretive rule. </SUM> <DATES> <HD SOURCE="HED">DATES:</HD> This advisory opinion is effective on December 23, 2025. </DATES> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Dave Gettler, Paralegal Specialist, Office of Regulations, at 202-435-7700. If you require this document in an alternative electronic format, please contact <E T="03">CFPB_Accessibility@cfpb.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> The CFPB is issuing this advisory opinion pursuant to its Advisory Opinions Policy. <SU>1</SU> <FTREF/> <FTNT> <SU>1</SU>  85 FR 77987 (Dec. 3, 2020). </FTNT> <HD SOURCE="HD1">I. Advisory Opinion</HD> <HD SOURCE="HD2">A. Market Background</HD> According to the Bureau of Labor Statistics, nearly three-quarters of U.S. private businesses use biweekly, semimonthly, or monthly pay periods. <SU>2</SU> <FTREF/> Several obstacles continue to prevent businesses from readily implementing shorter pay cycles. <SU>3</SU> <FTREF/> Starting a little over a decade ago, earned wage access (EWA) has emerged as an innovative way for workers to meet short-term liquidity needs that arise between paychecks without turning to potentially more costly alternatives. EWA seeks to address the lag between consumers' hours worked and receipt of their paychecks by facilitating advance access to earned but as yet unpaid wages. <FTNT> <SU>2</SU>   <E T="03">See</E> Bureau of Labor Statistics, <E T="03">Length of Pay Periods in the Current Employment Statistics Survey</E> (last modified Aug. 4, 2023), <E T="03">https://www.bls.gov/ces/publications/length-pay-period.htm.</E> </FTNT> <FTNT> <SU>3</SU>  This includes, for example, additional costs in both time and money to run payroll more frequently, cash flow limitations, and inertia. <E T="03">See, e.g.,</E> Marshall Lux & Cherie Chung, <E T="03">Earned Wage Access: An Innovation in Financial Inclusion?,</E> M-RCBG Associate Working Paper Series 2023.214, Harvard University (June 2023), <E T="03">https://dash.harvard.edu/server/api/core/bitstreams/5cb75832-883a-4d51-9b0e-d959da124354/content;</E> Mike Kappel, <E T="03">How Often Should You Run Payroll? (Weekly, Biweekly, Etc.),</E> Forbes (Apr. 1, 2025), <E T="03">https://www.forbes.com/sites/mikekappel/2025/04/01/how-often-should-you-run-payroll-weekly-biweekly-etc/.</E> The CFPB has noted that periodic wage payment may be driven “by efficiency concerns with payroll processing and employers' cash management.” 82 FR 54472, 54547 (Nov. 17, 2017). </FTNT> Two main types of EWA exist in the market today. Providers of “employer-partnered” (EP) EWA contract with employers to offer their workers access to amounts not exceeding accrued wages, with the provider generally utilizing the payroll process to deduct accessed amounts at the next payroll event. <SU>4</SU> <FTREF/> EP providers have evolved a variety of methods for making payroll process deductions. <SU>5</SU> <FTREF/> In addition, EP providers generally claim no rights against the worker in the event that the next paycheck is insufficient to support the deduction. “Direct-to-consumer” (D2C) EWA providers offer access to amounts that they estimate to be below accrued wages, with the provider then generally debiting accessed amounts via automated withdrawal from the worker's regular transaction account that receives their paycheck. <SU>6</SU> <FTREF/> Some D2C providers claim rights against the worker in the event that the amount that they are able to withdraw is insufficient. Some of the significant differences between these two types of earned wage products, however, are starting to erode. Some D2C providers now obtain payroll records to determine accrued wages, rather than estimate accrued wages by less direct means. Some also make deductions using the payroll process, rather than transferring from the consumer's regular transaction account after the consumer is paid. <SU>7</SU> <FTREF/> In addition, some D2C providers limit their ability to seek recourse. <FTNT> <SU>4</SU>  In some cases, deductions may include fees or other consumer payments associated with an EWA transaction. </FTNT> <FTNT> <SU>5</SU>  For example, some EP providers instruct the payroll processor to divert a portion of the paycheck to the EP provider, with the remainder going straight to the worker. Others instruct the payroll processor to pay the entire paycheck to the EP provider, which then makes the relevant residual payment to the worker. Whatever the exact model of payroll process deduction used, EP providers generally do not take funds from the worker's regular transaction account after that account's receipt of wages; instead, they make use of the payroll process to facilitate deduction. </FTNT> <FTNT> <SU>6</SU>  This includes, without limitation, prepaid and payroll card accounts. In some cases, the provider may partner with a bank to provide its EWA customers with a payroll card or other transaction account that the worker then uses to receive both early wage access and their regular paycheck. </FTNT> <FTNT> <SU>7</SU>  For example, at least one D2C provider obtains consumer authorization to instruct payroll processors to divert a portion of the paycheck to a dedicated account opened “for the benefit” of the consumer, which is used solely for the purpose of enabling the D2C provider to obtain payment, with the remainder of the paycheck going straight to the consumer's regular transaction account. </FTNT> Both forms of EWA now exist at scale, reflecting significant consumer demand, dozens of EWA providers, and upwards of $3.5 billion investment in the market from venture capital firms over the past decade. <SU>8</SU> <FTREF/> A 2024 report from the CFPB estimated that the EP EWA market had grown from $3.2 billion across 18.6 million transactions in 2018 to $22.8 billion across 214 million transactions in 2022, with 7.2 million workers utilizing EP EWA transactions at least once. <SU>9</SU> <FTREF/> That same year, an estimated 3 million workers accessed roughly $9.1 billion in D2C EWA funds; market analyses indicate that use of D2C products has also grown significantly over recent years. <SU>10</SU> <FTREF/> Recent estimates project that the U.S. EWA market is set to expand by about 300 percent between 2024 and 2034. <E T="03">EWA Chases Regulatory Clarity,</E> Payments Dive (Oct. 27, 2025), <E T="03">https://www.paymentsdive.com/news/earned-wage-access-federal-state-legal-regulatory-clarity/803398/.</E> </FTNT> <FTNT> <SU>9</SU>   <E T="03">See</E> CFPB, Data Spotlight: Developments in the Paycheck Advance Market (July 18, 2024), <E T="03">https://www.consumerfinance.gov/data-research/research-reports/data-spotlight-developments-in-the-paycheck-advance-market/</E> (hereinafter 2024 Data Spotlight). </FTNT> <FTNT> <SU>10</SU>   <E T="03">See id.</E> (“Combined with employer-partnered transactions, in 2022, roughly 10 million workers utilized earned wage product transactions to access over $31.9 billion.”). Several providers of D2C products report significant recent growth. <E T="03">See, e.g.,</E> Dave, <E T="03">3Q25 Earnings Presentation</E> (Nov. 4, 2025), <E T="03">https://investors.dave.com/static-files/4971d257-0924-4d19-b35e-5d871e5136f8</E> (showing D2C origination volume increased 49 percent from 3Q24 to 3Q25); Chime, <E T="03">Welcome to Chime,</E> at 24 (June 2025), <E T="03">https://chime.gcs-web.com/static-files/ef823261-71ae-4183-bd16-a76f0cf8b6ff</E> (showing $8.8 billion in D2C EWA transactions in the first nine months since product launch in 2024). </FTNT> <FTNT> <SU>11</SU>   <E T="03">See</E> Market.Us, <E T="03">North America Earned Wage Access Market Size, Share, Industry Analysis Report By Model</E> (Nov. 2025), <E T="03">https://market.us/report/north-america-earned-wage-access-market/.</E> </FTNT> EP providers obtain revenue from one or more of several sources: direct payment from the employer; a share of interchange revenue from payment cards used by workers; fees paid by workers for expedited delivery of EWA funds; and, less frequently, from subscription charges for access to EWA, sometimes packaged with other employee benefits. D2C providers obtain revenue from one or more of some of these same sources as well: interchange revenue, expedited delivery fees, and subscription charges. Many D2C providers also solicit tips from the workers who use their products. <SU>12</SU> <FTREF/> <FTNT> <SU>12</SU>  The CFPB is not aware of EP providers that solicit tips. </FTNT> <HD SOURCE="HD2">B. Regulatory Background</HD> In November 2020, the CFPB issued an advisory opinion (the 2020 AO)  <SU>13</SU> <FTREF/> to respond to uncertainty about whether EWA providers offer or extend “credit” within the scope of the Truth in Lending Act (TILA) and its implementing Regulation Z. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 68k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━