Apps that allow employees to get paid early have now been ruled by the agency as lenders and are now subject to the Truth in Lending Act.
Workers who receive their paychecks in advance will now see these apps under new regulations after the Consumer Financial Protection Bureau made an announcement Thursday.Drew Powers, the founder of Illinois-based Powers Financial Group, said the decision is important for protecting consumers and said advance payment platforms are often a 'wolf in sheep's clothing.''Earned Wage Access is the process of advancing money while charging fees and/or interest.
However, there can be a dark side to the apps, hidden in often undisclosed fees.'Some reading the Consumer Financial Protection Bureau's decision to go after these types of loans may view it as a bad thing without understanding they're making a decision,' Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek.'What the Bureau is targeting are lenders through other apps that provide your payment days in advance for a fee.
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