As inflation has eaten into Americans’ savings and paychecks, there has been rapid growth in the market for paycheck advance products, employer-partnered or direct-to-consumer loans that allow employees to receive their paycheck days before it’s scheduled to hit their account.
The number of transactions processed by these companies ballooned 90 percent from 2021 to 2022, when more than 7 million accessed around $22 million in the loans, according to the Consumer Financial Protection Bureau (CFPB).
“Paycheck advance products are often marketed to and designed for employers, rather than employees,” CFPB Director Rohit Chopra said.
“The CFPB’s actions will help workers know what they are getting with these products and prevent race-to-the-bottom business practices.”
Under the proposed rule, many of these products trigger an existing federal law that requires lenders to disclose information to borrowers including fees, interest and the total costs they incur by using the product.
The Hill’s Taylor Giorno has more here.
