News & Resources


APA Offers CFPB Recommendations on Earned Wage Access

BY: Mike Linehan | 03/21/22

The APA reached out to the federal Consumer Financial Protection Bureau (CFPB) regarding the agency’s response to a request by New Jersey consumer groups to identify earned wage access (EWA) services as payday loans. The APA has maintained that employer-integrated EWA is a different financial tool than payday loans. “To ensure that employees are not placed in a cycle of debt, the early payment amounts must be identified earned wages,” APA said.

The Problem Before the CFPB

At issue is a November 2020 CFPB advisory opinion on EWA that has sometimes been misunderstood. In the 2020 opinion, a request was made to the CFPB for interpretation of the definition of “extending credit” under the Truth In Lending Act based on a specific EWA model. The APA recommended that the CFPB conduct outreach regarding its advisory opinion policy and take further action, if appropriate, based on data and public input.

New Jersey Proposed Legislation

The APA pointed out that proposed legislation in New Jersey on EWA (S.B. 3611) is not related to the CFPB’s advisory opinion. New Jersey places significant state restrictions on payday loans, yet employees in the state can access payday loans through out-of-state lenders or pay significant bank fees for nonsufficient funds.

The APA and other business interests recommended to state legislators that New Jersey allow EWA by defining these services differently than payday loans under state law.

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Mike Linehan is the Assistant Manager of Government Relations for the APA.