RSSThe Consumer Financial Protection Bureau launched an inquiry into practices and financial products it believes could lead employees indebted to their employers.
The CFPB issued a request for information June 9 seeking data about, and worker experiences with, ‘employer-driven debt.’ The regulatory agency said employer-driven debt can include an employee’s up-front purchase of equipment and supplies deemed essential for their work or that an employer requires.
In other cases, workers could be required to agree to debt products where the debt must be repaid if the employee leaves an employer before a certain date. This could include a company requiring the cost of training a new hire be paid back if the employee leaves or is fired within a defined period.
“The CFPB is interested in knowing whether consumers have a meaningful choice in accepting employer-driven debt products,” the agency stated.
According to the regulatory agency, potential areas of focus during the inquiry include workers’ understanding of the debt arrangements, and how and whether default on employer-driven debt could threaten ongoing or future employment, including whether the status of the debt could impact a decision to seek other employment.
“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,” according to the CFPB.
“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.”
The deadline to submit comments to the inquiry is 90 days after the request for information’s publication in the Federal Register.
