The Consumer Financial Protection Bureau says apps that allow workers to access their paychecks in advance, often for a fee, are providing loans and therefore subject to the Truth in Lending Act.
FILE - Rohit Chopra, director of the Consumer Financial Protection Bureau, speaks as President Joe Biden meets with his Competition Council to announce new actions to lower costs for families in the State Dining Room of the White House in Washington, on March 5, 2024. The CFPB said Thursday July 18, 2024 that apps that allow workers to access their paychecks in advance, often for a fee, are providing loans and should be subject to the Truth in Lending Act.
Christine Zinner, policy counsel at Americans for Financial Reform, said the paycheck advance products “are nothing more than workplace payday loans, with consumers more easily preyed upon since the money is only a tap away on a cell phone.” In 2021, the California Department of Financial Protection and Innovation found “users often feel compelled to leave due to applied pressure tactics like... claiming tips are used to support other vulnerable consumers or for charitable purposes.”
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