On December 30, 2020, the Consumer Financial Protection Bureau ("CFPB") granted approval to Payactiv, Inc. ("Payactiv") to offer its earned wage access ("EWA") program under the CFPB's Policy on the Compliance Assistance Sandbox, among the first approvals under the CFPB's regulatory sandbox.
In its approval order, the CFPB granted approval to various aspects of Payactiv's EWA program and grants Payactiv a safe harbor from liability under the Truth in Lending Act ("TILA") and Regulation Z.
Payactiv's EWA program allows employees to access wages they have already earned, but have not yet been paid by their employer. Such programs provide critical short-term monetary flexibility to meet needs that may arise between paychecks and help employees avoid more costly alternatives like payday loans and high-interest credit card debt. The CFPB's order confirms that Payactiv's EWA program neither creates a debt obligation nor involves an extension of credit to the employee.
The CFPB's order comes on the heels of its November 20, 2020 advisory opinion, which distinguished EWA programs from credit. In its order, the CFPB approves of Payactiv's specified EWA program and provides Payactiv with safe harbor from liability related to its program. The CFPB's approval marks a historic step for consumer financial innovation – Payactiv's EWA program is one of the first three products to be approved under the CFPB's regulatory sandbox, and the only related to EWA.
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