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Comment on Proposed Rulemaking under the California Consumer Financial Protection Law: Earned Wage Access

March 15, 2021
Consumer Finance
Comment Letter

This set of comments will focus on earned wage access programs and other newer types of payday advance programs. NCLC and CRL have also joined a broader set of comments submitted by the California Economic Justice Coalition on a broader range of issues and a second set in conjunction with the Student Borrower Protection Center on income share agreements.

These comments will focus in particular on these questions that DFPI poses: For what industries should DFPI first establish registration requirements under Financial Code section 90009(a)? What are the consumer protection risks posed by those industries? Should DFPI issue regulations clarifying the applicable state credit cost limitations for consumer financial products and services offered by covered persons under the CCFPL?

In brief, we believe that earned wage access products and other newer payday advance programs do pose risks to consumers that require attention. First and foremost, these products are credit and should be governed by the protections, in particular usury laws, that apply under credit laws for other forms of credit. Failing to treat these advances as credit risks opening of a broad avenue for evasions, both for payday advance products and for other forms of credit that use similar arguments to claim they are not offering credit or loans.

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