The Consumer Financial Protection Bureau (CFPB) argued that many paycheck advance products, also marketed as “earned wage” products, are consumer loans subject to the Truth in Lending Act. The proposed rule will thus ensure that lenders understand their legal obligations to disclose the costs and fees of these credit products to employees.
Alongside the interpretive rule, the CFPB additionally released a report examining employer-sponsored paycheck advance loans, which prompted the bureau’s guidance.
The report found that:
In May this year, the CFPB proposed a new rule outlining that buy now pay later (BNPL) lenders should be treated like credit cards.
