CFPB proposes classifying paycheck advance products as consumer loans, subjecting lenders to Truth in Lending Act.
The CFPB has proposed a rule classifying paycheck advance products as consumer loans, making lenders subject to the Truth in Lending Act. This move would require lenders to provide consumers with accurate costs of these offerings, with interest rates often exceeding 100% APR. The CFPB found that the Earned Wage Access industry, which has experienced a significant increase in usage, has been likened to payday lending. The agency is currently seeking public comment on the proposed rules and could issue finalized rules later this year.
July 18, 2024
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