The Consumer Financial Protection Bureau has granted two companies, the fintech PayActiv and the credit card issuer Synchrony Financial, entry into its compliance assistance sandbox.
This gives the companies the CFPB’s blessing to continue developing or offering certain products for two years without regulatory reprisal provided they comply with terms of the approval.
In PayActiv's case, the product getting a safe harbor offers workers access to their earned but unpaid wages before payday. PayActiv will be free from liability under the Truth in Lending Act and Regulation Z while it’s in the sandbox. Early wage access has at times been controversial, especially when companies have charged large or hidden fees for the service.
For Synchrony, the CFPB has approved the company's proposal to develop a “dual-feature credit card” for consumers with a limited or damaged credit history. Synchrony intends to offer a lower-rate secured card that lets eligible accountholders graduate to unsecured credit after 12 months.
The CFPB says it is trying to encourage innovation while protecting consumers.
“By facilitating compliance in such circumstances, approvals help further the Bureau’s statutory purpose of ensuring that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent and competitive,” the CFPB said in its approval letter to PayActiv. “Approvals thereby facilitate access and innovation within consumer financial services while also facilitating compliance.”
