Input from the public on the practices and financial products that may leave workers indebted to their employers is due to the federal consumer financial protection agency Sept. 7, according to a Federal Register notice published Friday.
In its request for information (RFI) launched June 9, the Consumer Financial Protection Bureau (CFPB) said it is inviting public input on data regarding, and workers’ experiences with, emerging practices and financial products referred to as employer-driven debt. It noted that such debt, for example, could include costs for trainings or work-required equipment or supplies that must be repaid when workers leave employment arrangements.
The bureau said it is seeking to gain a better understanding of the potential impact of employer-driven debt on individual borrowers, jobseekers, and the broader labor market. Areas of inquiry include prevalence, pricing and other terms of the obligations, disclosures, dispute resolution, and the servicing and collection of these debts, according to the RFI.
This inquiry, it noted, falls within the bureau’s mandate to monitor markets for consumer financial products and services to ensure that they are fair, transparent, and competitive.
“Employer-driven debt, like other debt, could pose risks to consumers, including overextension of household finances, errors in servicing and collection, default, and inaccurate credit reporting,” the bureau said in the notice. “As with other debt, errors and misinformation can create heightened risks of consumer harm at each stage of the debt life cycle, from origination through servicing and default or payoff.”
Additional risk to consumers, it said, may include lack of understanding that such arrangements involve an extension of credit, whether they can comparison shop, or whether entering into the debt agreement is a condition of employment; whether default on the debt threatens continued or future employment; or whether the status of the debt is impacted by a decision to seek alternative employment. “These risks might limit competition and transparency in this market for consumer financial products and services.” the CFPB said.
Reg lookup: Request for Information Regarding Employer-Driven Debt