Shining a Spotlight on Workers’ Financial Experiences

March 9, 2022 / Source: CFPB

By Emma Oppenheim – MAR 09, 2022

There are troubling signs that too many American workers face financial hardship, even as the economy recovers and unemployment remains relatively low. Larger firms dominate many markets , while fewer workers are directly employed  by the larger firms that exert significant influence over labor conditions within their markets and supply chains. In response to concerns from workers about financial risk or harm at the hands of the very employers from which they seek to earn a living, the CFPB is looking into the consumer financial products or services that workers face in the workplace.

Recently, the CFPB invited worker organizations and labor unions representing workers in a wide range of sectors and occupations to share their members’ experiences and challenges. Participants conveyed that workers are increasingly subject to specific consumer financial products or services that can leave them financially worse off and unable to change jobs. Advocates emphasized that these practices are increasingly common, especially in industries dominated by a small number of employers. Participants also reported that the opportunity for abuse is significantly heightened for many workers who have been involved in the justice system, are immigrants, or are geographically isolated.

Two major themes of particular relevance to the CFPB emerged during the roundtable event:

Employer-driven Debt

Organizations reported that workers increasingly must personally shoulder the expense of employer-mandated training and buying equipment. As a result, workers are often saddled with significant debt to their employer or third-party debt collectors that leaves them unable to change employers for better wages or work conditions.

One participant shared the case of a large retailer whose aspiring specialists are required to pay between $500 to $5,500 if their employment is voluntarily or involuntarily terminated within two years of completing a training program, stating: “Employers are basically turning job trainings into debt traps.” Another participant shared the case of a large healthcare provider that requires fully-licensed nurses to complete a company-run training program for which they will owe $10,000 if they fail to work full-time for the company, stating: “In this context, training repayment agreements function as modern forms of indentured servitude.”

We will continue to analyze information about these debts and their collection by employers and third-party debt collectors to determine how best to address harm to workers and any potential violations of federal consumer financial law. We look forward to participating in the newly-launched Truck Leasing Task Force , along with the U.S. Department of Transportation and U.S. Department of Labor, to investigate predatory financial arrangements.

Surveillance Technology and Sale of Personal Data

Organizations reported concerns about the rise of new surveillance technology tools that are enabling the collection of unprecedented amounts of information about workers. Concerns were raised about how this information is compiled and used for decision-making that may impact workers’ financial well-being far beyond their current employers.

One participant shared the example of a tool used by gig workers to track the number of hours they work across many platforms. But workers may not realize that the tool continues to track them outside of working hours, and is selling access to their data to financial institutions, insurers, and other employers. The participant explained that firms are, “engaging in what is essentially a market of buying and selling worker data, and in trying to position themselves to dominate this market are seeking to acquire data by any means necessary.”

We heard about an emerging industry of data firms that collect and sell workers’ data and may not be following the appropriate protocols for privacy and transparency. We intend to closely monitor and better understand this emerging market along with our federal partners and assess where provisions of the Fair Credit Reporting Act and other consumer protection laws may protect workers.

This roundtable marks just the beginning of the CFPB’s focus on the consumer financial products or services that workers may encounter in the workplace. What we heard made it clear that there are many ways that workers face financial harm on the job, and we welcome further input from worker organizations, labor unions, and individual workers as we seek to use our tools to crack down on abuses. If you have a story about how an employer or their affiliate drove you into debt or caused you financial harm through the use of consumer financial products or services in the workplace, please share it with us here.