On December 30, 2020, the Consumer Financial Protection Bureau (“CFPB”) authorized Payactiv, Inc. (“Payactiv”) to offer its Earned Wage Access Program (“EWA”) under the CFPB policy on the compliance assistance sandbox, one of the first approvals under the CFPB regulatory sandbox.

In its Approval Order, the CFPB granted its 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 Z regulation .

Payactiv’s EWA program allows employees to access salaries they have already earned, but which have not yet been paid by their employer. Such programs provide critical short-term monetary flexibility to meet needs that may arise between paychecks and help employees avoid more expensive alternatives like payday loans and high interest credit card debt. The CFPB order confirms that the Payactiv EWA program does not create a debt obligation or involve an extension of credit to the employee.

The CFPB order follows its advisory opinion of November 20, 2020, which distinguished EWA programs from credit. In its ordinance, the CFPB approves Payactiv’s specified EWA program and provides Payactiv a safe haven from liability related to its program. CFPB approval marks historic milestone for consumer financial innovation – Payactiv’s EWA program is one of the first three products to be approved under the CFPB regulatory sandbox, and the only one linked to the ‘EWA.

McGuireWoods is monitoring these developments closely and will follow up with a full analysis of the CFPB Approval Order in the coming days.