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On December 23, 2025, the Consumer Financial Protection Bureau (CFPB) issued an advisory opinion to resolve regulatory uncertainty surrounding the applicability of the definition of “credit” under the Truth in Lending Act (TILA) and its implementing regulation, Regulation Z, to Earned Wage Access (EWA) products.
EWA addresses the lag between consumers’ hours worked and receipt of their paychecks by facilitating advance access to earned but as yet unpaid wages. According to the CFPB’s December advisory opinion, “covered EWA” does not constitute the extension of credit under Regulation Z. Additionally, where any EWA product does fall within Regulation Z’s scope, expedited delivery fees and tips are not treated as finance charges.
For purposes of the advisory opinion, covered EWA is a defined subset of EWA that meets specific criteria, including that the advance is limited to wages already earned, repayment occurs solely through payroll deductions, the worker has no legal obligation to repay beyond the deducted wages, and the provider cannot engage in debt collection or credit reporting. In other words, covered EWA does not give workers the right to defer payment or incur debt.
Despite the CFPB guidance, the regulatory landscape for EWA remains fragmented and dependent on the way the product is structured, as well as the local regulator's interpretation of the law. Against this backdrop, the CFPB’s recent decision not to classify covered EWA as credit carries significant implications for market expansion, conflicting compliance obligations at the state level, and emerging consumer protection concerns.
The bigger picture
EWA providers generate revenue through a mix of employer payments, a share of interchange revenue from payment cards used by workers, worker-paid fees for expedited access to wages and, in some cases, subscription charges bundled with other employee benefits.
The CFPB’s regulatory treatment of EWA as a whole has shifted over time. In November 2020, the CFPB issued an advisory opinion (2020 AO) to address uncertainty over whether EWA offerings constitute “credit” under Regulation Z, concluding that certain employer-partnered programs allowing access only to accrued wages did not involve credit. In the years that followed, the CFPB proposed an interpretive rule taking a contrary view, rescinded the 2020 AO in 2025, and ultimately withdrew both the advisory opinion and its 2025 rescission in May 2025.
Disparate views regarding how to classify EWA is not limited to the US. The UK Financial Conduct Authority (FCA) has stated that “employer salary advance schemes” do not usually involve the provision of credit and therefore do not fall under the FCA’s consumer credit framework. However, the UK regulator has expressed interest in the way these products are structured and has encouraged employers and providers to adopt best practices to minimize risks.
By contrast, in the EU, EWA providers may fall within the scope of the Second Consumer Credit Directive where the product is structured in a manner that constitutes a credit agreement and would therefore be regulated by the relevant national competent authorities responsible for consumer credit supervision in each member state. Implementation of this directive is still in the early stages, making it too soon to know how jurisdictions will approach it going forward.
Why should you care?
A 2024 report from the CFPB estimated that the employer-partnered (EP) EWA market had grown from $3.2bn across 18.6m transactions in 2018 to $22.8bn across 214m transactions in 2022, with 7.2m workers utilizing EP EWA transactions at least once. Underscoring the scale of the market size and potential business opportunity, the CFPB has cited projections that the US EWA market will grow by roughly 300 percent between 2024 and 2034.
Although the CFPB’s recent guidance dictating that certain EWA products fall outside the scope of Regulation Z may improve near-term regulatory confidence and support market expansion, it should be viewed as an interpretive position rather than a permanent regulatory shift. Of note, the CFPB’s most recent advisory opinion states the bureau will continue to seek stakeholder feedback and evaluate whether it should take further legal steps with respect to EWA products, including steps that might encompass non-covered EWA and/or other provisions of law besides Regulation Z. Given the CFPB’s history of revisiting its treatment of EWA, providers face the strategic risk that compliance obligations could change over time, potentially reshaping the market.
At the same time, states continue to take divergent approaches to regulating EWA, creating a fragmented compliance landscape that providers must carefully navigate. In 2023, Nevada became the first state to enact a licensing regime for EWA providers with the adoption of Senate Bill 290. Among other requirements, a provider must submit a license application containing terms of service with users, a privacy policy, and audited financial statements. Meanwhile, in 2024, the California Department of Financial Protection and Innovation (DFPI) finalized regulations under the California Consumer Financial Protection Law requiring providers of “income-based advances” (EWA) to register with the DFPI, classifying many EWA products as loans subject to state consumer financial protection laws. Regulatory frameworks continue to evolve, with Colorado introducing legislation in 2026 that would require providers to obtain a license and implement consumer protection measures, including the ability for consumers to cancel the service at any time without incurring a fee.
Even where EWA products currently fall outside the scope of Regulation Z, they will likely continue to attract regulatory scrutiny related to fees, transparency, and general consumer protection safeguards. To manage enforcement and reputational risk, providers should proactively embed strong consumer protection practices, not only to meet evolving consumer expectations but also to position themselves for potential future regulatory shifts should the CFPB revisit its interpretation.
Next steps
As companies evaluate entry into the EWA market, or scale existing offerings, compliance planning should remain central to strategy.
First, providers should ensure their operating models align with applicable state-level regulatory frameworks. A proactive, jurisdiction-by-jurisdiction assessment will be critical to managing regulatory risk in a fragmented landscape. Regular horizon scanning for legislative and regulatory developments can help providers anticipate changes before they take effect.
Second, providers should prioritize consumer protection practices regardless of the current federal classification as it relates to credit. This includes maintaining clear and transparent disclosures around fees, avoiding practices that could be viewed as unreasonable or predatory, and monitoring usage patterns that may trigger the need for enhanced consumer protection safeguards. Establishing internal compliance reviews and consumer complaint monitoring processes can further help identify emerging risks. Beyond meeting customer expectations, embedding these safeguards will position providers more favorably should the CFPB revisit or revise its stance on EWA in the future.
Lastly, providers should keep in mind that EWA is an evolving product that does not fit neatly within existing payments or financial services frameworks. Operating in a rapidly growing market requires staying ahead of the curve and ensuring compliance approaches can grow alongside the product, as regulatory expectations and areas of focus are likely to shift and evolve as EWA continues to develop in response to consumer demand and new business models. With jurisdictions such as the EU moving forward on directives that may influence global standards, understanding the evolving international landscape is increasingly important. As a result, engaging in regulatory consultations and feedback processes around standards and proposed rules will be critical to staying ahead of supervisory priorities and influencing the direction of future regulation.
