Notice2025-23735
Truth in Lending (Regulation Z); Non-application to Earned Wage Access Products
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 23, 2025
Effective
December 23, 2025
Issuing agencies
Consumer Financial Protection Bureau
Abstract
The Consumer Financial Protection Bureau (CFPB) is issuing this advisory opinion to resolve regulatory uncertainty regarding: (1) the applicability of the definition of credit under Regulation Z, which implements the Truth in Lending Act (TILA), to earned wage access (EWA) products that conform to the description of "Covered EWA" provided in part I.C.2 of this advisory opinion; and (2) the applicability of the definition of finance charge under Regulation Z to certain EWA-related charges (expedited delivery fees, tips) to the extent any EWA products meet the Regulation Z definition of credit. The CFPB is also withdrawing a proposed interpretive rule.
Full Text
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<title>Federal Register, Volume 90 Issue 244 (Tuesday, December 23, 2025)</title>
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[Federal Register Volume 90, Number 244 (Tuesday, December 23, 2025)]
[Notices]
[Pages 60069-60076]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-23735]
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CONSUMER FINANCIAL PROTECTION BUREAU
Truth in Lending (Regulation Z); Non-application to Earned Wage
Access Products
AGENCY: Consumer Financial Protection Bureau.
ACTION: Advisory opinion.
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SUMMARY: The Consumer Financial Protection Bureau (CFPB) is issuing
this advisory opinion to resolve regulatory uncertainty regarding: (1)
the applicability of the definition of credit under Regulation Z, which
implements the Truth in Lending Act (TILA), to earned wage access (EWA)
products that conform to the description of ``Covered EWA'' provided in
part I.C.2 of this advisory opinion; and (2) the applicability of the
definition of finance charge under Regulation Z to certain EWA-related
charges (expedited delivery fees, tips) to the extent any EWA products
meet the Regulation Z definition of credit. The CFPB is also
withdrawing a proposed interpretive rule.
DATES: This advisory opinion is effective on December 23, 2025.
FOR FURTHER INFORMATION CONTACT: Dave Gettler, Paralegal Specialist,
Office of Regulations, at 202-435-7700. If you require this document in
an alternative electronic format, please contact
<a href="/cdn-cgi/l/email-protection#e2a1a4b2a0bda381818791918b808b8e8b969ba281849280cc858d94"><span class="__cf_email__" data-cfemail="f1b2b7a1b3aeb092929482829893989d988588b192978193df969e87">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: The CFPB is issuing this advisory opinion
pursuant to its Advisory Opinions Policy.\1\
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\1\ 85 FR 77987 (Dec. 3, 2020).
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I. Advisory Opinion
A. Market Background
According to the Bureau of Labor Statistics, nearly three-quarters
of U.S. private businesses use biweekly, semimonthly, or monthly pay
periods.\2\ Several obstacles continue to prevent businesses from
readily implementing shorter pay cycles.\3\ Starting a little over a
decade ago, earned wage access (EWA) has emerged as an innovative way
for workers to meet short-term liquidity needs that arise between
paychecks without turning to potentially more costly alternatives. EWA
seeks to address the lag between consumers' hours worked and receipt of
their
[[Page 60070]]
paychecks by facilitating advance access to earned but as yet unpaid
wages.
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\2\ See Bureau of Labor Statistics, Length of Pay Periods in the
Current Employment Statistics Survey (last modified Aug. 4, 2023),
<a href="https://www.bls.gov/ces/publications/length-pay-period.htm">https://www.bls.gov/ces/publications/length-pay-period.htm</a>.
\3\ This includes, for example, additional costs in both time
and money to run payroll more frequently, cash flow limitations, and
inertia. See, e.g., Marshall Lux & Cherie Chung, Earned Wage Access:
An Innovation in Financial Inclusion?, M-RCBG Associate Working
Paper Series 2023.214, Harvard University (June 2023), <a href="https://dash.harvard.edu/server/api/core/bitstreams/5cb75832-883a-4d51-9b0e-d959da124354/content">https://dash.harvard.edu/server/api/core/bitstreams/5cb75832-883a-4d51-9b0e-d959da124354/content</a>; Mike Kappel, How Often Should You Run Payroll?
(Weekly, Biweekly, Etc.), Forbes (Apr. 1, 2025), <a href="https://www.forbes.com/sites/mikekappel/2025/04/01/how-often-should-you-run-payroll-weekly-biweekly-etc/">https://www.forbes.com/sites/mikekappel/2025/04/01/how-often-should-you-run-payroll-weekly-biweekly-etc/</a>. The CFPB has noted that periodic wage
payment may be driven ``by efficiency concerns with payroll
processing and employers' cash management.'' 82 FR 54472, 54547
(Nov. 17, 2017).
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Two main types of EWA exist in the market today. Providers of
``employer-partnered'' (EP) EWA contract with employers to offer their
workers access to amounts not exceeding accrued wages, with the
provider generally utilizing the payroll process to deduct accessed
amounts at the next payroll event.\4\ EP providers have evolved a
variety of methods for making payroll process deductions.\5\ In
addition, EP providers generally claim no rights against the worker in
the event that the next paycheck is insufficient to support the
deduction. ``Direct-to-consumer'' (D2C) EWA providers offer access to
amounts that they estimate to be below accrued wages, with the provider
then generally debiting accessed amounts via automated withdrawal from
the worker's regular transaction account that receives their
paycheck.\6\ Some D2C providers claim rights against the worker in the
event that the amount that they are able to withdraw is insufficient.
Some of the significant differences between these two types of earned
wage products, however, are starting to erode. Some D2C providers now
obtain payroll records to determine accrued wages, rather than estimate
accrued wages by less direct means. Some also make deductions using the
payroll process, rather than transferring from the consumer's regular
transaction account after the consumer is paid.\7\ In addition, some
D2C providers limit their ability to seek recourse.
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\4\ In some cases, deductions may include fees or other consumer
payments associated with an EWA transaction.
\5\ For example, some EP providers instruct the payroll
processor to divert a portion of the paycheck to the EP provider,
with the remainder going straight to the worker. Others instruct the
payroll processor to pay the entire paycheck to the EP provider,
which then makes the relevant residual payment to the worker.
Whatever the exact model of payroll process deduction used, EP
providers generally do not take funds from the worker's regular
transaction account after that account's receipt of wages; instead,
they make use of the payroll process to facilitate deduction.
\6\ This includes, without limitation, prepaid and payroll card
accounts. In some cases, the provider may partner with a bank to
provide its EWA customers with a payroll card or other transaction
account that the worker then uses to receive both early wage access
and their regular paycheck.
\7\ For example, at least one D2C provider obtains consumer
authorization to instruct payroll processors to divert a portion of
the paycheck to a dedicated account opened ``for the benefit'' of
the consumer, which is used solely for the purpose of enabling the
D2C provider to obtain payment, with the remainder of the paycheck
going straight to the consumer's regular transaction account.
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Both forms of EWA now exist at scale, reflecting significant
consumer demand, dozens of EWA providers, and upwards of $3.5 billion
investment in the market from venture capital firms over the past
decade.\8\ A 2024 report from the CFPB estimated that the EP EWA market
had grown from $3.2 billion across 18.6 million transactions in 2018 to
$22.8 billion across 214 million transactions in 2022, with 7.2 million
workers utilizing EP EWA transactions at least once.\9\ That same year,
an estimated 3 million workers accessed roughly $9.1 billion in D2C EWA
funds; market analyses indicate that use of D2C products has also grown
significantly over recent years.\10\ Recent estimates project that the
U.S. EWA market is set to expand by about 300 percent between 2024 and
2034.\11\
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\8\ Lynne Marek, EWA Chases Regulatory Clarity, Payments Dive
(Oct. 27, 2025), <a href="https://www.paymentsdive.com/news/earned-wage-access-federal-state-legal-regulatory-clarity/803398/">https://www.paymentsdive.com/news/earned-wage-access-federal-state-legal-regulatory-clarity/803398/</a>.
\9\ See CFPB, Data Spotlight: Developments in the Paycheck
Advance Market (July 18, 2024), <a href="https://www.consumerfinance.gov/data-research/research-reports/data-spotlight-developments-in-the-paycheck-advance-market/">https://www.consumerfinance.gov/data-research/research-reports/data-spotlight-developments-in-the-paycheck-advance-market/</a> (hereinafter 2024 Data Spotlight).
\10\ See id. (``Combined with employer-partnered transactions,
in 2022, roughly 10 million workers utilized earned wage product
transactions to access over $31.9 billion.''). Several providers of
D2C products report significant recent growth. See, e.g., Dave, 3Q25
Earnings Presentation (Nov. 4, 2025), <a href="https://investors.dave.com/static-files/4971d257-0924-4d19-b35e-5d871e5136f8">https://investors.dave.com/static-files/4971d257-0924-4d19-b35e-5d871e5136f8</a> (showing D2C
origination volume increased 49 percent from 3Q24 to 3Q25); Chime,
Welcome to Chime, at 24 (June 2025), <a href="https://chime.gcs-web.com/static-files/ef823261-71ae-4183-bd16-a76f0cf8b6ff">https://chime.gcs-web.com/static-files/ef823261-71ae-4183-bd16-a76f0cf8b6ff</a> (showing $8.8
billion in D2C EWA transactions in the first nine months since
product launch in 2024).
\11\ See Market.Us, North America Earned Wage Access Market
Size, Share, Industry Analysis Report By Model (Nov. 2025), <a href="https://market.us/report/north-america-earned-wage-access-market/">https://market.us/report/north-america-earned-wage-access-market/</a>.
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EP providers obtain revenue from one or more of several sources:
direct payment from the employer; a share of interchange revenue from
payment cards used by workers; fees paid by workers for expedited
delivery of EWA funds; and, less frequently, from subscription charges
for access to EWA, sometimes packaged with other employee benefits. D2C
providers obtain revenue from one or more of some of these same sources
as well: interchange revenue, expedited delivery fees, and subscription
charges. Many D2C providers also solicit tips from the workers who use
their products.\12\
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\12\ The CFPB is not aware of EP providers that solicit tips.
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B. Regulatory Background
In November 2020, the CFPB issued an advisory opinion (the 2020 AO)
\13\ to respond to uncertainty about whether EWA providers offer or
extend ``credit'' within the scope of the Truth in Lending Act (TILA)
and its implementing Regulation Z.\14\ The 2020 AO noted that the CFPB
had itself acknowledged some uncertainty on this point when it issued
the 2017 Payday Rule.\15\ The 2020 AO was issued pursuant to the CFPB's
Advisory Opinions Policy, which is ``intended to facilitate timely
guidance by the Bureau that enables compliance by resolving outstanding
regulatory uncertainty.'' \16\
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\13\ See 2020 AO, 85 FR 79404 (Dec. 10, 2020).
\14\ 15 U.S.C. 1602(f); 12 CFR 1026.2(a)(14).
\15\ See 2020 AO, 85 FR 79404, 79407 (Dec. 10, 2020) (citing 82
FR 54472 at 54547).
\16\ 85 FR 77987, 77987 (Dec. 3, 2020).
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The 2020 AO clarified that a particular type of EWA--which it
labeled as a ``Covered EWA Program''--did not involve the offering or
extension of ``credit'' as defined by section 1026.2(a)(14) of
Regulation Z.\17\ As described further in the 2020 AO, a Covered EWA
Program met all of the following criteria \18\: it is employer-
partnered; the amount accessed by the employee does not exceed accrued
wages; accessing EWA is free for the employee; the provider has no
recourse against the employee if an employer-facilitated deduction from
the next paycheck is insufficient, and engages in no debt collection or
credit reporting activity; and the provider does not assess the credit
risk of employees. The 2020 AO noted that Covered EWA Programs, being
functionally equivalent to early wage payment, do not involve debt and,
by extension, credit under Regulation Z. The 2020 AO did not state that
other forms of EWA, such as direct-to-consumer EWA, are credit under
Regulation Z. It did not reach that question, although it observed that
EWA meeting all the listed criteria except being free to the consumer
might not be credit under Regulation Z.\19\
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\17\ The definition of ``credit'' in TILA is virtually identical
to Regulation Z's definition of the term. See 15 U.S.C. 1602(f).
Accordingly, the 2020 AO also stated that Covered EWA does not
involve the offering or extension of ``credit'' under TILA.
\18\ See 2020 AO, 85 FR 79404 at 79405-06.
\19\ The 2020 AO invited providers of EWA programs that charge
fees to request clarification from the CFPB about their programs
through, for example, applying for a compliance assistance sandbox
(CAS) approval. See 2020 AO, 85 FR 79404 at 79405 (citing the CAS
policy published at 84 FR 48246 (Sept. 13, 2019)). In December 2020,
the CFPB granted one such application from Payactiv, stating that
its EWA product--which charged a $1 daily access fee for EWA--was
not credit. See Approval Order (Dec. 30, 2020), <a href="https://files.consumerfinance.gov/f/documents/cfpb_payactiv_approval-order_2020-12.pdf">https://files.consumerfinance.gov/f/documents/cfpb_payactiv_approval-order_2020-12.pdf</a>. That approval was rescinded in June 2022.
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On January 15, 2025, the CFPB issued another advisory opinion
rescinding the 2020 AO (the 2025 Rescission).\20\ The 2025 Rescission
contended that the 2020 AO created, rather than reduced, regulatory
uncertainty. It further claimed that the 2020 AO contained several
legal flaws. Prior to the 2025
[[Page 60071]]
Rescission, the CFPB considered replacing the 2020 AO with a contrary
opinion. Specifically, in June 2024, the CFPB issued a proposed
interpretive rule (the 2024 PIR) that, if finalized, would have
identified all EWA as Regulation Z credit.\21\ In addition, the 2024
PIR would have identified expedited delivery fees and, at least in
certain circumstances, tips as finance charges under Regulation Z.
After soliciting public comment \22\ on the 2024 PIR, the CFPB never
adopted the interpretive positions proposed in it, opting instead for
the much narrower rescission of the 2020 AO.\23\ Finally, in May 2025,
the CFPB withdrew both the 2020 AO and the 2025 Rescission.\24\
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\20\ 2025 Rescission, 90 FR 3622 (Jan. 15, 2025).
\21\ See 2024 PIR, 89 FR 61358 (July 31, 2024).
\22\ In response to the 2024 PIR, the CFPB received 37 comments
from industry stakeholders; 15 comments from consumer group
stakeholders; 10 comments from Federal, State, and local government
officials; and nearly 150,000 comments from individual consumers. In
part because of the many comments received on the 2024 PIR, the CFPB
is not seeking comment on this advisory opinion.
\23\ The unfinalized and abandoned 2024 PIR is of no legal
effect. However, the CFPB is hereby formally withdrawing the 2024
PIR for several reasons, including: the comments received on it; a
number of Executive Orders, including E.O. 14219; and at least five
Federal district court opinions, directly or indirectly, relying
heavily on it. See cases cited in infra note 81.
\24\ 90 FR 20084 (May 12, 2025).
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C. Legal Analysis
1. General
Part I.C.2 of this advisory opinion explains why Covered EWA is not
credit under Regulation Z. Part I.C.3 explains why, to the extent that
any EWA product is Regulation Z credit, expedited delivery fees and
tips are not, in the normal course, finance charges under Regulation Z.
This advisory opinion does not state, and nothing in it should be
understood to state, that EWA products that are not Covered EWA are
credit under Regulation Z. In addition, nothing in this advisory
opinion interprets provisions of law outside of Regulation Z. The CFPB
continues to seek stakeholder feedback and evaluate whether it should
take further legal steps with respect to EWA products, including steps
that might encompass non-Covered EWA and/or other provisions of law
besides Regulation Z.
2. Covered EWA Is Not Credit
a. Covered EWA
For purposes of this advisory opinion, the term ``Covered EWA''
means EWA that includes all of the following characteristics:
(1) Covered EWA transactions do not exceed the accrued cash value
of the wages \25\ the worker has earned up to the date and time of the
transaction, which amount is determined based upon payroll data \26\
that evidence this amount.\27\ A Covered EWA provider does not
determine accrued wages based on other information, such as worker
representations, or on estimates or predictions of accrued wages.
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\25\ The ``accrued cash value of the wages'' are wages that the
worker is entitled to receive under State law in the event of
separation from the employer for work performed for the employer,
but for which the worker has yet to be paid.
\26\ ``Payroll data'' are generally maintained by a payroll
processor engaged by the employer to handle payroll; in some cases,
however, the employer may handle payroll in-house and would be the
source for payroll data.
\27\ Providers should take note of the possibility that workers
could take two or more EWA transactions, potentially from different
providers, in the same pay period, and that these transactions could
cumulatively exceed the accrued cash value of the worker's wages,
even as each individual EWA transaction does not. A transaction that
causes the cumulative amount to exceed the accrued cash value of the
worker's wages is not a Covered EWA transaction; earlier EWA
transactions may be. To meet this first criteria, therefore,
providers may need to account for any earlier Covered EWA
transactions in that same pay period.
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(2) The provider uses a payroll process deduction in connection
with the worker's next payroll event.\28\ In a payroll process
deduction, payment instructions received and acted upon by the payroll
processor (or by the employer itself if it does not use a processor)
enable the EWA provider to receive accessed amounts without debiting
the consumer's regular transaction account after the consumer is
paid.\29\ A transfer to the provider from any of the consumer's regular
transaction accounts after the payment of wages into that account is
not a payroll process deduction.\30\
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\28\ In the event of a technical or administrative error,
Covered EWA encompasses one additional payroll process deduction at
the next payroll event. Technical or administrative errors include,
for instance, an API malfunction or a mistake in the employer's
payroll process (e.g., miscalculation of a worker's base pay or
overtime award). They do not include situations in which the
employer has withheld a worker's garnished wages following a Covered
EWA transaction. For example, a Covered EWA transaction may occur in
week one of a worker's pay cycle, but the employer learns of and
subjects the worker's paycheck to a required wage garnishment in
week two of the pay cycle. As a result of the garnishment, the
worker's paycheck is less than the amount of the Covered EWA
transaction. That is not administrative or technical error of the
kind identified in part I.C.2.a.(2).
\29\ Examples of payroll process deduction include, without
limitation: (a) the payroll processor sends the relevant amount to
the EWA provider, and pays the remaining wages to the worker's
regular transaction account; (b) the payroll processor sends the
relevant amount to an account held ``for the benefit'' of the
consumer and used only to make payments to the EWA provider, and the
processor pays the remaining wages to the worker's regular
transaction account; and (c) the payroll processor sends all wages
to the EWA provider, with the EWA provider separately and directly
paying the balance of the wages owed to the worker's regular
transaction account. Providers seeking clarification from the CFPB
about whether their practices constitute payroll process deduction
may request clarification from the CFPB by, for instance, applying
for an Approval under the Policy on the Compliance Assistance
Sandbox. See 84 FR 48246. Although the policy was rescinded in
September 2022, the CFPB anticipates reissuing it shortly after this
advisory opinion is published.
\30\ As noted, a regular transaction account may include payroll
or prepaid card accounts offered to the consumer by the EWA provider
in partnership with a bank issuer. See supra note 6.
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(3) Before providing Covered EWA, the provider clearly and
conspicuously explains to the worker, and warrants to the worker as
part of the contract between the parties, that it: (a) has no legal or
contractual claim or remedy, direct or indirect, against the worker in
the event the payroll process deduction is insufficient to cover the
full amount of a Covered EWA transaction, including no right to take
payment from any of the consumer's regular transaction accounts; \31\
and (b) will not engage in any debt collection activities related to
Covered EWA, place a Covered EWA transaction amount as a debt with or
sell it to a third party, or report to a consumer reporting agency
concerning Covered EWA.
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\31\ A provider may choose to refrain from offering the worker
further EWA services and still meet this condition.
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(4) The provider does not directly or indirectly assess the credit
risk of individual workers, including through obtaining and reviewing
credit reports or credit scores about the individual workers.
b. Analysis
Section 1026.2(a)(14) of Regulation Z defines ``credit'' as ``the
right to defer payment of debt or to incur debt and defer its
payment.'' \32\ Neither Regulation Z nor TILA define the term ``debt.''
Covered EWA does not provide workers with the right to defer payment of
debt or to incur debt and defer its payment. As a result, Covered EWA
is not credit.
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\32\ 12 CFR 1026.2(a)(14). TILA defines ``credit'' as ``the
right granted by a creditor to a debtor to defer payment of debt or
to incur debt and defer its payment.'' 15 U.S.C. 1602(f).
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As explained further in the 2020 AO, this is for several
reasons.\33\ The primary reason is that the common meaning of debt is
``a sum of money due by certain and express agreement'' or ``a
financial liability or obligation owed by one person, the debtor, to
another, the creditor.'' \34\ In the context of Covered EWA, the worker
incurs no such liability or obligation.\35\ Covered EWA
[[Page 60072]]
facilitates workers' access to wage amounts that they have already
earned, and to which they are already entitled.\36\ Using payroll data,
either at the employer or its payroll processor, the provider knows the
accrued cash value of the worker's wages at the point that the worker
requests a Covered EWA transaction. Using the payroll process, the
provider makes a deduction for the amount of the Covered EWA
transaction at the next scheduled payroll event, which corresponds to
the pay period in which the worker accrued the wages on which the
Covered EWA was based.\37\ Covered EWA offers workers access to money
that they are owed by virtue of work that they have already performed.
Rather than the consumer's repayment of a debt, the provider's payroll
process deduction from the payroll event associated with that work
serves to ensure the consumer is not effectively compensated twice for
the same work.\38\ They have had earlier-than-normal access to wage
amounts accrued, so they are owed less at payday. Fundamentally,
Covered EWA resembles early wage payment and does not resemble an
extension of credit.
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\33\ See 2020 AO, 85 FR 79404 at 79406-07.
\34\ Debt, Black's Law Dictionary (4th ed. 1968).
\35\ See 2020 AO, 85 FR 79404 at 79406. Citing a later Black's
definition of debt, the 2020 AO notes the absence of a ``liability''
in this context. However, the 2020 AO did not intend to
differentiate ``liability'' from ``obligation'' in this context. The
present AO relies on the 1968 Black's definition of debt, which was
current when TILA became law, and which also draws no such
distinction.
\36\ Covered EWA transactions cannot be more than this amount,
which reduces the risk that EWA funds do not correspond to funds the
worker has actually earned and is entitled to receive on payday.
\37\ Payroll process deductions may not be attempted in any
other pay period in the event that the initial payroll process
deduction is insufficient to cover the full amount of the Covered
EWA transaction. However, in the event of a technical or
administrative error, one additional payroll process deduction may
be attempted at the next payroll event.
\38\ In proposing an interpretation of credit that would cover
all EWA, the 2024 PIR noted that ``it is not uncommon for credit
providers to compel repayment of debt using wage garnishment
automatically deducted from consumer paychecks.'' 2024 PIR, 89 FR
61358, 61361 n.26 (July 31, 2024). But the fact that some creditors
sometimes obtain repayment of debts via payroll does not demonstrate
that all payroll process deductions involve the repayment of debt.
None of the examples cited in the 2024 PIR involve deductions to
account for the consumer earlier accessing money that they were owed
by virtue of work that they had already performed.
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The 2020 AO also drew support from two prior regulatory
statements.\39\ Comment 2(a)(14)-1.v to Regulation Z states that
``[b]orrowing against the accrued cash value of an insurance policy or
a pension account if there is no independent obligation to repay'' is
``not considered credit for purposes of the regulation.'' \40\ When it
issued this Regulation Z commentary, the Board of Governors of the
Federal Reserve System (the Board) stated that in such instances,
``credit has not been extended because the consumer is, in effect, only
using the consumer's own money.'' \41\ As the 2020 AO explains, the
accrued cash value of a worker's earned but unpaid wages is similarly
the worker's own money. Accordingly, in a Covered EWA transaction, the
worker is ``in effect, only using the [worker's] own money'' and is not
incurring debt or deferring its payment. Similarly, Covered EWA
involves ``no independent obligation to repay'' because the provider
may only transfer funds via the allowed payroll process deduction for
the pay period in which the wages were accrued; it has no claim direct
or indirect against a worker for nonpayment in the event of a failed or
partial deduction.\42\ The 2020 AO also cited the preamble to the 2017
Payday Rule in support of its interpretation of the application of
Sec. 1026.2(a)(14) to Covered EWA Programs. Recognizing that ``some
efforts to give consumers access to accrued wages may not be credit at
all,'' that rule took specific steps to ensure that it had no
application to several types of EWA products.\43\
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\39\ See 2020 AO, 85 FR 79404 at 79406-07.
\40\ 12 CFR 1026, supp. I, comment 2(a)(14)-1.
\41\ 46 FR 20848, 20851 (Apr. 7, 1981) (``The regulatory
definition [of `credit'] may be difficult to apply in particular
fact situations, and the Board therefore offers the following
guidance, which will also be incorporated into the commentary.'').
In a footnote, the 2024 PIR asserts without support that because
this exclusion was promulgated after notice and comment, products
that are similar but not specifically covered by it ``should
therefore be presumed to be `credit.''' See 2024 PIR, 89 FR 61358 at
61361 n.29. The 2024 PIR offers no citation or basis for this
position. In fact, statements by the Board directly contradict that
approach and instead explain that Regulation Z commentary is
intended to serve as guidance for use in determining application to
particular transactions. See, e.g., 46 FR 28560, 28560 (May 27,
1981) (proposing official Regulation Z commentary); 46 FR 50288,
50288 (Oct. 9, 1981) (adopting official Regulation Z commentary).
\42\ This could happen, for instance, if a worker's wages become
subject to garnishment or an employer goes out of business after an
EWA transaction but before the scheduled payday.
\43\ 82 FR 54472 at 54547.
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Finally, the 2020 AO noted that Covered EWA Programs lack typical
substantive indicia of credit.\44\ Covered EWA providers similarly
reserve no recourse against the worker in the event a payroll process
deduction for the period in which accessed wage amounts were accrued is
insufficient to cover those amounts. A Covered EWA provider also cannot
engage in debt collection, report to consumer reporting agencies, or
sell or place the transaction as a debt with any third party. Providers
also do not pull credit reports or credit scores on individual workers
or otherwise assess their credit risk.
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\44\ See 2020 AO, 85 FR 79404 at 79407. As the 2020 AO noted,
courts generally look at the totality of the circumstances--and
weigh multiple factors in a fact-specific inquiry--to determine if a
transaction's substance is credit. See id. (citing cases at note
20).
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The 2020 AO limited its application to EP EWA, and more
specifically to EP products where the provider transfers the amount of
each EWA transaction ``through an employer-facilitated payroll
deduction from the employee's next paycheck.'' Upon reconsideration,
however, the CFPB now believes that these specific limitations are not
derived from the text of Regulation Z (or TILA). Section 1026.2(a)(14)
of Regulation Z defines ``credit'' as ``the right to defer payment of
debt or to incur debt and defer its payment''; pursuant to this
definition, the defining element of ``credit'' is a consumer's
repayment--at some point in the future--of the amount owed. When an EWA
provider makes arrangements to ensure that the appropriate amount of
the consumer's paycheck is directed to it through a payroll process
deduction, the funds never touch the consumer's regular transaction
account, and accordingly the consumer makes no deferred payment.
Indeed, as noted above, the EWA market has evolved such that EP
providers now use a variety of methods for effecting transfers through
the payroll process, which include, but are no longer limited to,
``employer-facilitated payroll deductions.'' For purposes of
interpreting the application of ``credit'' to EWA, there is no reason
to preference one such method over others. Similarly, D2C providers
that transfer EWA amounts through the payroll process, rather than from
a worker's regular transaction account after receipt of wages, are
Covered EWA if they meet the other criteria.
The 2020 AO also limited its application to EWA products that were
free to the consumer. That limitation, too, is not required by the text
of Regulation Z (or TILA) and is not maintained in the present advisory
opinion. Under existing law, consumer cost is relevant to the question
of whether consumers incur Regulation Z finance charges in connection
with products that extend credit--but has no bearing on whether or not
a product amounts to Regulation Z credit in the first place. As noted,
whether a product constitutes credit depends on whether it implicates a
debt. For the reasons explained above, Covered EWA does not. Credit can
be free to the consumer or it can cost the consumer. Non-credit
products, too, can be free or they can
[[Page 60073]]
cost. The difference between the two is not cost.
Not only is this point clear from looking at the text of the
statute and regulation, but it is a point of wide interpretive
consensus, as demonstrated by stakeholder feedback on the 2020 AO. For
example, in an October 12, 2021 letter, some 96 consumer, labor, civil
rights, legal services, faith, community and financial organizations,
and academics state that the 2020 AO was flawed in part because ``the
definition of `credit' under TILA is not related to price.'' \45\ A
contemporaneous letter from the National Consumer Law Center and the
Center for Responsible Lending expands on the point: ``Whether there is
a charge for credit has absolutely no bearing on whether `debt' has
been incurred. The cost is only relevant to whether the lender is a
`creditor': one who `regularly extends consumer credit that is subject
to a finance charge or is payable by written agreement in more than
four installments.''' \46\ Moreover, the 2020 AO did not position cost
as critical to its interpretation. Rather, it simply limited its
interpretive scope to products that were free.\47\
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\45\ See Nat'l Consumer L. Ctr., et al., Letter to CFPB (Oct.
12, 2021), <a href="https://www.nclc.org/wp-content/uploads/2022/10/CFPB-EWA-letter-coalition-FINAL2.pdf">https://www.nclc.org/wp-content/uploads/2022/10/CFPB-EWA-letter-coalition-FINAL2.pdf</a>. The same letter also notes that the
question of fees relates to finance charge issues, rather than to
the definition of credit: ``Free programs might be exempt from TILA
for other reasons (i.e., if the provider is not a `creditor' as
defined by TILA).''
\46\ See Nat'l Consumer L. Ctr. & Ctr. for Responsible Lending,
Letter to CFPB (Oct. 12, 2021), <a href="https://www.nclc.org/wp-content/uploads/2022/10/EWA-letter-to-CFPB_Oct-4-2021.pdf">https://www.nclc.org/wp-content/uploads/2022/10/EWA-letter-to-CFPB_Oct-4-2021.pdf</a>.
\47\ The 2020 AO noted that both wages and free EWA cost the
consumer nothing, but that observation was not central to its core
claim that the consumer does not incur a liability when using EWA.
The 2020 AO focused on a class of EWA products that is the most akin
to early wage payment--because wages are free to the consumer. But
that does not mean that other forms of EWA--including Covered EWA as
defined in this advisory opinion--are not more akin to early wage
payment than to credit extension.
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It is important to note that obligations under Regulation Z and
TILA generally only arise when a provider is a Regulation Z creditor.
Regardless of whether a product counts as Regulation Z credit, if its
provider is not a Regulation Z creditor, then as a general matter, the
product is not subject to regulatory obligations under Regulation Z or
TILA. And cost is relevant to the question of whether or not a provider
is a creditor, as discussed in part I.C.3 below. In the normal course,
providers of EWA products that are free and thus carry no finance
charges will not be creditors under Regulation Z, and accordingly such
EWA products will not be subject to credit regulation under Regulation
Z.\48\
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\48\ A provider is a creditor under Regulation Z if the product
is repayable in more than four installments or subject to finance
charges. 12 CFR 1026.2(a)(17)(i). In the normal course, free EWA
products will not meet either condition and thus their providers
will not be Regulation Z creditors. Regulation Z also includes
definitions of ``creditor'' that apply specifically to credit card
issuers. See 12 CFR 1026(a)(17)(iii), (iv). The CFPB is unaware of
any EWA providers that issue credit cards in connection with the
provision of EWA.
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While the 2025 Rescission took no position on whether Regulation Z
applies to any forms of EWA, it criticized the reasoning of the 2020 AO
in four respects. Upon reconsideration, the CFPB now believes that none
of these criticisms are persuasive. First, it faulted the 2020 AO for
not drawing on State law definitions of debt, even as it did not claim
that CFPB interpretations of Regulation Z debt must rely on State
law.\49\ However, the 2020 AO, like this advisory opinion, relied on
the ordinary meaning of the term ``debt,'' which is found in numerous
State laws. In addition, most States to have specifically considered
EWA legislatively do not regulate EWA as credit.\50\ And two States
offering regulatory guidance on EWA determined that it does not count
as a loan under State law.\51\
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\49\ Regulation Z provides that undefined terms ``have the
meanings given to them by state law or contract'' (12 CFR
1026.2(b)(3)), but the regulation offers no guidance about how to
apply this provision, and there is little applicable case law. Some
cases have interpreted the provision as an instruction to consult
the ``ordinary usage'' of the undefined term in question. See, e.g.,
Fernandes v. JPMorgan Chase Bank, N.A., 818 F. Supp. 2d 1086, 1090-
91 (N.D. Ill. 2011) (consulting Black's Law Dictionary for the
meaning of the undefined term in question); Wilbourn v. Advantage
Fin. Partners, 2010 WL 1194950, at *6 (N.D. Ill. 2010). This
advisory opinion, like the 2020 AO, relies on exactly this kind of
ordinary usage of the term ``debt.''
\50\ See, e.g., Kan. Stat. Ann. Sec. 9-2407(a)(1) (``Earned
wage access services provided by a registrant in accordance with
this chapter shall not be considered to be: (A) A loan or other form
of credit or the registrant a creditor or lender with respect
thereto''); Mo. Ann. Stat. Sec. 361.749(6)(1) (``Earned wage access
services offered and provided by a registered provider shall not be
considered to be any of the following: . . . (b) A loan or other
form of credit''); S.C. Code Ann. Sec. 39-5-860 (``Proceeds
provided to a consumer by the [EWA] provider shall not be considered
a consumer loan for purposes of Section 37-3-104 [defining consumer
loan] or a loan for purposes of Section 37-3-106 [defining
loan].''); Utah Code Ann. Sec. 13-78-106(1) (``A provider offering
or providing earned wage access services in this state: . . . (b) is
not offering a loan or other form of credit or debt, if the provider
is not a creditor, a debt collector, or a lender.''). The 2024 PIR
cites State law definitions of ``debt'' (many of which happen to
appear in State FDCPA statutes) that it claims support its broad
``any obligation'' interpretation of ``debt,'' but it avoids
discussing State law's treatment of whether EWA is credit, which
predominantly supports the interpretation offered here and in the
2020 AO. 2024 PIR, 89 FR 61358 at 61360.
\51\ See Ariz. Op. Att'y Gen., No. I22-005 (Dec. 16, 2022);
Mont. Op. Att'y Gen., Vol. 59, Op. 2 (Dec. 22, 2023).
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Second, the 2025 Rescission targeted what it characterized as the
main rationale for the 2020 AO's assertion that Covered EWA Programs do
not involve the consumer incurring a liability: the claim that EWA
``functionally operates like'' an employer that pays its workers
earlier than the scheduled payday. The 2025 Rescission took issue with
this rationale for insufficiently explaining why ``functional
operation'' supports the 2020 AO's conclusion. The point intended by
that language is the same point made above: for all the reasons stated
in the 2020 AO and restated here, EWA resembles the early payment of
wages and does not resemble the extension of credit. With Covered EWA,
there is no liability or obligation sufficient to create a debt because
the provider, by engaging with the consumer's employer or its payroll
processor, makes a payroll process deduction for the pay period in
which the wages have been accrued, and reserves no recourse against the
consumer if that deduction falls short of the amount of the EWA
transaction--just as an employer directly advancing wages to a worker
would use the payroll process to deduct that amount from the worker's
paycheck and take no further recourse against the worker. The deduction
operates to ensure that the consumer is not effectively paid twice for
the same work. The presence of a third-party intermediary--the EWA
provider--facilitating access to accrued earnings does not change the
nature of the transaction.
Third, while the 2025 Rescission did not dispute that Covered EWA
lacks certain significant indicia that are common in credit
transactions (such as underwriting, debt collection, recourse, credit
reporting, and so on), it asserted that the 2020 AO failed to consider
EWA features ``commonly found in credit transactions, including a
consumer's receipt of funds, consumer repayment of those funds, and the
wage garnishment tool used to effectuate repayment.'' \52\ The CFPB
does not
[[Page 60074]]
believe those factors are necessary to the analysis, but considering
them further, it does not believe they would require a different
result. Receipt of funds is common to many kinds of transactions--a
sale or investment, for example, not to mention receipt of wages
directly from an employer--and thus is not a meaningful indicium of
credit. Further, covered EWA products do not garnish wages, and they do
not involve consumer repayment. As noted above, the payroll process
deduction that the EWA provider uses at the next payroll event works to
ensure that the consumer is not effectively paid twice for the same
work--and accordingly is not consumer repayment for credit advanced.
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\52\ See 2025 Rescission, 90 FR 3622, 3623 (Jan. 15, 2025). As
part of this criticism, the 2025 Rescission faulted the 2020 AO for
failing to ``explain how its `totality of the circumstances'
approach derived from the definition of `credit.' '' Id. But as the
2020 AO explained, courts commonly conduct a fact-specific inquiry--
using the types of factors articulated in the 2020 AO--to determine
whether a transaction is ``credit.'' The logic of the 2025
Rescission would prohibit an agency from interpreting terms using
well-established precedent.
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Fourth, the 2025 Rescission criticized the 2020 AO for drawing
support from the 2017 Payday Rule's exclusion of certain EWA products.
It suggested that these exclusions have no bearing on the Regulation Z
credit status of EWA because the Payday Rule was based on the CFPB's
UDAAP authority, not its TILA authority, and the exclusions would only
operate to the extent that EWA was credit under Regulation Z. It is
true that the 2017 Payday Rule did not conclusively determine that EWA
was not Regulation Z credit. But when it considered and then finalized
the Payday Rule, the CFPB recognized that EWA products might well not
be credit. As a result, it took formal regulatory steps to ensure that
the Payday Rule's regulation of short-term credit would not have
application to EWA.\53\ Upon reconsideration, the CFPB now believes
that it was appropriate for the 2020 AO to cite this recognition as
additional support for its conclusion.\54\
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\53\ To the extent the 2025 Rescission contended that the Payday
Rule's exclusion of certain ``wage advance products'' demonstrates
that such products must be Regulation Z credit (because the rule
only applies to such credit), that contention is false. The Payday
Rule made clear that its wage advance exclusion was limited to
``advances that constitute credit,'' indicating that some such
advances might not in fact be credit for the various reasons that it
noted, including that EWA lets consumers ``draw on the accrued cash
value of wages they have earned but not yet been paid,'' and does so
``without recourse beyond deduction from the next paycheck,'' and
without ``collection or debt reporting activities.'' 82 FR 54472 at
54547 (emphasis added).
\54\ The 2024 PIR contends that because the Payday Rule's
exclusions for ``wage advance products'' only operate to the extent
that such products are TILA credit, ``the decision to exclude'' such
products ``has no impact on the credit status of EWA products under
TILA or Regulation Z.'' What this misses is that the CFPB was clear
that it was providing these exclusions precisely because it
recognized that such products might not be TILA credit. Absent a
final determination of EWA's credit status, the CFPB needed to
provide the exclusions to ensure that the Payday Rule would not
apply to these products.
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3. Expedited Delivery Fees and Tips Associated With EWA Are Not Finance
Charges
As explained in part I.C.2 above, Covered EWA is not credit. Thus,
given that a finance charge is the cost of credit, any fees charged in
connection with Covered EWA cannot be finance charges. To the extent
any EWA products other than Covered EWA are credit, fees associated
with them can be finance charges. This is not to imply that any EWA
products other than Covered EWA are credit. As noted, the CFPB
continues to seek stakeholder feedback and evaluate whether it should
provide additional clarity about whether (and when) other EWA products,
which are not Covered EWA as described here, are also not credit under
Regulation Z.
The question addressed in part I.C.3.b is whether expedited
delivery fees associated with EWA are finance charges. Part I.C.3.c
addresses the question of whether tips associated with EWA are finance
charges.\55\ For the reasons set forth below, the CFPB concludes that,
in the normal course, fees for expedited delivery of earned wages and
tips for the receipt of earned wages are not finance charges because
they are not imposed directly or indirectly by the provider. That said,
in certain factual scenarios discussed below, each could be a finance
charge.
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\55\ This advisory opinion does not address the question of
whether EWA subscription fees are finance charges because Regulation
Z already clarifies that this type of ``participation'' fee is not a
finance charge. See 12 CFR 1026.4(c)(4).
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a. General
In general, the obligations of Regulation Z apply to any credit
provider that regularly offers or extends consumer credit subject to a
finance charge.\56\ The finance charge is ``the cost of consumer credit
as a dollar amount.'' \57\ Unless specifically excluded by the
regulation, this includes ``any charge payable directly or indirectly
by the consumer and imposed directly or indirectly by the creditor as
an incident to or a condition of the extension of credit.'' \58\ Thus,
to qualify as a finance charge, a charge must be either ``an incident
to'' or ``a condition of'' an extension of credit and be ``imposed
directly or indirectly'' by the creditor. Providers are required to
disclose finance charges in the manner prescribed by Regulation Z.\59\
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\56\ See 12 CFR 1026.1(c)(1)(iii).
\57\ 12 CFR 1026.4(a).
\58\ Id.
\59\ See, e.g., 12 CFR 1026.18(d).
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Neither Regulation Z nor TILA defines the key terms in the
definition of ``finance charge'': ``imposed by,'' ``incident to,'' and
``condition of.'' \60\ The 1968 edition of Black's Law Dictionary
defines ``impose'' to mean ``to levy or exact as by authority; to lay
as a burden, tax, duty, or charge.'' \61\ It defines ``incident'' to
mean ``anything which is usually connected with another, or connected
for some purposes, though not inseparably.'' \62\ The meaning of
``condition'' is ``an uncertain future act or event whose occurrence or
nonoccurrence determines the rights or obligations of a party under a
legal instrument and especially a contract.'' \63\ On their own,
however, these highly general definitions do not provide a clear answer
to the questions at hand, i.e., whether expedited delivery fees and
tips are finance charges.\64\ Rather, it is well established that
determining whether a fee qualifies as a finance charge requires a
case-by-case approach.\65\
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\60\ Regulation Z provides that undefined terms ``have the
meanings given to them by state law or contract.'' 12 CFR
1026.2(b)(3). However, the regulation itself does not provide any
guidance about how to apply this provision.
\61\ Impose, Black's Law Dictionary (4th ed. 1968); see also
Impose, Merriam-Webster, <a href="https://www.merriam-webster.com/dictionary/impose">https://www.merriam-webster.com/dictionary/impose</a> (last updated Oct. 28, 2025) (``to establish or apply by
authority'').
\62\ Incident, Black's Law Dictionary (4th ed. 1968); see also
Incident, Merriam-Webster, <a href="https://www.merriam-webster.com/dictionary/incident">https://www.merriam-webster.com/dictionary/incident</a> (last updated Oct. 30, 2025)(``dependent on or
relating to another thing in law'').
\63\ Condition, Black's Law Dictionary (12th ed. 2024); see also
Condition, Merriam-Webster, <a href="https://www.merriam-webster.com/dictionary/condition">https://www.merriam-webster.com/dictionary/condition</a> (last updated Oct. 30, 2025) (``a premise upon
which the fulfillment of an agreement depends[;] . . . a provision
making the effect of a legal instrument contingent upon an uncertain
event'').
\64\ Nor does case law clarify their meaning. A good example is
Household Credit Servs., Inc. v. Pfennig, 541 U.S. 232 (2004). In
Pfennig, the Supreme Court overturned the Sixth Circuit's
determination that a credit card over-limit fee was a finance
charge, in part, on the ground that ``the phrase `incident to' does
not make clear whether a substantial (as opposed to remote)
connection is required.'' Id. at 241. As such, it is not possible
``to conclude that the term `finance charge' unambiguously includes
over-limit fees.'' Id. Thus, the opinion provides little if any
assistance in determining whether expedited delivery fees and tips
associated with EWA are finance charges. The 2024 PIR implausibly
interpreted Pfennig to hold that only a remote connection is
required and then used this interpretation to buttress the view that
expedited delivery fees and tips are ``incident to'' the provision
of EWA.
\65\ 61 FR 49237, 49239 (Sept. 19, 1996) (``The Board has
generally taken a case-by-case approach in determining whether
particular fees are `finance charges.' '').
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b. Expedited Delivery Fees
Most EWA providers offer consumers the option of receiving their
earned wages via regular ACH and/or by instant transfer to the
provider's debit, prepaid,
[[Page 60075]]
or payroll card for free.\66\ ACH delivery typically takes one to three
days.\67\ Most also offer one form or another of expedited delivery to
an account of the consumer's choice. To effectuate such delivery, EWA
providers incur charges from expedited delivery services which they
then pass on to consumers. Consumers that choose this option pay fees
typically ranging from $2.50 to $5.99.\68\ Prima facie, these fees are
charges for expedited delivery rather than for receiving a certain
amount of earned wages. But are they actually finance charges?
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\66\ Other free options include, for instance, ``visiting a
specified retail store to obtain funds; taking the funds on a
designated retailer's gift card; or employer-subsidized funding of
some or all of transfers.'' 2024 Data Spotlight, supra note 9.
\67\ Id.
\68\ Id. (summarizing fees charged by a sample of EP and D2C
providers obtained from publicly available websites).
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There is no need for the CFPB to write on a clean slate when
answering this question. In a 2003 rule, the Board considered whether
two types of expedited fees in connection with credit cards accessing
home equity lines of credit are finance charges: a fee for expediting a
consumer's payment, and a fee expediting delivery of the physical card.
As regards the former, the Board determined that ``expedited payment
fees . . . are not finance charges under TILA and Regulation Z because
the consumer has a reasonable means for making payment on the account
without paying a fee to the creditor.'' \69\ As regards the latter, the
Board likewise determined that ``a fee for expedited delivery of a
credit card is not incidental to the extension of credit and thus is
not a finance charge where the consumer requests the service and the
card is also available by standard mail service (or another means that
is at least as fast) without a fee.'' \70\ Fees that EWA providers
charge for expedited delivery of EWA fit squarely into this mold, since
consumers can receive exactly the same service without paying the fee.
---------------------------------------------------------------------------
\69\ 68 FR 16185, 16186 (Apr. 3, 2003).
\70\ Id. at 16187. The Board's determination about the two types
of ``expedited'' fees is codified at 12 CFR 1026, comments 6(a)(2)-
2(ix) and (x). The 2024 PIR sought to distinguish the Board's
interpretation on the ground that neither of those expedited
services ``are as closely and integrally connected to the extension
of credit as faster funds access is to obtaining an earned wage
product.'' 2024 PIR, 89 FR 61358 at 61362 n.42. But this reasoning
is off point because the Board based its determinations on whether
there were options other than the expedited option, even if slower.
---------------------------------------------------------------------------
Somewhat earlier, the Eleventh Circuit in Veale v. Citibank
addressed the application of ``finance charge'' to an expedited
delivery fee very similar to the expedited delivery fees charged by EWA
providers: a $21 Federal Express fee for expedited delivery of loan
proceeds. The court noted that ``[i]f the borrower can choose to avoid
the Federal Express fee by having the documents sent via regular mail,
then the fee is not imposed as an incident to the extension of
credit.'' \71\ And the court held that ``[s]ince the [borrowers] could
have chosen not to pay the Federal Express fee and the bank did not
require it, then the fee was not imposed as an incident to the
extension of credit and need not be included in the Finance Charge
[disclosure].'' \72\
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\71\ Veale v. Citibank, 85 F.3d 577, 579 (11th Cir. 1996).
\72\ Id.
---------------------------------------------------------------------------
The 2024 PIR made essentially no effort to distinguish Veale.
Instead, it attempted to place the entire weight of its novel proposed
interpretation on a 1996 Board rule about a very different fact
pattern: fees charged for debt cancellation agreements. Under such an
agreement, ``the creditor agrees to cancel all or part of any remaining
debt in the event of an occurrence, such as the death, disability or
unemployment of the borrower.'' \73\ The Board reasoned that fees for
such agreements are finance charges because the agreement ``alters the
fundamental nature of the borrower's repayment obligation.'' \74\ More
specifically, it potentially reduces the principal amount the consumer
owes the creditor. Such fees bear little, if any, resemblance to fees
for expedited delivery of earned wages. The earned wage amount the
provider deducts is unaffected by the consumer's opting for expedited
delivery; the provider deducts the same earned wage amount if the
consumer opts instead for free ACH delivery.
---------------------------------------------------------------------------
\73\ 61 FR 49237, 49240 (Sep. 19, 1996).
\74\ Id.
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Ignoring this fundamental difference between debt cancellation fees
and expedited delivery fees, the 2024 PIR highlighted more general
language in the 1996 rule, namely, ``even though a lender may not
require a particular loan feature, the feature may become a term of the
credit if it is included.'' \75\ Relying on this formulation, the 2024
PIR proposed the facially implausible interpretation that fees for
expedited delivery of earned wages are finance charges because earned-
wages-plus-expedited-delivery is one credit product, and earned-wages-
without-expedited-delivery is an entirely different credit product.
That interpretation conflicts with the long-standing interpretation of
``finance charge'' by the Board itself in its 2003 rule and by the
Eleventh Circuit in Veale, detailed above. In addition, the 2024 PIR's
reading of the Board's 1996 rule would have created a principle without
any limitation under which any fee for anything connected to a credit
transaction can be transformed into a finance charge. All one needs to
do is create a separate credit product for each ``feature.'' \76\
---------------------------------------------------------------------------
\75\ 2024 PIR, 89 FR 61358 at 61362 (citing 61 FR 49237 at
49239).
\76\ The 2024 PIR also failed to mention that the Board's 1996
Rule did not simply determine that debt cancellation fees are
finance charges. It also determined that debt cancellation fees are
not finance charges where the lender provides certain disclosures
about the debt cancellation agreement. See 61 FR 49237 at 49240-41.
Thus, even if the Board's rule were factually on point, it would
provide support only for a more limited interpretation that
expedited delivery fees are finance charges only if the expedited
delivery feature is not sufficiently disclosed. Moreover, even if it
is assumed that fees for debt cancellation agreements are factually
on point, the Seventh Circuit has held that fees for such agreements
(specifically GAP agreements) are not finance charges. See McGee v.
Kerr-Hickman, 93 F.3d 380, 383-85 (7th Cir. 1996).
---------------------------------------------------------------------------
The preceding determination that, in the normal course, expedited
delivery fees associated with EWA are not finance charges is not
intended to mean that expedited delivery fees can never be finance
charges. The key issue is whether such fees are ``directly or
indirectly imposed'' on the consumer. In the normal course, expedited
delivery fees are the cost of obtaining earned wages more quickly than
via ACH, and are triggered by the consumer's opting for expedited
delivery; they are not ``directly or indirectly imposed'' by the
provider. However, to the extent that an EWA provider does impose
expedited delivery fees on a consumer's receipt of earned wages, those
fees could qualify as finance charges. Determining whether such
imposition is occurring is a matter that depends on the facts and
circumstances of a provider's practices. For example, if an EWA
provider makes it too difficult for consumers to select the un-
expedited delivery of EWA funds, the resulting expedited delivery fees
may effectively be imposed. Providers seeking clarification from the
CFPB about whether their practices concerning expedited delivery fees
do not amount to the imposition of a finance charge may request
clarification from the CFPB by, for instance, applying for an Approval
under the Policy on the Compliance Assistance Sandbox.\77\
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\77\ See supra note 29 (discussing the Policy on the Compliance
Assistance Sandbox).
---------------------------------------------------------------------------
c. Tips
Tipping is a longstanding, familiar aspect of the retail services
economy, but it has only relatively recently appeared in the context of
consumer financial services. The practice of seeking tips, gratuities,
and the like is
[[Page 60076]]
relatively common among D2C EWA providers, which raises the question of
whether tips in this context qualify as finance charges. In general
dictionaries, a tip is defined as a gratuity, and a gratuity is defined
as ``something given voluntarily or beyond obligation usually for some
service.'' \78\ To the extent that any EWA products are credit, if a
provider seeks tips in connection with the provision of EWA, the tip is
arguably ``incident to'' the extension of credit. However, it is
inherent in the meaning of ``tip'' that it is not imposed, even if
providing one is considered customary. Accordingly, a bona fide tip
provided by the consumer for EWA services cannot be a finance charge.
---------------------------------------------------------------------------
\78\ Tip, Merriam-Webster, <a href="https://www.merriam-webster.com/dictionary/tip">https://www.merriam-webster.com/dictionary/tip</a> (last updated Oct. 31, 2025); Gratuity, Merriam-
Webster, <a href="https://www.merriam-webster.com/dictionary/gratuity">https://www.merriam-webster.com/dictionary/gratuity</a> (last
updated Oct. 29, 2025). These terms are not defined in Black's Law
Dictionary.
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To the extent tipping for EWA services is not voluntary, however,
tips can be ``directly or indirectly imposed'' by providers and thus
qualify as finance charges. The determination of when a tip crosses the
line from voluntary to imposed depends on the facts and circumstances
of a provider's practices.\79\ For example, if the provider makes it
too difficult to avoid tipping, the resulting consumer payment may be
imposed, at least in part.\80\ Providers seeking clarification from the
CFPB about whether their particular practices concerning tipping do not
rise to the level of imposing finance charges may request clarification
from the CFPB by, for instance, applying for an Approval under its
Policy on the Compliance Assistance Sandbox.\81\
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\79\ The 2024 PIR likewise indicated that determining when a tip
is imposed depends on the facts and circumstances. But it also
employed various devices designed to stack the deck in favor of a
determination that tips are finance charges. For example, it used
quotes for each and every mention of the word tip. It identified
numerous considerations it deemed relevant to making this
determination. Many of these, however, have no basis in the ordinary
meaning of the term ``tip'' and the familiar practice of tipping.
For example, the 2024 PIR states that the consumer's ``reasonable
understanding that the provider expects a `tip' '' is evidence that
it is imposed. 2024 PIR, 89 FR 61358 at 61363 n.48. Consumers who
are served at a restaurant have a ``reasonable understanding'' that
the server expects a tip, but that doesn't mean that the server
imposes the tip. Another ``relevant consideration'' identified by
the 2024 PIR is ``suggesting ``tip'' amounts or percentages to the
consumer.'' This is now a common practice on POS checkout platforms,
but no reasonable consumer believes this makes any tips selected
mandatory.
\80\ Depending on the facts and circumstances, a provider's
tipping practices could instead or also be unlawfully deceptive
under 12 U.S.C. 5531, 5536.
\81\ See supra note 29 (discussing the Policy on the Compliance
Assistance Sandbox). Subsequent to the issuance of the 2024 PIR, at
least five district court opinions have appeared that concern
products that could be classified as EWA, and that hold that those
products are credit and that expedited delivery fees and/or tips
associated with those products are finance charges. See Orubo v.
Activehours, Inc., 780 F. Supp. 3d 927, 938 (N.D. Cal. Apr. 30,
2025) (motion to dismiss); Johnson v. Activehours, Inc., 2025 WL
2299425, at *9 (D. Md. Aug. 8, 2025) (motion to dismiss);
Golubiewski v. Activehours, Inc., 2025 WL 2484192, at *1 (M.D. Pa.
Aug. 28, 2025) (motion to dismiss); Moss v. Cleo AI Inc., 2025 WL
2592265, at *4 (W.D. Wash. Sept. 8, 2025) (motion to dismiss);
Vickery v. Empower Finance Inc., 2025 WL 2841686, at *9 (N.D. Cal.
Oct. 7, 2025) (motion to compel arbitration). All rely heavily,
directly or indirectly, on the application of ``credit'' to EWA and
the application of ``finance charge'' to EWA-related express
delivery fees and tips in the 2024 PIR, despite the fact that the
2024 PIR was merely a proposed interpretive rule. The first of the
cases, Orubo v. Activehours, quotes liberally from the 2024 PIR.
Each of the four subsequent cases then relies heavily on Orubo. Now
that the CFPB has not only formally withdrawn the 2024 PIR but
officially rejected the interpretations advanced in it, these
opinions have no real bearing on this advisory opinion.
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II. Regulatory Matters
This advisory opinion is an interpretive rule issued under the
CFPB's authority to interpret the Truth in Lending Act and Regulation
Z, including under section 1022(b)(1) of the Consumer Financial
Protection Act of 2010, which authorizes guidance as may be necessary
or appropriate to enable the CFPB to administer and carry out the
purposes and objectives of Federal consumer financial laws.\82\
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\82\ 12 U.S.C. 5512(b)(1).
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As guidance, this interpretive rule does not have the force or
effect of law. It has no legally binding effect, including on persons
or entities outside the Federal government.
By operation of TILA section 130(f), no provision of TILA sections
130, 108(b), 108(c), 108(e), or 112 imposing any liability applies to
any act done or omitted in good faith in conformity with this
interpretive rule, notwithstanding that after such act or omission has
occurred, the interpretive rule is amended, rescinded, or determined by
judicial or other authority.
The Office of Information and Regulatory Affairs (OIRA) within the
Office of Management and Budget (OMB) has determined that this action
is not a ``significant regulatory action'' under E.O. 12866, as
amended.
Pursuant to the Congressional Review Act,\83\ the CFPB will submit
a report containing this advisory opinion and other required
information to the United States Senate, the United States House of
Representatives, and the Comptroller General of the United States prior
to the interpretive rule taking effect. OIRA has designated this
advisory opinion as not a ``major rule'' as defined by 5 U.S.C. 804(2).
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\83\ 5 U.S.C. 801 et seq.
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The CFPB has determined that this advisory opinion does not contain
any new or substantively revised information collection requirements
that would require approval by OMB under the Paperwork Reduction
Act.\84\
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\84\ 44 U.S.C. 3501 et seq.
Russell Vought,
Acting Director, Consumer Financial Protection Bureau.
[FR Doc. 2025-23735 Filed 12-22-25; 8:45 am]
BILLING CODE 4810-AM-P
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</html>Indexed from Federal Register on December 23, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.