According to the DFPI, providers of earned wage access in California 'have generally maintained that they are not subject to any existing consumer credit laws or regulations.' The rule announced Tuesday holds that these services can either be licensed and regulated as lenders subject to the California Financing Law, which limits interest rates and other terms, or register as credit providers under the 2021 law.
What the rule will do is gather information about how these services operate and their effect on consumers, something that could lead legislators to impose new restrictions, said Suzanne Martindale, DFPI’s senior deputy commissioner for consumer financial protection. "The goal is to get the data. Let's see the trends, let's identify the risks for consumers, and then let's have a conversation on possible legislative actions."
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