CFPB Says Paycheck Advances No Longer Subject To Lending Law

The CFPB has issued a new advisory opinion saying that most “earned wage” or paycheck advance products are not covered by the federal Truth in Lending Act (TILA), meaning many providers will no longer have to give standard loan cost and term disclosures for those products.​

What the new CFPB opinion says

• The Bureau now takes the position that widely used earned wage/paycheck advances generally do not meet TILA’s definition of “consumer credit,” so TILA and Regulation Z do not apply in most cases.​

• As a result, providers of qualifying paycheck advances will typically not have to show APRs or other TILA cost disclosures that normally apply to loans or lines of credit.​

How this differs from recent policy

• In 2024, the CFPB proposed an interpretive rule that would have treated many paycheck advance/earned wage access products as credit subject to TILA, including counting “tips” and expedited delivery fees as finance charges.​

• That 2024 proposal followed the Bureau’s rescission of a 2020 Trump‑era advisory opinion and was framed as a move to stop “fintech payday” lenders from evading rate caps and disclosure rules; the new 2025 opinion undercuts that earlier direction and eases regulatory pressure on paycheck advance providers.​

What it likely means for workers and providers

• For workers, paycheck advance apps and employer-sponsored earned wage products may look and operate much the same day-to-day, but they may not show standardized loan-style disclosures of total cost or APR, making it harder to compare these products to traditional credit.​

• For providers and employers offering these products, the shift reduces the risk of TILA/Regulation Z enforcement for many earned wage models, though other laws (like state rate caps, unfair/deceptive acts standards, and payment rules) can still apply and may vary significantly by state.​

If you share whether you’re asking as an employee using these apps, an employer, or a lender, a more tailored breakdown of risks and compliance steps can be provided.

Workers who use earned wage access (EWA) or paycheck advance apps will likely see fewer standardized loan-style disclosures and protections at the federal level, so it will be harder to compare these apps’ true costs to other forms of credit and easier for some providers to add or raise fees without triggering Truth in Lending Act (TILA) rules.​

Key changes for app users

• Providers whose products fit the CFPB’s new advisory opinion generally no longer have to treat paycheck advances as “consumer credit,” so they are not required to show APRs or other TILA cost and term disclosures for those advances.​

• This means many apps can keep using tips, monthly subscriptions, expedited funding fees, or other charges without having to present them as finance charges in a standardized format workers can easily compare.​

Practical impact on everyday use

• The apps themselves will function much the same: workers will still be able to pull money early from their paycheck, usually through an app linked to their bank account or payroll system.​

• The main difference is that workers may get less clear, less standardized information about the true cost of repeated use, even when effective annual costs can exceed 100% on some employer-linked advances used frequently.​

Risks workers should watch for

• Frequent use: CFPB research found workers using employer paycheck advances took an average of 27 advances per year, often at very high effective APRs, which can quietly drain paychecks over time.​

• “Optional” fees: Tips, voluntary contributions, or instant-transfer fees can add up; without TILA-style disclosures, it is harder to see how these compare to, for example, a small installment loan or credit union line of credit.​

Protections that still exist

• State law: Some states explicitly regulate or define paycheck advances and may still cap fees or require licensing, while others treat them much more lightly, so protections depend heavily on where the worker lives.​

• Other federal rules: Even if TILA does not apply, providers can still be challenged under unfair, deceptive, or abusive acts standards, and military members remain protected by the Military Lending Act’s 36% cost cap on covered loans.​

How workers can protect themselves

• Treat advances as loans: Assume each advance is debt that must be repaid out of your next paycheck and avoid using it for recurring bills when possible.​

• Compare alternatives: Check if a credit union, bank small‑dollar loan, or employer emergency grant/loan program offers clearer terms or lower total cost than your EWA app.​

If you share which app you use and your typical fee pattern (tips, subscriptions, instant fees), a more specific cost comparison for your situation can be outlined.