Millions of American families utilize safe and transparent emerging product; EWA deserves a pragmatic and appropriate regulatory framework

Responsible EWA products are non-recourse and do not: require a credit check, underwriting, or base fees on creditworthiness; charge a fee in installments, charge interest, late fees, or penalties; or impact a user’s credit score

Washington, D.C. (February 7, 2024) – The American Fintech Council (AFC), the premier industry association representing responsible fintech companies, including the largest Earned Wage Access (EWA) providers, have requested that the Consumer Protection Financial Bureau (CFPB) immediately convene relevant stakeholders for a comprehensive conversation on EWA products and consideration of a formal rulemaking.

“Director Chopra and the CFPB have been thoughtful partners and we hope they will work with responsible industry stakeholders to ensure an appropriate regulatory structure for the emerging EWA industry,” said Phil Goldfeder, Chief Executive Officer of AFC. “American families deserve the ability to access the wages they have already earned from responsible and innovative companiesproviding an alternative to high-priced payday and other predatory options. EWA is not credit and should not be treated as a loan or forced into a legacy regulatory framework that will only serve to harm the very families the CFPB is charged with protecting.”

In a letter to Director Rohit Chopra at the CFPB, AFC urged the CFPB to convene an immediate meeting with all relevant stakeholders to explore the possibility of a rulemaking to ensure consumers are protected without losing important financial options. In addition, AFC argued that EWA is not a lending or credit product and should not be regulated as such. Unlike the provision of credit or a loan, EWA is non-recourse and does not require a credit check, underwriting, base fees on creditworthiness; charge a fee in installments, charge interest, late fees, or penalties; or impact a user’s credit score.

“We recognize that the Bureau has multiple options in their regulatory toolkit that could be used to formally or informally regulate the emerging EWA market,” wrote Ian P. Moloney, SVP, Head of Policy and Regulatory Affairs, in AFC’s recent letter to the CFPB. “We believe that the Bureau should convene the various stakeholders espousing these diverging views in order to develop a pragmatic policy solution—such as a formal rulemaking—for the EWA industry that properly protects consumers while not stymieing innovation.”

AFC raised concerns about the possibility of another CFPB Advisory Opinion and the limitations that come with pursuing non-binding guidance. AFC noted that the Bureau has multiple options in their regulatory toolkit that could have been used to pursue a better path forward, instead of issuing another Advisory Opinion.

“To date, the Bureau has opted to pursue less comprehensive or binding guidance with regards to EWA,” continued Moloney in his letter. “Initially, we agreed with this approach, as it allowed the industry to develop responsible options that fit the demands of consumers, without significant limitations to their business models. However, given the developments that have occurred in the market and various states since the Bureau issued its previous Advisory Opinion, we believe that it is time to engage in a more substantive regulatory endeavor, such as a formal rulemaking on EWA, which, as prescribed under the Administrative Procedures Act, would provide the public the ability to adequately convey the myriad views on this subject and ensure that the Bureau duly considers these views.”

Read full letter here.