The law creating a new California mini-CFPB took effect on January 1, 2021, and a few weeks later, the California Department of Financial Protection and Innovation (DFPI) entered into “first-of-their kind” memoranda of understanding (MOUs), by which the DFPI will regulate earned wage access (EWA) products offered by five companies in California. These MOUs follow the CFPB’s issuance of an advisory opinion for EWA products, but they go much further in imposing pricing limitations and reporting and examination obligations for products that the DFPI gained authority to regulate under the new California Consumer Financial Protection Law (CCFPL). These MOUs, along with the CFPB’s advisory opinion, signal creation of regulatory guardrails for previously unregulated products. They also reflect the DFPI’s continued focus on capping interest rates for financial products offered in California.
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