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Are early wage access products a worker-friendly innovation — or loans that need regulation?

·11 min read
Are early wage access products a worker-friendly innovation — or loans that need regulation?

Boosters of these products say they’re disrupting the payday loan industry, using technology to find a cheaper way to provide workers who may have poor or thin credit with the funds they need, and in many cases, have already earned. It’s a question swirling around a variety of fintech products that supporters say are offering consumers a much-needed alternative to traditional financial services and consumer advocates worry are actually loans trying to avoid the regulations that come with them. Last year, the CFPB under Kathy Kraninger, the then-director appointed during the Trump administration, issued an advisory opinion saying that earned wage access products that work through employers and that don’t charge employees to use them aren’t credit products and therefore don’t have to abide by certain lending laws.