WASHINGTON—The Consumer Financial Protection Bureau has issued an order terminating Payactiv’s Sandbox Approval Order relating to its earned wage access products.
The CFPB said it had given Payactiv special regulatory treatment, including as to liability under a relevant federal consumer financial law with respect to these products. Payactiv requested the termination in order to make changes to its fee model, the agency said.
San Jose-based Payactiv provides so-called “earned wage access” products to employees. The company contracts with employers to provide employee-requested transfers of wages that an employee has already earned prior to payday, and then recoups the amount of each transaction through a payroll deduction from the employee’s next paycheck.
The CFPB granted Payactiv a “Sandbox Approval Order” in December 2020, which gave the company a temporary safe harbor from liability under the Truth in Lending Act and Regulation Z. The temporary safe harbor is for offering and providing certain earned wage access products, subject to good faith compliance with the terms of the approval order, according to the Bureau.
‘Wrong’ Statements
The CFPB informed Payactiv on June 3, 2022 that it was considering terminating the approval order in light of certain public statements the company made wrongly suggesting a CFPB endorsement of its products. On June 21, 2022, Payactiv notified the CFPB that it was planning to modify its earned wage access product fee model.
The 2020 approval order only applies to the company’s existing products and any changes to the product fee model would require modification to the order. Payactiv instead requested termination of the order so it could make fee model changes quickly and flexibly, the CFPB said.
As requested by Payactiv, the order terminates the 2020 Sandbox Approval Order, effective immediately.
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