Tell the CFPB What You Think About Earned Wage Access

Earned wage access apps have been around for a long time, under a variety of names.  Minus the app part, they predate the invention of the smartphone.  The concept of earned wage access is that employers tally up how much money an employee has earned at the end of each workday and keep a running total until payday, when they issue the employee’s paycheck.  If an employee needs money before payday, he or she can take some of the amount already earned, and on payday, the employer will pay the difference, minus a fee.  The Consumer Financial Protection Bureau (CFPB) is considering categorizing earned wage access, especially when provided through smartphone apps, as a type of consumer loan; if this happens, then earned wage access programs will be subject to the same laws as other consumer loans, including providing consumers with disclosures about the annual costs of borrowing, before customers agree to accept the funds before payday.  Before issuing its decision, the CFPB is inviting comments from the public.  If you want to voice your opinion about the effect of earned wage access on your finances, contact the CFPB by August 30.  If your finances are in such bad shape that eliminating the fees associated with earned wage access would barely make a dent in the problem, contact a Miami debt lawyer.

Hourly Wage Earners Have to Pay to Access Their Own Money No Matter What

Branch, Brigit, Dave, DailyPay, EarnIn, and Payactiv are just a few of the earned wage access apps by which hourly wage earners can access their earned money early.  These apps charge fees that seem modest when viewed individually, but which add up over time.  Employees choose these apps because the other options that would enable them to access their money early enough to pay their bills on time also cost a bundle.  Some employers issue wages on debit cards that eat up a percentage of each transaction, and some even charge fees when you don’t spend your pay.  If your employer still issues paper paychecks, but you don’t have a bank account, the fees for cashing your paycheck are not cheap.  If you are lucky enough to have a bank account, so that you can get your paycheck through direct deposit, your wages still are not enough to cover your bills, so a substantial portion of your money goes to buy now pay later (BNPL) late fees and high-interest peer-to-peer loans, anyway.

Are Third Party Apps the Real Bad Guys?

If the CFPB decides to categorize earned wage access as loans, an apparently helpful program could start to appear more like predatory lending.  When you add up all the fees and express the costs of borrowing as an annual percentage rate, it starts to look more like predatory lenders are acting as middlemen between employers and hourly wage earners.

Work With a Debt Lawyer About Thinking Beyond the Next Payday

A South Florida debt lawyer can help you find ways to discharge or settle eligible debts and find more affordable ways to access your employment income.  Contact Nowack & Olson, PLLC in Miami, Florida to discuss your case.

Source:

cnbc.com/2024/07/19/what-cfpbs-rule-on-paycheck-advance-programs-means-for-workers.html