Last week, we reported that on December 30, 2020, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) issued compliance assistance sandbox (“CAS”) approval to Payactiv, Inc. (“Payactiv”) regarding specific aspects of its earned wage access (“EWA”) product.

Payactiv’s Chief Legal Officer, David Reidy, expressed Payactiv’s reaction to the Approval Order this way – “We are grateful for the hard work and commitment the Bureau showed through this whole process. Everyone involved believes in EWA as an important and innovative benefit for workers. I couldn’t be more proud that Payactiv is the first and only EWA provider to be granted this approval.”

Continue Reading A Detailed Look At The CFPB’s Historic Approval of Payactiv’s Earned Wage Access (EWA) Program under Regulatory Sandbox Policy

New York, California and six other States filed a widely expected lawsuit on January 5 seeking to invalidate the “True Lender” Rule recently issued by the Office of the Comptroller of the Currency (“OCC”).  As we previously reported, the OCC’s True Lender Rule — finalized in October and effective since December 29 —provides bright-line tests for determining, in the context of a lending partnership between a national bank (or federal thrift) and a third-party (often a FinTech or other non-bank firm), which entity actually “made” the loan, i.e., which entity was the “true lender.”

Continue Reading States Sue to Set Aside OCC’s True Lender Rule

On December 30, 2020, the Consumer Financial Protection Bureau (“CFPB”) granted approval to Payactiv, Inc. (“Payactiv”) to offer its earned wage access (“EWA”) program under the CFPB’s Policy on the Compliance Assistance Sandbox, among the first approvals under the CFPB’s regulatory sandbox.

In its approval order, the CFPB granted approval to various aspects of Payactiv’s EWA program and grants Payactiv a safe harbor from liability under the Truth in Lending Act (“TILA”) and Regulation Z.

Continue Reading CFPB Grants Historic Approval to Payactiv, Approving Payactiv’s Earned Wage Access (EWA) Program under Regulatory Sandbox Policy

In an earlier article, we provided an overview of the Consumer Financial Protection Bureau’s (“CFPB”) earned wage access (“EWA”) advisory opinion.  In the opinion, the CFPB identified seven requirements for a “Covered EWA Program,” i.e., an EWA program that would “not involve the offering or extension of ‘credit’” under the Truth In Lending Act (“TILA”) and its Regulation Z.

Continue Reading CFPB’s Fee-Free Model Requirement Set Forth In Its Wage Access Advisory Opinion Raises More Questions

On December 3, 2020, the SEC announced that FinHub (the Strategic Hub for Innovation and Financial Technology) was being upgraded to an independent office. Acknowledging the importance of the all things fintech (emerging technologies and innovation in financial services), the SEC stated that creating a stand-alone office:

“[S]trengthens the SEC’s ability to continue fostering innovation in emerging technologies in our markets consistent with investor protection. The office will continue to lead the agency’s work to identify and analyze emerging financial technologies affecting the future of the securities industry, and engage with market participants, as technologies develop.”

Continue Reading SEC Takes Another Step to Prioritize Fintech Innovation

As we previously explained, the Consumer Financial Protection Bureau’s (“CFPB”) recently finalized Advisory Opinion Policy allows any person or entity to request an advisory opinion from the agency.  When the CFPB finalized that Policy on November 30, 2020, it concurrently issued its first two advisory opinions: one addressing earned wage access (“EWA”) programs, and one concerning private education loan products.  This article specifically comments on the important EWA advisory opinion.

EWA programs generally allow employees to access wages they have already worked for and accrued, but have not yet been paid.  In its EWA advisory opinion, the CFPB stated that EWA programs incorporating several specific features do “not involve the offering or extension of ‘credit,’” and thus, do not fall under the purview of Regulation Z, which implements the Truth In Lending Act (“TILA”).

Continue Reading CFPB Unveils In First Advisory Opinion That TILA Does Not Apply to Certain Earned Wage Access Products

The Consumer Financial Protection Bureau (“CFPB”) announced in March 2020 that it would develop a new advisory opinion program under which it would publish in the Federal Register responses to questions seeking clarification of ambiguities in federal consumer financial law.  On November 30, 2020, the CFPB issued a final Advisory Opinion Policy (“AO Policy”) setting forth specific procedures for its Advisory Opinion Program.

Opinions issued under the AO Policy will be interpretive rules under the Administrative Procedure Act that respond to a specific need for clarity on a statutory or regulatory interpretive question.  See 5 U.S.C. § 553(b).  Each advisory opinion will include a summary of the material facts or covered products, and the CFPB’s legal analysis of the issue.  The CFPB expects that its advisory opinions will apply not only to the requestor, but also “to similarly situated parties to the extent that their situations conform to the summary of material facts or coverage in the advisory opinion.”

Continue Reading CFPB Finalizes Advisory Opinion Program Opening Door for Those Seeking Clarity on Ambiguous Statutory or Regulatory Questions

The recent final rule (the “Rule”) implementing the Fair Debt Collection Practices Act (“FDCPA”) only directly governs parties defined as “debt collectors” by the FDCPA, principally meaning those who collect delinquent debt for others.[1]  However, this Rule from the Consumer Financial Protection Bureau, accompanied by a 560-page Preamble, will also likely influence the collection activities of “creditors” — i.e., those collectors that fall outside that “debt collector” definition — in various ways.[2]  The Rule also will affect how creditors should work with the debt collectors they hire.  In this Alert, we focus specifically on these different impacts of the Rule on creditors.  The Rule will take effect one year from the date it is published in the Federal Register.

Continue Reading What Creditors Need to Know About the Final Debt Collection Rule

On October 27, the North American Securities Administrators Association[1] held its 2020 symposium on Fintech and Cybersecurity. A key theme of the symposium was the impact that the pandemic has had on fintech, cybersecurity, and regulating the financial markets  –  given that regulators and securities industry professionals are largely working from home. The panelists also discussed new technological innovations that are likely to impact both the fintech industry and cybersecurity.

Continue Reading 2020 NASAA Fintech and Cyber Security Symposium – A Download of Key Comments

On October 27, 2020, the Office of the Comptroller of the Currency (OCC) issued its final rule setting the test for determining who the ‘true lender’ is in a loan transaction, including in the context of a lending partnership between a federally-chartered bank and a non-bank third party. The final rule adopts the two-pronged test set forth in the OCC’s proposed ‘true lender’ rule issued in July of this year – a bank is the ‘true lender’ if, as of the date of origination, the bank (1) is “named as the lender in the loan agreement,” or (2) “funds the loan.”  The rule further clarified that if one bank funds the loan but another bank is named as the lender in the loan agreement, the bank identified in the loan agreement will be considered the ‘true lender’ of the loan. That clarification is consistent with the fundamental rule of the Truth-in-Lending Act, which always makes the party on the loan agreement the “creditor” on that loan.

Continue Reading OCC Issues Final ‘True Lender’ Rule To Provide Clarity For Bank Lending Partnerships