Regulatory approvals might sound mundane, but not this one. We wanted to highlight the most important government action to date regarding Payactiv. It happened on December 30, it relates to all of our users, and it is the best possible news we can share with you.
The Consumer Financial Protection Bureau was established in 2011. It was created, as the name implies, to protect consumers in the area of financial services. The catalyst for its creation was the financial/mortgage crisis. There was so much criticism delivered at banks, mortgage brokers, and everyone else in the financial chain of housing that Congress was forced to take action. This applied not only to the mortgage industry, but to all financial services.
The CFPB not only implements and enforces rules governing everything from banks to debt collectors, but has collected billions in fines and consumer redress for rule-breakers.
However, the CFPB was designed for your protection. The agency has officially recognized earned wage access as a financial product and has unequivocally stated that the Payactiv EWA programs as described in the Order and Payactiv’s CAS Application are non-credit transactions, meaning they are exempt from the Truth in Lending Act (TILA) and Regulation Z.
That is, the CFPB decided that consumers that use our programs as described in the order are not being given a loan. Moreover, it highlighted our “innovative mechanism for allowing consumers to bridge the gap between paychecks,” which can “provide consumers with a lower-cost alternative to traditional payday loans.”
Those are the words and guiding principle of our CEO, Safwan Shah. He, Sohail Aslam, and Ijaz Anwar founded Payactiv because they didn’t want to see workers like you taken advantage of anymore. They saw how payday loans, overdraft fees, late fees, auto title loans, and pawn loans were part of the American fabric and they wanted this to change.
They wanted to create something that puts the user first, protects them from loans and fees, and would not only never put the user in a position that left them worse off than they were before, but improve their livelihood.
We’ve always believed that because your earned wages are your money, Payactiv was not a loan. We didn’t charge interest. We didn’t engage in any kind of underwriting. A debt was never created between you and us.
These points and more were made to the CFPB as part of applying to their “compliance assistance sandbox” program.
The CFPB agreed with us.
They didn’t have to agree with us, but they took the time – most of the entire last year – to learn about Payactiv and what we do.
While we are humbled to have this acknowledgement, we are most proud that the CFPB Approval Order recognizes you.
They listened to us.
Now they are listening to you.
Please note that the CFPB Approval Order relates only to Payactiv’s Payroll Deduction EWA Programs and not to all Payactiv products or services. The Approval Order is a public document, and may be reviewed here.