Bill Text: TX SB2245 | 2023-2024 | 88th Legislature | Introduced


Bill Title: Relating to the regulation of earned wage access services; creating a criminal offense; providing an administrative penalty; authorizing a fee.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2023-03-22 - Referred to Business & Commerce [SB2245 Detail]

Download: Texas-2023-SB2245-Introduced.html
  88R6917 JES-F
 
  By: Johnson S.B. No. 2245
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the regulation of earned wage access services; creating
  a criminal offense; providing an administrative penalty;
  authorizing a fee.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 14.251, Finance Code, is amended by
  adding Subsection (a-2) to read as follows:
         (a-2)  The commissioner shall assess an administrative
  penalty against an earned wage access services provider who
  knowingly and wilfully violates or causes a violation of Chapter
  398, or a rule adopted under Chapter 398.
         SECTION 2.  Title 5, Finance Code, is amended by adding
  Chapter 398 to read as follows:
  CHAPTER 398. EARNED WAGE ACCESS SERVICES
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 398.001.  DEFINITIONS. In this chapter:
               (1)  "Commissioner" means the consumer credit
  commissioner.
               (2)  "Consumer" means an individual who resides in this
  state.
               (3)  "Earned but unpaid income" means wages,
  compensation, or income that a consumer represents, and an earned
  wage access services provider reasonably determines, has been
  earned or has accrued to the benefit of the consumer but has not, at
  the time of the payment of proceeds, been paid to the consumer by an
  obligor.
               (4)  "Earned wage access services" means the business
  of delivering proceeds to a consumer before the next date on which
  an obligor is obligated to pay salary, wages, compensation, or
  other income to the consumer.
               (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.
               (6)  "Mandatory payment" means an amount determined by
  a provider that must be paid by a consumer to the provider as a
  condition of receiving or repaying proceeds.
               (7)  "Non-mandatory payment" means an amount other than
  a mandatory payment that is paid by a consumer or an obligor to a
  provider. The term includes:
                     (A)  a fee imposed by a provider for delivery or
  expedited delivery of proceeds to a consumer, as long as the
  provider offers the consumer at least one option to receive
  proceeds at no cost to the consumer;
                     (B)  an amount paid by an obligor to a provider on
  a consumer's behalf that entitles the consumer to receive proceeds
  at no cost to the consumer;
                     (C)  a subscription or membership fee imposed by a
  provider for a group of services that include earned wage access
  services, as long as the provider offers the consumer at least one
  option to receive proceeds at no cost to the consumer; and
                     (D)  a tip or gratuity paid by a consumer to a
  provider, as long as the provider offers the consumer at least one
  option to receive proceeds at no cost to the consumer.
               (8)  "Nonrecourse," with respect to a repayment of
  proceeds or other amounts owed, means that a provider cannot compel
  or attempt to compel repayment by a consumer of outstanding
  proceeds or non-mandatory payments owed by the consumer to the
  provider through:
                     (A)  a civil suit filed against the consumer;
                     (B)  use of a third-party to pursue collection of
  outstanding proceeds or non-mandatory payments on the provider's
  behalf; or
                     (C)  sale of outstanding amounts owed to a
  third-party collector or debt buyer.
               (9)  "Obligor" means an employer or other person who is
  contractually or legally obligated to pay a consumer earned but
  unpaid income on an hourly, project-based, piecework, or other
  basis, including to a consumer who is acting as an independent
  contractor. The term does not include a service provider of an
  obligor or another third party that has an obligation to make any
  payment to a consumer based solely on the consumer's agency
  relationship with the obligor.
               (10)  "Outstanding proceeds" means proceeds paid by an
  earned wage access services provider to a consumer that have not
  been repaid to the provider.
               (11)  "Person" means a corporation, partnership,
  cooperative, association, or other business entity.
               (12)  "Proceeds" means a payment of funds by an earned
  wage access services provider to a consumer that is based on earned
  but unpaid income.
         Sec. 398.002.  PERSONS NOT COVERED.  (a)  This chapter does
  not apply to:
               (1)  a person:
                     (A)  authorized to make a loan or grant an
  extension of consumer credit under the laws of this state or the
  United States; and
                     (B)  subject to regulation and supervision by this
  state or the United States;
               (2)  a bank or savings association the deposits or
  accounts of which are eligible to be insured by the Federal Deposit
  Insurance Corporation or a subsidiary of the bank or association;
               (3)  a credit union doing business in this state;
               (4)  a nonprofit organization exempt from taxation
  under Section 501(c)(3), Internal Revenue Code of 1986; or
               (5)  a consumer reporting agency.
         (b)  In an action under this chapter, a person claiming an
  exemption under this section has the burden of proving the
  exemption.
         Sec. 398.003.  APPLICABILITY OF OTHER LAW. A person
  registered under this chapter is not subject to the provisions of
  Title 4 of this code with respect to its earned wage access
  services.
         Sec. 398.004.  WAIVER VOID.  A waiver of a provision of this
  chapter by a consumer is void.
  SUBCHAPTER B. REGISTRATION AND DISCLOSURE STATEMENTS
         Sec. 398.051.  REGISTRATION STATEMENT.  (a)  Before
  conducting business in this state, an earned wage access services
  provider shall register with the secretary of state by filing a
  statement that:
               (1)  contains the name and address of:
                     (A)  the provider; and
                     (B)  each person who directly or indirectly owns
  or controls at least 10 percent of the outstanding shares of stock
  in the provider; and
               (2)  fully discloses any litigation or unresolved
  complaint relating to the operation of the provider filed with a
  governmental authority of this state or contains a notarized
  statement that there has been no litigation or unresolved complaint
  of that type.
         (b)  The provider shall keep a copy of the registration
  statement in its files.
         (c)  The secretary of state may not require a provider to
  provide information other than information contained in the
  registration statement.
         (d)  A registration statement expires on the first
  anniversary of its date of issuance.  A registered provider may
  renew a registration statement by filing a renewal application, in
  the form prescribed by the secretary of state, and paying the
  renewal fee.
         Sec. 398.052.  UPDATE OF REGISTRATION STATEMENT.  An earned
  wage access services provider shall update information contained in
  the registration statement not later than the 90th day after the
  date on which the information changes.
         Sec. 398.053.  INSPECTION OF REGISTRATION STATEMENT.  An
  earned wage access services provider shall allow a consumer to
  inspect the registration statement on request.
         Sec. 398.054.  FILING FEE.  The secretary of state may charge
  an earned wage access services provider a reasonable fee to cover
  the cost of filing a registration statement or renewal application
  in an amount not to exceed $100.
         Sec. 398.055.  DISCLOSURE STATEMENT.  Before executing a
  contract 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; and
               (3)  contains:
                     (A)  the terms of the earned wage access services
  offered by the provider, including a description of any
  non-mandatory payments that may be directly imposed by the provider
  in connection with the provision of earned wage access services;
                     (B)  a statement that the commissioner has
  oversight authority over the earned wage access services performed
  by the provider and includes a telephone number and an Internet
  website for submission of consumer complaints to the commissioner
  regarding the provider's earned wage access services;
                     (C)  an explanation of the consumer's right to
  proceed against the surety bond or account obtained under
  Subchapter E; and
                     (D)  the name and address of the surety company
  that issued the surety bond or the name and address of the
  depository and the trustee and the account number of the surety
  account, as appropriate.
         Sec. 398.056.  COPY OF DISCLOSURE STATEMENT.  An earned wage
  access services provider shall keep in its files a copy of the
  disclosure statement required under Section 398.055 that includes
  consumer's written or digital signatures acknowledging receipt of
  the disclosure statement until the second anniversary of the date
  on which the provider provides the disclosure.
  SUBCHAPTER C. CONTRACT FOR SERVICES
         Sec. 398.101.  FORM AND TERMS OF CONTRACT. (a)  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)  be written in language intended to be easily
  understood by a layperson.
         (b)  Each contract must disclose that: 
               (1)  proceeds will be provided to the consumer on a
  nonrecourse basis;
               (2)  non-mandatory payment obligations will be treated
  as nonrecourse payment obligations;
               (3)  proceeds will be provided to the consumer using a
  method agreed to by the consumer and the provider;
               (4)  in any case in which a provider seeks repayment of
  proceeds from the consumer, the provider will inform the consumer
  when the provider will first attempt to seek the repayment of
  proceeds from the consumer;
               (5)  the provider will comply with any applicable rules
  for use of an automated clearinghouse transaction if the provider
  attempts to seek repayment of proceeds from a consumer's depository
  institution; and
               (6)  the consumer may cancel the contract at any time
  without financial penalty.
         Sec. 398.102.  ISSUANCE OF CONTRACT. An earned wage access
  services provider shall make available to the consumer a copy of the
  completed contract, when receipt of the document is acknowledged by
  the consumer.
  SUBCHAPTER D. PROHIBITIONS
         Sec. 398.151.  PROHIBITED ACTS. (a)  An earned wage access
  services provider may not, in connection with providing earned wage
  access services to consumers:
               (1)  impose a mandatory payment on a consumer that
  directly relates to the provision of earned wage access services;
               (2)  make the amount of proceeds a consumer is eligible
  to request or the frequency with which the provider will provide
  proceeds to the consumer contingent on:
                     (A)  whether the consumer makes any non-mandatory
  payments to the provider; or
                     (B)  the size of any non-mandatory payments a
  consumer may make to the provider in connection with the provision
  of earned wage access services; 
               (3)  charge a late fee, interest, or other penalty or
  charge for failure to pay outstanding proceeds;
               (4)  charge a fee or any other charge in connection with
  deferring the collection of any outstanding proceeds beyond the
  original scheduled repayment date;
               (5)  solicit a consumer to delay repayment of
  outstanding proceeds for the purpose of increasing the total
  non-mandatory payments the provider may collect;
               (6)  report a consumer's payment or failed repayment of
  outstanding proceeds to a consumer credit reporting agency or a
  debt collector;
               (7)  base eligibility for earned wage access services
  on a consumer's credit score; or
               (8)  provide, sell, or otherwise disclose to any
  third-party, including an obligor, any nonpublic personal
  information collected from or about a consumer, except as necessary
  to provide earned wage access services to the consumer or with the
  consumer's written consent.
         (b)  The prohibition described by Subsection (a)(2) may not
  be construed to prohibit a non-mandatory payment equal to a
  percentage of proceeds provided.
         (c)  An earned wage access services provider is not precluded
  from using any of the methods described by Section 398.001(8) to
  compel or attempt to compel repayment of outstanding amounts
  incurred by a consumer through fraudulent means.
         Sec. 398.152.  FALSE OR MISLEADING REPRESENTATION OR
  STATEMENT.  An earned wage access services provider may not make or
  use a false or misleading representation or statement to a consumer
  during the offer or provision of earned wage access services.
         Sec. 398.153.  FRAUDULENT OR DECEPTIVE CONDUCT.  An earned
  wage access services provider may not directly or indirectly engage
  in a fraudulent or deceptive act, practice, or course of business
  relating to the offer or provision of earned wage access services.
         Sec. 398.154.  ADVERTISING SERVICES WITHOUT FILING
  REGISTRATION STATEMENT PROHIBITED.  An earned wage access services
  provider may not advertise its services if the provider has not
  filed the registration statement required by Subchapter B.
         Sec. 398.155.  WAIVER OF CONSUMER RIGHT PROHIBITED.  An
  earned wage access services provider may not attempt to cause a
  consumer to waive a right under this chapter.
  SUBCHAPTER E. SURETY BOND OR ACCOUNT
         Sec. 398.201.  SURETY BOND. (a) The surety bond of an
  earned wage access services provider must be issued by a surety
  company authorized to do business in this state.
         (b)  A copy of the bond shall be filed with the secretary of
  state.
         Sec. 398.202.  SURETY ACCOUNT. (a) The surety account of an
  earned wage access services provider must be held in trust at a
  federally insured bank or savings association located in this
  state.
         (b)  The name of the depository and the trustee and the
  account number of the surety account must be filed with the
  secretary of state.
         Sec. 398.203.  AMOUNT OF SURETY BOND OR ACCOUNT. The surety
  bond or account of an earned wage access services provider must be
  in the amount of $10,000.
         Sec. 398.204.  BENEFICIARY OF SURETY BOND OR ACCOUNT. The
  surety bond or account of an earned wage access services provider
  must be in favor of:
               (1)  this state for the benefit of a person damaged by a
  violation of this chapter; and
               (2)  a person damaged by a violation of this chapter.
         Sec. 398.205.  CLAIM AGAINST SURETY BOND OR ACCOUNT. (a) A
  person making a claim against a surety bond or account of an earned
  wage access services provider for a violation of this chapter may
  file suit against:
               (1)  the provider; and
               (2)  the surety or trustee.
         (b)  A surety or trustee is liable only for actual damages,
  reasonable attorney's fees, and court costs awarded under Section
  398.253(a).
         (c)  The aggregate liability of a surety or trustee for a
  provider's violation of this chapter may not exceed the amount of
  the surety bond or account.
         Sec. 398.206.  TERM OF SURETY BOND OR ACCOUNT. The surety
  bond or account of an earned wage access services provider must be
  maintained until the second anniversary of the date on which the
  provider ceases operations in this state.
         Sec. 398.207.  PAYMENT OF MONEY IN SURETY ACCOUNT TO CREDIT
  SERVICES ORGANIZATION. (a) A depository may not pay money in a
  surety account to an earned wage access services provider that
  established the account or a representative of the provider unless
  the provider or the provider's representative presents a statement
  issued by the secretary of state indicating that the requirement of
  Section 398.206 has been satisfied in relation to the account.
         (b)  The secretary of state may conduct an investigation and
  require information to be submitted as necessary to enforce this
  section.
  SUBCHAPTER F. CRIMINAL PENALTIES AND CIVIL REMEDIES
         Sec. 398.251.  CRIMINAL PENALTY. (a) A person commits an
  offense if the person violates this chapter.
         (b)  An offense under this chapter is a Class B misdemeanor.
         Sec. 398.252.  INJUNCTIVE RELIEF. A district court, on
  application of the attorney general or a consumer, may enjoin a
  violation of this chapter.
         Sec. 398.253.  DAMAGES. (a) A consumer injured by a
  violation of this chapter is entitled to recover:
               (1)  actual damages in an amount not less than the
  amount the consumer paid the earned wage access services provider;
               (2)  reasonable attorney's fees; and
               (3)  court costs.
         (b)  A consumer who prevails in an action brought under this
  section may also be awarded punitive damages.
         Sec. 398.254.  DECEPTIVE TRADE PRACTICE. A violation of
  this chapter is a deceptive trade practice actionable under
  Subchapter E, Chapter 17, Business & Commerce Code.
         Sec. 398.255.  STATUTE OF LIMITATIONS. An action under
  Section 398.253 or 398.254 must be brought not later than the fourth
  anniversary of the date on which the contract to which the action
  relates is executed.
         SECTION 3.  A person engaging in business as an earned wage
  access services provider on the effective date of this Act must
  register with the secretary of state under Section 398.051, Finance
  Code, as added by this Act, not later than January 1, 2024.
         SECTION 4.  Sections 398.055 and 398.101, Finance Code, as
  added by this Act, apply only to a contract for earned wage access
  services entered into on or after the effective date of this Act.
         SECTION 5.  This Act takes effect September 1, 2023.
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