CFPB Launches Inquiry into Practices that Leave Workers Indebted to Employers

Consumer Financial Protection Bureau (CFPB)

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) says that it has launched an inquiry into practices and financial products that may leave employees indebted to their employers. In the recent Request for Information, the CFPB seeks data about, and worker experiences with, these emerging practices and financial products referred to as employer-driven debt. The CFPB is interested in knowing whether consumers have a meaningful choice in accepting employer-driven debt products. The CFPB also wants to understand the terms and conditions for these products, including whether they might impede someone from seeking a better-paying job.

“The labor market operates at its best when workers are able to move freely within it,” said CFPB Director Rohit Chopra. “Our inquiry is about studying the effects of an emerging form of debt that may have the potential to trap employees in place.”

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Though it may take other forms, employer-driven debt can cover an array of products and practices, including an employee’s up-front purchase of equipment and supplies that is essential for their work or that the employer requires. In other instances, workers may have to agree to debt products where the debt must be repaid if the employee leaves the employer before a certain date. For example, a company may provide training to a new hire, and require that the training’s cost be paid back if the employee leaves or is fired within a set period.

The CFPB is charged with monitoring markets for consumer financial products and services to ensure that they are fair, transparent, and competitive. Employer-driven debt comprises an emerging set of products and services, which the CFPB will study to better understand the potential impact on individual borrowers, jobseekers, and the broader labor market. Some potential areas of focus for the CFPB include:

  • Workers’ understanding of employer-driven debt arrangements: Workers may not understand that these arrangements involve an extension of credit, and they may not know whether they have the ability to comparison shop for credit offered by others or whether entering into the debt agreement is a condition of employment.
  • How and whether default on employer-driven debt could threaten continued or future employment: This includes understanding whether the status of the debt may impact a decision to seek alternative employment. These potential risks might limit competition in the labor market and in the market for similar consumer financial products and services.
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The CFPB wants to hear from members of the public about their experiences with employer-driven debt, whether taken on in pursuit of employment or while being employed. This includes prevalence, pricing, and other terms of the obligations, disclosures, dispute resolution, and the servicing and collection of these debts.

The deadline to submit comments to the CFPB’s inquiry is September 7, 2022.

Read the Request for Information Regarding Employer-Driven Debt.

Watch the CFPB’s video, Tell Your Story: Your job shouldn’t leave you worse-off financially.

Consumers having an issue with a consumer financial product or service can submit a complaint with the CFPB online or by calling (855) 411-CFPB (2372).

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