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Consumer Financial Protection Bureau Director Rohit Chopra testifies in Washington, D.C. on June 12, 2024.
"The CFPB's actions will help workers know what they are getting with these products and prevent race-to-the-bottom business practices," said the director of the bureau.
With inflation rising in recent years, driven by corporate greed according to numerous analyses, the number of people in the U.S. who have relied on paycheck advance products has skyrocketed—but a rule introduced Thursday by the Consumer Financial Protection Bureau is aimed at ensuring that lenders who provide these products are transparent with financially struggling workers about the fees they can incur.
The CFPB proposed a rule clarifying that paycheck advances, sometimes marketed as "earned wage" products, are consumer loans and are therefore subject to the Truth in Lending Act.
The federal law requires lenders to disclose all fees, interest, and total costs consumers will incur before they use the product.
According to a study released by the CFPB as it announced the new proposed rule, the number of paycheck advance transactions processed by employer-partnered firms ballooned by 90% from 2021-22. More than 7 million workers used paycheck advances to access $22 million over that time period in order to pay for their housing, utilities, and other essentials.
The study notes that "the mismatch between when a family receives income and when a family must make payments for expenses" is a major driver of demand for consumer credit and other products like paycheck advances.
"To reduce their costs, employers have a strong incentive to delay the payment of compensation to workers, which drives demand for short-term credit," reads the analysis.
As such, said Rohit Chopra, director of the CFPB, paycheck advances "are often marketed to and designed for employers, rather than employees."
"The CFPB's interpretive rule will level the playing field and promote competition among short-term small-dollar lenders."
"The CFPB's actions will help workers know what they are getting with these products and prevent race-to-the-bottom business practices," he said.
Th bureau's report focuses on employer-sponsored paycheck advances, which have been increasingly used over and over by the same workers. Employees took out an average of 27 paycheck advance loans per year, according to the CFPB, with the average transaction totaling $106.
"The share of workers in our sample using the product at least once a month increased from 41% in 2021 to nearly 50% in 2022," wrote the CFPB.
The bureau noted that while employers sometimes make paycheck advances fee-free for their employees, workers usually pay fees themselves, including expedited service fees and "tips" that the online services request when completing the transaction.
In the sample the CFPB reviewed, employers paid for less than 5% of the fees incurred by workers
"Across our sample of surveyed companies, in 2021 and 2022, roughly 90% of workers paid at least one earned wage product-related fee," said the bureau. "Among the companies in our sample that collect fees, the average cost per transaction ranged from $0.61 to $4.70. When workers paid a fee, the average size was approximately $3.18. Workers paid an average of $68.88 per year in fees."
Some services provide subscriptions for workers who used paycheck advances regularly; those who utilize them can pay as much as $14.99 per month in subscription fees, according to the CFPB.
"In recent years, workers have seen big increases in wages, but junk fees and high rates on financial products not only chip away at these gains—they take advantage of workers," acting Labor Secretary Julie Su said in a statement.
Adam Rust, director of financial services for the Consumer Federation of America, said the proposed rule shows that "an advance on wages is still a loan that has to be repaid, and no amount of hair-splitting can change it."
"Workers have always relied on wages to repay advances from lenders," said Rust. "Policymakers should be skeptical whenever lenders insist on regulatory exemptions from rules that apply to their competitors. The CFPB's interpretive rule will level the playing field and promote competition among short-term small-dollar lenders."
The CFPB is among several federal agencies that right-wing operatives, many of whom worked in the Trump administration, have pledged to abolish under the policy agenda Project 2025.
Under the Biden administration, in addition to taking aim at paycheck advances, the CFPB has proposed a rule to cap credit card late fees at $8, a move that would save Americans $10 billion per year; prevented discrimination by small business lenders; and fined Wells Fargo $3.7 billion for illegal activity.
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With inflation rising in recent years, driven by corporate greed according to numerous analyses, the number of people in the U.S. who have relied on paycheck advance products has skyrocketed—but a rule introduced Thursday by the Consumer Financial Protection Bureau is aimed at ensuring that lenders who provide these products are transparent with financially struggling workers about the fees they can incur.
The CFPB proposed a rule clarifying that paycheck advances, sometimes marketed as "earned wage" products, are consumer loans and are therefore subject to the Truth in Lending Act.
The federal law requires lenders to disclose all fees, interest, and total costs consumers will incur before they use the product.
According to a study released by the CFPB as it announced the new proposed rule, the number of paycheck advance transactions processed by employer-partnered firms ballooned by 90% from 2021-22. More than 7 million workers used paycheck advances to access $22 million over that time period in order to pay for their housing, utilities, and other essentials.
The study notes that "the mismatch between when a family receives income and when a family must make payments for expenses" is a major driver of demand for consumer credit and other products like paycheck advances.
"To reduce their costs, employers have a strong incentive to delay the payment of compensation to workers, which drives demand for short-term credit," reads the analysis.
As such, said Rohit Chopra, director of the CFPB, paycheck advances "are often marketed to and designed for employers, rather than employees."
"The CFPB's interpretive rule will level the playing field and promote competition among short-term small-dollar lenders."
"The CFPB's actions will help workers know what they are getting with these products and prevent race-to-the-bottom business practices," he said.
Th bureau's report focuses on employer-sponsored paycheck advances, which have been increasingly used over and over by the same workers. Employees took out an average of 27 paycheck advance loans per year, according to the CFPB, with the average transaction totaling $106.
"The share of workers in our sample using the product at least once a month increased from 41% in 2021 to nearly 50% in 2022," wrote the CFPB.
The bureau noted that while employers sometimes make paycheck advances fee-free for their employees, workers usually pay fees themselves, including expedited service fees and "tips" that the online services request when completing the transaction.
In the sample the CFPB reviewed, employers paid for less than 5% of the fees incurred by workers
"Across our sample of surveyed companies, in 2021 and 2022, roughly 90% of workers paid at least one earned wage product-related fee," said the bureau. "Among the companies in our sample that collect fees, the average cost per transaction ranged from $0.61 to $4.70. When workers paid a fee, the average size was approximately $3.18. Workers paid an average of $68.88 per year in fees."
Some services provide subscriptions for workers who used paycheck advances regularly; those who utilize them can pay as much as $14.99 per month in subscription fees, according to the CFPB.
"In recent years, workers have seen big increases in wages, but junk fees and high rates on financial products not only chip away at these gains—they take advantage of workers," acting Labor Secretary Julie Su said in a statement.
Adam Rust, director of financial services for the Consumer Federation of America, said the proposed rule shows that "an advance on wages is still a loan that has to be repaid, and no amount of hair-splitting can change it."
"Workers have always relied on wages to repay advances from lenders," said Rust. "Policymakers should be skeptical whenever lenders insist on regulatory exemptions from rules that apply to their competitors. The CFPB's interpretive rule will level the playing field and promote competition among short-term small-dollar lenders."
The CFPB is among several federal agencies that right-wing operatives, many of whom worked in the Trump administration, have pledged to abolish under the policy agenda Project 2025.
Under the Biden administration, in addition to taking aim at paycheck advances, the CFPB has proposed a rule to cap credit card late fees at $8, a move that would save Americans $10 billion per year; prevented discrimination by small business lenders; and fined Wells Fargo $3.7 billion for illegal activity.
With inflation rising in recent years, driven by corporate greed according to numerous analyses, the number of people in the U.S. who have relied on paycheck advance products has skyrocketed—but a rule introduced Thursday by the Consumer Financial Protection Bureau is aimed at ensuring that lenders who provide these products are transparent with financially struggling workers about the fees they can incur.
The CFPB proposed a rule clarifying that paycheck advances, sometimes marketed as "earned wage" products, are consumer loans and are therefore subject to the Truth in Lending Act.
The federal law requires lenders to disclose all fees, interest, and total costs consumers will incur before they use the product.
According to a study released by the CFPB as it announced the new proposed rule, the number of paycheck advance transactions processed by employer-partnered firms ballooned by 90% from 2021-22. More than 7 million workers used paycheck advances to access $22 million over that time period in order to pay for their housing, utilities, and other essentials.
The study notes that "the mismatch between when a family receives income and when a family must make payments for expenses" is a major driver of demand for consumer credit and other products like paycheck advances.
"To reduce their costs, employers have a strong incentive to delay the payment of compensation to workers, which drives demand for short-term credit," reads the analysis.
As such, said Rohit Chopra, director of the CFPB, paycheck advances "are often marketed to and designed for employers, rather than employees."
"The CFPB's interpretive rule will level the playing field and promote competition among short-term small-dollar lenders."
"The CFPB's actions will help workers know what they are getting with these products and prevent race-to-the-bottom business practices," he said.
Th bureau's report focuses on employer-sponsored paycheck advances, which have been increasingly used over and over by the same workers. Employees took out an average of 27 paycheck advance loans per year, according to the CFPB, with the average transaction totaling $106.
"The share of workers in our sample using the product at least once a month increased from 41% in 2021 to nearly 50% in 2022," wrote the CFPB.
The bureau noted that while employers sometimes make paycheck advances fee-free for their employees, workers usually pay fees themselves, including expedited service fees and "tips" that the online services request when completing the transaction.
In the sample the CFPB reviewed, employers paid for less than 5% of the fees incurred by workers
"Across our sample of surveyed companies, in 2021 and 2022, roughly 90% of workers paid at least one earned wage product-related fee," said the bureau. "Among the companies in our sample that collect fees, the average cost per transaction ranged from $0.61 to $4.70. When workers paid a fee, the average size was approximately $3.18. Workers paid an average of $68.88 per year in fees."
Some services provide subscriptions for workers who used paycheck advances regularly; those who utilize them can pay as much as $14.99 per month in subscription fees, according to the CFPB.
"In recent years, workers have seen big increases in wages, but junk fees and high rates on financial products not only chip away at these gains—they take advantage of workers," acting Labor Secretary Julie Su said in a statement.
Adam Rust, director of financial services for the Consumer Federation of America, said the proposed rule shows that "an advance on wages is still a loan that has to be repaid, and no amount of hair-splitting can change it."
"Workers have always relied on wages to repay advances from lenders," said Rust. "Policymakers should be skeptical whenever lenders insist on regulatory exemptions from rules that apply to their competitors. The CFPB's interpretive rule will level the playing field and promote competition among short-term small-dollar lenders."
The CFPB is among several federal agencies that right-wing operatives, many of whom worked in the Trump administration, have pledged to abolish under the policy agenda Project 2025.
Under the Biden administration, in addition to taking aim at paycheck advances, the CFPB has proposed a rule to cap credit card late fees at $8, a move that would save Americans $10 billion per year; prevented discrimination by small business lenders; and fined Wells Fargo $3.7 billion for illegal activity.
Judge James Boasberg reportedly raised concerns that the Trump administration "would disregard rulings of federal courts," something the White House has done repeatedly.
The Trump Justice Department on Monday filed a misconduct complaint against a federal judge for warning in early March that the president could spark a "constitutional crisis" by defying court orders—a concern that was swiftly validated.
The complaint against James Boasberg, chief judge of the U.S. District Court for the District of Columbia, was announced by Attorney General Pam Bondi, who alleged on social media that Boasberg made "improper public comments" about President Donald Trump and his administration.
During a March gathering of the Judicial Conference—the federal judiciary's policymaking body—Boasberg reportedly raised colleagues' fears that "the administration would disregard rulings of federal courts leading to a constitutional crisis."
John Roberts, the chief justice of the U.S. Supreme Court, "expressed hope that would not happen and in turn no constitutional crisis would materialize," according to a memo obtained by The Federalist, a right-wing publication.
Days after the Judicial Conference gathering, the Trump administration ignored Boasberg's order to turn around deportation flights, prompting an ACLU attorney to warn, "I think we're getting very close" to a constitutional crisis.
Boasberg, an Obama appointee, later said there was probable cause to hold the Trump administration in contempt of court, concluding that the evidence demonstrated "a willful disregard" for the judge's order.
Boasberg's rulings against the Trump administration in the high-profile deportation case stemming from the president's invocation of the Alien Enemies Act have made the judge a target of the White House and its allies. Trump and some congressional Republicans have demanded that Boasberg be impeached.
Politico reported Monday that the Justice Department's complaint against Boasberg was signed by Chad Mizelle, Bondi's chief of staff.
"Mizelle argued that Boasberg's views expressed at the conference violated the 'presumption of regularity' that courts typically afford to the executive branch," Politico noted. "And the Bondi aide said that the administration has followed all court orders, though several lower courts have found that the administration defied their commands."
A Washington Post analysis published last week estimated that Trump officials have been accused of violating court orders in "a third of the more than 160 lawsuits against the administration."
"The antitrust division has long worked to enforce the law to fight monopoly power, but these attorneys may have been fired for doing just that," said Sen. Amy Klobuchar.
The Trump Justice Department has removed two of its top antitrust officials amid infighting over the handling of merger enforcement, conflict that came to a head with the DOJ's strange and allegedly corrupt settlement with Hewlett Packard Enterprise and Juniper Networks.
CBS News reported that Roger Alford, principal deputy assistant attorney general, and Bill Rinner, deputy assistant attorney general and head of merger enforcement, were fired for "insubordination" on Monday after being placed on administrative leave last week.
"There has been tension over the handling of investigations into T-Mobile, Hewlett Packard Enterprise, and others," the outlet reported, citing unnamed sources.
The Wall Street Journal subsequently reported that the two officials—both deputies of Assistant Attorney General Gail Slater, the head of the DOJ's antitrust division—were terminated "after internal disagreements over how much discretion their division should have to police mergers and other business conduct that threatens competition."
News of Alford and Rinner's firings came amid growing scrutiny of the Justice Department's merger settlement with Hewlett Packard Enterprise and Juniper Networks, an agreement that reportedly divided the DOJ internally.
The Capitol Forum reported last week that Justice Department leaders including Chad Mizelle, Attorney General Pam Bondi's chief of staff, "overruled" top antitrust officials who raised concerns about the settlement, Slater among them. HPE hired lobbyists with ties to the Trump White House to push for the deal, which allowed the merger to move forward pending a judge's review of the settlement.
MLex reported over the weekend that Mizelle placed Alford and Ginner on leave last week following "disagreements with higher-ups over a recent merger settlement in HPE-Juniper."
Sen. Amy Klobuchar (D-Minn.), who serves on the Senate Subcommittee on Competition Policy, Antitrust, and Consumer Rights, called the firings "deeply concerning" and demanded answers from the Trump administration.
"The antitrust division has long worked to enforce the law to fight monopoly power, but these attorneys may have been fired for doing just that," Klobuchar wrote on social media.
Faiz Shakir, an adviser to Sen. Bernie Sanders (I-Vt.), wrote in response to the firings that "more and more people [are] taking notice that Trump is using his power to coddle the oligarchs."
"Major cases being settled, rather than fought out in trials," he wrote. "Nothing new being filed to fight major monopolies. Things like non-compete bans and click-to-cancel rules being overturned."
The American Prospect's David Dayen described the internal turmoil at the Trump DOJ as an apparent "effort to hijack antitrust powers on behalf of large corporations."
"This mess is about more than just a wireless back-office infrastructure merger," Dayen wrote, referring to the HPE-Juniper deal. "The antitrust division is actively overseeing cases against Google, Apple, Visa, Live Nation, RealPage, and more."
"If Slater is functionally not in control of the division, then cash and favor-trading will determine the outcomes for some of the biggest companies in the economy," Dayen added. "We're already seeing lenient enforcement at DOJ, with a deal between T-Mobile and UScellular approved. The precedent appears to be set: The right consultants paid the right amount of money can get you a sweetheart deal."
"President Trump's deal to take a $400 million luxury jet from a foreign government deserves full public scrutiny—not a stiff-arm from the Department of Justice," said the head of one watchdog group.
With preparations to refit a Qatari jet to be used as Air Force One "underway," a press freedom group sued the U.S. Department of Justice in federal court on Monday for failing to release the DOJ memorandum about the legality of President Donald Trump accepting the $400 million "flying palace."
The Freedom of the Press Foundation (FPF), represented by nonpartisan watchdog American Oversight, filed the lawsuit seeking the memo, which was reportedly approved by the Office of Legal Counsel and signed by U.S. Attorney General Pam Bondi, who previously lobbied on behalf of the Qatari government.
FPF had submitted a Freedom of Information Act (FOIA) request for the memo on May 15, and the DOJ told the group that fulfilling it would take over 600 days.
"How many flights could Trump have taken on his new plane in the same amount of time it would have taken the DOJ to release this one document?"
"It shouldn't take 620 days to release a single, time-sensitive document," said Lauren Harper, FPF's Daniel Ellsberg chair on government secrecy, in a Monday statement. "How many flights could Trump have taken on his new plane in the same amount of time it would have taken the DOJ to release this one document?"
The complaint—filed in the District of Columbia—notes that the airplane is set to be donated to Trump's private presidential library foundation after his second term. Harper said that "the government's inability to administer FOIA makes it too easy for agencies to keep secrets, and nonexistent disclosure rules around donations to presidential libraries provide easy cover for bad actors and potential corruption."
It's not just FPF sounding the alarm about the aircraft. The complaint points out that "a number of stakeholders, including ethics experts and several GOP lawmakers, have questioned the propriety and legality of the move, including whether acceptance of the plane would violate the U.S. Constitution's foreign emoluments clause... which prohibits a president from receiving gifts or benefits from foreign governments without the consent of Congress."
Some opponents of the "comically corrupt" so-called gift stressed that it came after the Trump Organization, the Saudi partner DarGlobal, and a company owned by the Qatari government reached a deal to build a luxury golf resort in Qatar.
Despite some initial GOP criticism of the president taking the aircraft, just hours after the Trump administration formally accepted the jet in May, U.S. Senate Republicans thwarted an attempt by Minority Leader Chuck Schumer (D-N.Y.) to pass by unanimous consent legislation intended to prevent a foreign plane from serving as Air Force One.
"Although President Trump characterized the deal as a smart business decision, remarking that it would be 'stupid' not to accept 'a free, very expensive airplane,' experts have noted that it will be costly to retrofit the jet for use as Air Force One, with estimatesranging from less than $400 million to more than $1 billion," the complaint states.
As The New York Times reported Sunday:
Officially, and conveniently, the price tag has been classified. But even by Washington standards, where "black budgets" are often used as an excuse to avoid revealing the cost of outdated spy satellites and lavish end-of-year parties, the techniques being used to hide the cost of Mr. Trump's pet project are inventive.
Which may explain why no one wants to discuss a mysterious, $934 million transfer of funds from one of the Pentagon's most over-budget, out-of-control projects—the modernization of America's aging, ground-based nuclear missiles...
Air Force officials privately concede that they are paying for renovations of the Qatari Air Force One with the transfer from another the massively-over-budget, behind-schedule program, called the Sentinel.
Preparations to refit the plane "are underway, and floor plans or schematics have been seen by senior U.S. officials," according to Monday reporting by CBS News. One unnamed budget official who spoke to the outlet also "believes the money to pay for upgrades will come from the Sentinel program."
Chioma Chukwu, executive director of American Oversight, said Monday that "President Trump's deal to take a $400 million luxury jet from a foreign government deserves full public scrutiny—not a stiff-arm from the Department of Justice."
"This is precisely the kind of corrupt arrangement that public records laws are designed to expose," Chukwu added. "The DOJ cannot sit on its hands and expect the American people to wait years for the truth while serious questions about corruption, self-dealing, and foreign influence go unanswered."
The complaint highlights that "Bondi's decision not to recuse herself from this matter, despite her links to the Qatari government, adds to a growing body of questionable ethical practices that have arisen during her short tenure as attorney general."
It also emphasizes that "the Qatari jet is just one in a list of current and prospective extravagant donations to President Trump's presidential library foundation that has raised significant questions about the use of private foundation donations to improperly influence government policy."
"Notably, ABC News and Paramount each agreed to resolve cases President Trump filed against the media entities by paying multimillion-dollar settlements to the Trump presidential library foundation, with Paramount's $16 million agreed payout coming at the same time it sought government approval for a planned merger with Skydance," the filing details. "On July 24, the Federal Communications Commission announced its approval of the $8 billion merger."