SB938 - Relating to the regulation of earned wage access services; providing an administrative penalty.

  89R4859 PRL-F     By: Parker S.B. No. 938       A BILL TO BE ENTITLED   AN ACT   relating to the regulation of earned wage access services;   providing an administrative penalty.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Sections 14.251(a) and (b), Finance Code, are   amended to read as follows:          (a)  The commissioner may assess an administrative penalty   against a person who knowingly and wilfully violates or causes a   violation of this chapter, Chapter 394, Chapter 398,  or Subtitle B,   Title 4, or a rule adopted under this chapter, Chapter 394, or   Subtitle B, Title 4.          (b)  The commissioner may order the following businesses or   other persons to pay restitution to an identifiable person:                (1)  a person who violates or causes a violation of this   chapter, Chapter 394, or Subtitle B, Title 4, or a rule adopted   under this chapter, Chapter 394, or Subtitle B, Title 4;                (2)  a credit access business who violates or causes a   violation of Chapter 393 or a rule adopted under Chapter 393;                 (3)     an earned wage access services provider who   violates or causes a violation of Chapter 398; or                 (4)  [ (3) ]  a person who violates or causes a violation   of Subchapter B, Chapter 1956, Occupations Code, or a rule adopted   under that subchapter.          SECTION 2.  Title 5, Finance Code, is amended by adding   Chapter 398 to read as follows:   CHAPTER 398. EARNED WAGE ACCESS SERVICES           Sec.   398.001.     SHORT TITLE.   This chapter shall be known and   may be cited as the "Texas Earned Wage Access Services Act."           Sec. 398.002.  DEFINITIONS. In this chapter:                 (1)     "Consumer" means an individual who resides in this   state.                 (2)     "Consumer-directed wage access services"   means   offering or providing services directly to a consumer based on the   consumer's earned but unpaid income.                 (3)     "Earned but unpaid income" means salary, wages,   compensation, or income that:                       (A)     a consumer represents, and a provider   reasonably determines, has been earned or has accrued to the   benefit of the consumer in exchange for the consumer's provision of   services to an employer or on the employer's behalf; and                       (B)     has not, at the time of the payment of   proceeds, been paid to the consumer by the employer.                 (4)     "Earned wage access services" means the business   of providing:                       (A)  consumer-directed wage access services;                       (B)  employer-integrated wage access services; or                       (C)     both consumer-directed wage access services   and employer-integrated wage access services.                 (5)     "Earned wage access services provider" or   "provider" means a person who is in the business of offering and   providing earned wage access services to consumers.   The term does   not include:                       (A)     a service provider, including a payroll   service provider, whose role includes verification of the earned   but unpaid income but who is not contractually obligated to fund   proceeds delivered to a consumer as part of an earned wage access   service; or                       (B)     an employer that offers a portion of salary,   wages, or compensation directly to its employees or independent   contractors before the scheduled pay date.                 (6)     "Employer" means a person who employs a consumer   or a person who is contractually obligated to pay a consumer earned   but unpaid income on an hourly, project-based, piecework, or other   basis, in exchange for the consumer's provision of services to the   employer or on the employer's behalf, including to a consumer who is   acting as an independent contractor with respect to the employer.   The term does not include a customer of the employer or a person   whose obligation to pay salary, wages, compensation, or other   income to a consumer is not based on the consumer's provision of   services for or on behalf of that person.                 (7)     "Employer-integrated wage access services" means   delivering to consumers access to earned but unpaid income that is   based on employment, income, or attendance data obtained directly   or indirectly from an employer.                 (8)     "Fee" includes an amount charged by a provider for   expedited delivery or other delivery of proceeds to a consumer and   for a subscription or membership fee charged by a provider for a   bona fide group of services that includes earned wage access   services or an amount paid by an employer to a provider on a   consumer's behalf that entitles the consumer to receive proceeds at   reduced or no cost to the consumer.   The term does not include a   voluntary tip, gratuity, or donation paid to the provider.                 (9)     "Outstanding proceeds" means proceeds remitted to   a consumer by a provider that have not been repaid to that provider.                 (10)     "Proceeds" means a payment to a consumer by a   provider that is based on earned but unpaid income.           Sec.   398.003.     DETERMINATION OF CONSUMER'S RESIDENCE.   A   provider may use the mailing address or state of residence provided   by a consumer to determine the consumer's state of residence for   purposes of this chapter.           Sec.   398.004.     APPLICABILITY OF OTHER LAW.   A provider is not   considered to be engaging in lending, money transmission, or debt   collection in this state, or in violation of the laws of this state   governing deductions from wages or the purchase, sale, or   assignment of or an order for earned but unpaid income, if that   provider complies with the requirements of Sections 398.005 and   398.006.           Sec.   398.005.     REQUIREMENTS. (a) Before entering into an   agreement with a consumer for the provision of earned wage access   services, an earned wage access services provider shall provide the   consumer with a disclosure that:                 (1)  may be in written or electronic form;                 (2)     may be included as part of the contract to provide   earned wage access services;                 (3)     uses a font and language intended to be easily   understood by a layperson;                 (4)     informs the consumer of the consumer's rights   under the contract; and                 (5)     fully and clearly discloses each fee associated   with the earned wage access services.           (b)     An earned wage access services provider must notify a   consumer of any material change to the information provided in a   disclosure statement under Subsection (a) to that consumer, using a   font and language intended to be easily understood by a layperson,   before implementing the particular change with respect to that   consumer.           (c)     At the time that a provider charges a fee or solicits a   tip, gratuity, or donation from a consumer, the provider is   required to offer the consumer at least one reasonable option to   obtain proceeds at no cost to the consumer and clearly explain how   to elect that no-cost option.           (d)     Each contract for the provision of earned wage access   services to a consumer by a provider may be in writing or electronic   form and must:                 (1)  be dated;                 (2)     include the written or digital signature of the   consumer; and                 (3)     use a font and language intended to be easily   understood by a layperson.           (e)  Each contract must disclose that:                 (1)     fee obligations are subject to the limitations on   compelling or attempting to compel repayment under Section   398.006(a)(6);                 (2)     proceeds will be provided to the consumer using a   method agreed to by the consumer and the provider;                 (3)     the consumer may cancel at any time the consumer's   participation in the provider's earned wage access services without   incurring a cancellation fee;                 (4)     the provider is required to develop and implement   policies and procedures to respond to questions asked and concerns   raised by consumers and to address complaints from consumers in an   expedient manner;                 (5)     if a provider seeks repayment of outstanding   proceeds, a fee, or another payment from a consumer, including a   voluntary tip, gratuity, or other donation, from a consumer's   account at a depository institution, including through an   electronic funds transfer, the provider must:                       (A)     comply with applicable provisions of and   regulations adopted under the federal Electronic Fund Transfer Act   (15 U.S.C. Section 1693 et seq.); and                       (B)     unless the payment sought by the provider was   incurred by the consumer using fraudulent or unlawful means,   reimburse the consumer for the full amount of any overdraft or   non-sufficient funds fees imposed on the consumer by the consumer's   depository institution if the provider attempts to seek any payment   from the consumer on a date before, or in a different amount from,   the date or amount disclosed to the consumer for that payment;                 (6)     the provider is required to comply with all local,   state, and federal privacy and information security laws; and                 (7)     if the provider solicits, charges, or receives a   tip, gratuity, or donation from the consumer, the provider:                       (A)     must clearly and conspicuously disclose to   the consumer immediately before each transaction that the tip,   gratuity, or donation is voluntary and may be set to zero by the   consumer;                       (B)     must clearly and conspicuously disclose in   the contract and other service contracts with consumers that any   tip, gratuity, or donation from a consumer to a provider is   voluntary and the offering of earned wage acce [Text truncated for display. 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