CFPB Finally Starts Getting EWA Right, Says Many EWA Models Are Not Subject to TILA and Regulation Z

On December 23, 2025, the Consumer Financial Protection Bureau (CFPB) published in the Federal Register an advisory opinion affirming that certain qualifying earned wage access (EWA) services, also known as on-demand pay services, are not “credit” and optional expedited delivery fees and voluntary tips are not “finance charges” under the Truth in Lending Act (TILA) and Regulation Z (hereafter collectively referred to as Regulation Z). The CFPB also withdrew its July 2024 proposed interpretive rule (2024 Proposal), which would have reached the opposite conclusions. The advisory opinion may also have significant ramifications for other types of financial products and services.

What Are Earned Wage Access Services?

EWA services generally permit workers to access their earned but unpaid wages, salary, or other compensation before their scheduled payroll date. These services offer workers an alternative to employer-imposed pay cycles and a means to satisfy short-term liquidity needs arising between paychecks. Such services enable workers without a lot of discretionary income to manage emergencies, pay for daily necessities, and avoid third-party late fees, bounced checks, overdraft fees, and predatory debt traps. There are many providers in the marketplace, including “employer-partnered” providers, also known as employer-integrated providers, and “direct-to-consumer” providers, also known as consumer-directed providers, that offer a variety of structures, features, and distribution models. Some programs have credit-like features, while others do not. Because there are many different types of EWA programs, it is difficult to paint them in broad strokes.

What Does the Advisory Opinion Do?

The advisory opinion provides relief from Regulation Z to both EWA services that qualify as “Covered EWA” (as described in the next section) and, to the extent that they involve optional expedited delivery fees or tips, EWA services that do not qualify as Covered EWA.

First, the advisory opinion affirms that Covered EWA is not subject to Regulation Z because it involves no debt and therefore is not “credit.” Next, the advisory opinion affirms that optional expedited delivery fees or tips are not “finance charges” and, therefore, even EWA services that do not qualify as Covered EWA are not subject to Regulation Z to the extent that they involve optional expedited delivery fees or tips. Finally, the advisory opinion formally withdraws the 2024 Proposal, which, following public comment, the CFPB now calls “unfinalized and abandoned [and] of no legal effect.”

The advisory opinion is the latest in a series of CFPB guidance, both adopted and proposed, regarding EWA services. While we do not focus on the agency’s historical issuances regarding EWA services in this client alert, we have previously discussed a 2020 advisory opinion, which granted a narrower safe harbor from Regulation Z to employer-integrated EWA services that settled through payroll deductions but did not require workers to repay the provider (and also satisfied various other criteria); and we have previously shredded the 2024 Proposal’s departure from precedent and reversal of its own prior positions through its novel interpretations seeking to subject nonrecourse EWA services to Regulation Z.

Why Isn’t Covered EWA as Described in the Advisory Opinion “Credit”?

Regulation Z applies only to transactions that are credit transactions. Regulation Z defines “credit” as “the right to defer payment of debt or to incur debt and defer its payment.” Although the term “debt” is not defined in Regulation Z, the CFPB cites several sources that variously frame the defining characteristic of debt as the debtor’s obligation or liability to pay money. The advisory opinion affirms that workers participating in Covered EWA do not become obligated to repay the provider for the on-demand payments made to them by the provider. To the contrary, Covered EWA helps workers access “amounts that they have already earned, and to which they are already entitled,” with any “payroll process deductions” (as described later in this section) merely ensuring the worker is not functionally paid twice for the same work. The advisory opinion also discusses comparable scenarios that are not “credit” in which a consumer functionally accesses their own money. The advisory opinion notes that “the presence of a third-party intermediary” (i.e., the EWA provider) facilitating this access does not transform the transaction into credit. As a result, Covered EWA involves no debt, and, without debt, the CFPB will not treat the Covered EWA as “credit” subject to Regulation Z.

The advisory opinion effectively provides Covered EWA a safe harbor from Regulation Z’s definition of “credit.” Note that the advisory opinion expressly states that EWA products that fall outside of this safe harbor are not automatically considered “credit” under Regulation Z. The advisory opinion sets forth four criteria an EWA service must satisfy to qualify as Covered EWA:

1. Available funds must be limited to the cash value of accrued wages. Covered EWA transactions may “not exceed the accrued cash value of the wages the worker has earned up to the date and time of the transaction” (i.e., unpaid wages a worker is entitled to under state law if the worker is separated from the employer). This amount must be based upon payroll data (i.e., data generally maintained by a payroll processor engaged by an employer or by the employer itself) that evidence this amount.

2. A payroll process deduction is required. Covered EWA transactions must settle through “a payroll process deduction in connection with the worker’s next payroll event.” The advisory opinion also permits Covered EWA to have one additional payroll process deduction to rectify technical or administrative errors, though such errors do not include situations when an employer withholds “a worker’s garnished wages following a Covered EWA transaction.” As used in the advisory opinion, the term “payroll process deduction” is not strictly limited to an above-the-line payroll deduction as might be reflected on a paystub. The CFPB explains that, in a payroll process deduction, “payment instructions are received and acted upon by the payroll processor” (or employer) to “enable the EWA provider to receive accessed amounts without debiting the consumer’s regular transaction account after the consumer is paid.”

The CFPB also provides three illustrative examples of a payroll process deduction:

a. “The payroll processor sends the relevant amount to the EWA provider, and pays the remaining wages to the worker’s regular transaction account;
b. “the payroll processor sends the relevant amount to an account held ‘for the benefit’ of the consumer and used only to make payments to the EWA provider, and the processor pays the remaining wages to the worker’s regular transaction account; and 
c. “the payroll processor sends all wages to the EWA provider, with the EWA provider separately and directly paying the balance of the wages owed to the worker’s regular transaction account.”

The CFPB notes that “a transfer to the provider from any of the consumer’s regular transaction accounts” (including a payroll or prepaid card account) “after the payment of wages into that account is not a payroll process deduction” (emphasis added).

3. Providers must disclose certain information. Before providing Covered EWA, the provider must “clearly and conspicuously explain and warrant” to the worker that the provider:

a. “has no legal or contractual claim or remedy […] against the worker [if] the payroll process deduction is insufficient to cover the full amount of a Covered EWA transaction, including no right to take payment from any of the consumer’s regular transaction accounts; and 
b. “will not engage in any debt collection activities related to Covered EWA, place a Covered EWA transaction amount as a debt with or sell it to a third party, or report to a consumer reporting agency concerning Covered EWA.”

4. No underwriting of individual workers. A provider of Covered EWA may not “assess the credit risk of individual workers, including through obtaining and reviewing [their] credit reports or credit scores.”

Note that the definition of Covered EWA neither depends on whether a provider utilizes an “employer-partnered” or a “direct-to-consumer” model, requires a no-cost option to be available to workers, nor imposes any other fee limitations. To the contrary, the advisory opinion explains that “any fees charged in connection with Covered EWA,” which is not credit, “cannot be finance charges,” which are costs of credit.

Why Aren’t Optional Expedited Delivery Fees and Voluntary Tips as Described in the Advisory Opinion “Finance Charges”?

Regulation Z generally applies to a credit transaction if it has “a finance charge or is payable by a written agreement in more than four installments.” EWA services do not typically feature multiple installments, so we do not discuss installments here (and similarly, neither does the advisory opinion). Regulation Z includes a complex set of rules for determining whether a given fee is a finance charge, but the general rule is that the term includes “any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as an incident to or a condition of the extension of credit.”

Credit and finance charges are separate elements when determining whether Regulation Z applies, and each element must be separately satisfied. First, one must evaluate the nature of a product to determine if it is credit. As established previously, if there is no payment obligation (as in the case of Covered EWA), then there is no debt. And if there is no debt, then there is no credit. However, if one affirmatively determines that credit exists, then one should go on to evaluate whether fees are finance charges.

The advisory opinion identifies charging optional expedited delivery fees or soliciting voluntary tips as two of the ways EWA providers generate revenue. The advisory opinion affirms that, in the ordinary course, neither optional expedited delivery fees nor voluntary tips are finance charges because workers can obtain the EWA transaction without paying them.

Some EWA providers offer workers the option, for a fee, to choose expedited delivery of their funds in lieu of no-cost regular delivery via, for example, automated clearing house (ACH) delivery. The advisory opinion discusses comparable scenarios in which optional expedited delivery fees relating to credit cards are not finance charges. It also discusses long-standing case law, such as Veale v. Citibank FSB, 85 F.3d 577 (11th Cir. 1996), which held that optional expedited delivery fees for loan proceeds were not finance charges. We previously panned the 2024 Proposal’s superficial minimalization of such precedent, and the advisory opinion aligns with our analysis. Accordingly, an optional expedited delivery fee chosen by a worker to obtain EWA more quickly than via ACH is not “imposed” for the EWA transaction itself and therefore is not a finance charge.

Some EWA providers solicit voluntary tips or gratuities from workers. The advisory opinion observes that tipping is a practice familiar to workers and that tips are inherently not “imposed” by the recipient, even if providing a tip is customary in a given context. For example, the advisory opinion explains that consumers who are served at a restaurant have a “reasonable understanding” that the server expects a tip, but that does not mean that the server imposes the tip on the consumer. Accordingly, a bona fide tip is not “imposed” for the EWA transaction itself and therefore is not a finance charge.

As a result, EWA services that do not qualify as Covered EWA, even if later determined to be “credit,” are not subject to Regulation Z to the extent that they involve optional expedited delivery fees or tips. The advisory opinion cautions, however, that if a provider makes it too difficult to select the un-expedited delivery option or avoid a tip, then the resulting expedited delivery fees or tips might be considered finance charges. Such determinations will depend on the provider’s facts and circumstances and could involve unlawfully deceptive practices. The CFPB suggests that providers with questions about their practices consider utilizing its Compliance Assistance Sandbox program, which, according to the advisory opinion, the CFPB anticipates reviving shortly after issuing the advisory opinion.

Why Doesn’t the Advisory Opinion Similarly Discuss in Detail Whether Subscription or Membership Fees Are “Finance Charges”?

The advisory opinion does not discuss in detail whether EWA subscription or membership fees are finance charges because Regulation Z already clarifies that a “participation” fee is not a finance charge.

What Is the Advisory Opinion’s Relation to Other Laws and Regulations?

The advisory opinion expressly states that it does not interpret “provisions of law outside of Regulation Z.” However, several federal laws, such as the Equal Credit Opportunity Act and its implementing Regulation B, use substantially similar definitions of “credit.” Many other federal laws and regulations also apply to creditors, lenders, debt, or loans, and a number of states often consider federal precedent when charting their own courses. It remains to be seen whether the CFPB will impose a similar interpretation on other federal laws or whether any states will adopt the CFPB’s approach.

Pending legislation, litigation, and investigations currently underway throughout the country that rely on the 2024 Proposal may be impacted by its withdrawal. The advisory opinion specifically notes that a handful of recent court decisions relied “heavily” on the 2024 Proposal’s application of “credit” to EWA services and “finance charge” to EWA-related expedited delivery fees and tips “despite the fact that [it] was merely a proposed interpretive rule [emphasis added]. […] Now that the CFPB has not only formally withdrawn the 2024 [Proposal] but officially rejected the interpretations advanced in it, [the court decisions] have no real bearing on this advisory opinion.”

What Does the Advisory Opinion Mean for Other Financial Services?

The advisory opinion’s discussion of credit and finance charges arises in the context of EWA services, but the rationale is not unique to them. The advisory opinion therefore could help support positions that other nonrecourse financial products or services should not be deemed credit. For the same reason, the advisory opinion could help support positions that other types of optional fees should not be deemed finance charges.

What Timelines Should I Be Aware Of?

The advisory opinion becomes effective on December 23, 2025.

What Should I Do Next?

For assistance qualifying as a Covered EWA provider, structuring fees or tips that are not finance charges, considering a Compliance Assistance Sandbox application, or learning more about the advisory opinion and how it may affect your business, please contact Alexander J. Callen at acallen@goodwinlaw.com, Sammy Tang at xtang@goodwinlaw.com, or Mike Whalen at mwhalen@goodwinlaw.com.

Goodwin’s extensive experience with earned wage access spans product development and structuring; customer experience; user, business partner, and vendor contracts; investor and business partner transactions and diligence; bank partnership arrangements; license choice and applications; agency inquiries and investigations; legislation and regulation drafting; comment letters; and other legal and regulatory services.

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