CFPB Issues Request for Information Relating to Employment-Driven Debt Practices

On June 9, 2022, the Consumer Financial Protection Bureau (“CFPB”) launched an inquiry into “employment practices and financial products that may leave employees indebted to their employers.”

The inquiry is intended to focus on situations where an employer requires that an employee spend their own money to be able to engage in the employment requirements. These expenditures can involve circumstances where the employee is required to make up-front equipment or supplies purchases without being reimbursed for theses costs or where employees are required to agree to services or products that the employer will pay for, but the employee must agree to repay the cost of these services or products if they leave or are fired. 

As the inquiry states, the “CFPB is charged with monitoring markets for consumer financial products and services to ensure that they are fair, transparent, and competitive.” This inquiry will allow the CFPB to study current market practices and assess the impact that these practices have on employees and whether or not they have a “meaningful choice in accepting employer-driven debt products[,]” those wishing to become employees, and the broader labor market.

As CFPB Director Rohit Chopra stated, “[t]he labor market operates at its best when workers are able to move freely within it,” so the CFPB intends to assess whether these practices “may have the potential to trap employees in place.”

The inquiry requests public comment on employees experiences with this type of “employer-driven debt[,]” and the impact that it has on their future employment by September 7, 2022. Although the CFPB has not indicated that they intend to engage in any rulemaking procedures relating to these practices or services, employers should consider a review of the public comments issued to reflect on their own employment practices and to ensure adherence to best practices.