The California Department of Financial Protection and Innovation (DFPI) should restore cost limits for earned wage advances and other fintech cash advances under proposed regulations rather than allow a temporary registration regime with no cost limits for up to four years, the Center for Responsible Lending, Consumer Federation of California, National Consumer Law Center, and Office of Kat Taylor said in comments filed with the Department on November 27.

The groups “strongly support the provisions [of the proposed regulations] that make clear that income-based advances are loans and that voluntary charges are ‘charges’” under the California Financing Law (CFL). Those determinations “are absolutely critical to any regulatory approach to fintech cash advances,” the groups wrote.

However, the groups are “deeply disturbed” by the proposal to allow companies, for up to four years, to register without complying with the CFL’s interest rate limits, writing that “it will harm consumers to allow income-based advance providers to continue to operate without any cost limitation.” DFPI registration regimes expire in four years unless the legislature acts to extend them. “[W]e urge DFPI not to wait four years, and to bring income-based advances fully within the CFL as soon as possible,” the comments said.