Bill Text: NJ S3611 | 2020-2021 | Regular Session | Amended
Bill Title: Creates certain requirements for certain earned income access services and related provider contracts.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2022-01-10 - Substituted by A3450 (5R) [S3611 Detail]
Download: New_Jersey-2020-S3611-Amended.html
Sponsored by:
Senator NICHOLAS P. SCUTARI
District 22 (Middlesex, Somerset and Union)
SYNOPSIS
Creates certain requirements for certain earned income access services and related provider contracts.
CURRENT VERSION OF TEXT
As reported by the Senate Commerce Committee on December 16, 2021, with amendments.
An Act concerning earned income access services and supplementing Title 17 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. As used in this act:
1"Commissioner" means the Commissioner of Banking and Insurance.1
"Consumer" means a natural person.
"Department" means the Department of Banking and Insurance 1["].1
"Earned but unpaid income" means earned income that has not yet been paid to the consumer by an earned income obligor.
"Earned income" means moneys that a consumer or obligor has represented, and the earned income access service provider has reasonably determined based on that representation, have accrued to the benefit of that consumer for services rendered to an earned income obligor.
"Earned income access service provider" or "provider" means any person that is engaged in the business of delivering earned but unpaid income to a consumer in New Jersey1[. An earned income access service provider shall be employer-integrated] through an integration with an employer. "Earned income access service provider" shall not include a wage advance provider that does not operate through an integration with an employer1.
"Earned income access services" means the delivery of funds to a consumer that represent earned but unpaid income and which shall not be considered a loan.
"Obligor" means an employer or another person who is contractually obligated to pay the consumer any sum of money on an hourly, project-based, piecework, or other basis for labor or services provided by the consumer. "Obligor" shall not include a customer of an obligor or other third party whose obligation to make any payment to a consumer is based solely on the consumer's agency relationship with the obligor.
1"Office" means the Office of Earned Income Access Services within the Division of Banking in the Department of Banking and Insurance.1
12. a. There is established within the Division of Banking in the Department of Banking and Insurance, an Office of Earned Income Access Services. The purpose of the office shall be to oversee the regulation of earned income access services pursuant to this act.
b. (1) Upon the establishment of the office, there shall be a 24-month initial period for the registration and regulation of earned income access services pursuant to this act.
(2) The commissioner shall, at the end of the 24-month initial period established pursuant to this section, determine whether each of the providers registered pursuant to subsection c. of this section is in compliance with the provisions of this act.
(3) A provider that is determined by the commissioner to be in compliance with the provisions of this act shall be allowed to operate in this State on an ongoing basis.
(4) A provider that is determined by the commissioner to not be in compliance with the provisions of this act shall not offer earned income access services in this State.
c. (1) A provider shall register with the department prior to offering earned income access services pursuant to this act, except that a provider that has not been denied a registration by the department may operate while registration procedures are being promulgated by the department.
(2) The department may investigate and examine any provider or other person the commissioner deems necessary to determine compliance with this act and any orders, rules and regulations issued hereunder. For these purposes, the commissioner may examine the books, accounts, records, and other documents or matters of any provider or other person. The commissioner shall have the power to compel by subpoena the production of all relevant books, records and other documents and materials relative to an examination or investigation. The cost of the investigations and examinations shall be borne by the provider. The commissioner shall have the power to prohibit any provider not in compliance with the provisions of this act from doing business in this State.
d. (1) The office shall establish a telephone hotline for consumers to file complaints concerning providers. Each complaint shall be separately registered within the office and investigated by the department.
(2) During the first 12 months of the 24-month initial period established pursuant to subsection b. of this section, the department shall conduct a study of industry practices, consumer demand, benefits, and cost compared to other similarly available products, and actors in the earned income access services industry. The department shall issue a report of its findings, conclusions, and recommendations to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature. Prior to the termination of the initial 24-month period, the department shall review and analyze the benefits and risks to consumers during the initial provider registration period.
(3) Prior to the termination of the 24-month initial period, the department shall review and analyze the benefits and risks to consumers during the initial provider registration period. The department may consider or analyze issues including, but not limited to, average fees and costs imposed on consumers and whether limits on frequency of access to earned pay should be imposed.
(4) Upon conclusion of a review and analysis, the department shall issue a report concerning whether further regulation of the industry by the Legislature is warranted to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature. The department may also propose and implement regulations thereto.1
1[2.] 3.1 a. An earned income access service provider shall offer earned income access services through a contractual arrangement with an obligor or a service provider to an obligor 1or a consumer1, in which the provider:
(1) 1reasonably1 verifies a consumer's 1[net]1 earned income; and
(2) delivers earned income to the consumer prior to the date on which the obligor is scheduled to pay the consumer1[,]1 and the amount of the earned income delivered by the provider to the consumer is reduced or withheld from the consumer's next payment.
b. An obligor shall not share information with an earned income access service provider pertaining to the obligor's accrued and expected obligations to the consumer unless:
(1) the obligor or service provider to the obligor has entered into a contractual arrangement for earned income access services with the earned income access service provider; 1[and] or1
(2) the consumer consents to sharing that information.
c. The imposition of a fee on a consumer who opts to use the services of an earned income access service provider, and the reduction or withholding from a consumer's payment as set forth in subsection a. of this section, shall not violate section 4 of P.L.1965, c.173 (C.34:11-4.4) or section 13 of P.L.1999, c.90 (C.34:11-4.14), provided that the consumer is informed in writing of the right to receive the full amount of the consumer's wages, without discount 1or expense1, if the consumer waits until the regular payment due date.
1d. An earned income access service provider shall, at the time earned income access services are offered, provide a consumer with a statement, the language of which shall be determined by the commissioner, explaining that the office oversees the regulation of earned income access services providers and including the number and purpose of the telephone hotline established pursuant to section 2 of this act.
e. If an earned income access service provider makes a withdrawal on a consumer's account, prior to the next regularly scheduled payday, that results in the imposition of fees on the consumer, including an overdraft or non-sufficient funds fee, the provider shall refund the fees to the consumer upon adequate notice and proof by the customer.
f. An earned income access service provider shall not charge a consumer for earned income access services more than two times in any week except there shall be no limit on earned income access services when the consumer is given an option for funds to be delivered without a fee.1
1[3.] 4.1 a. Any earned income access services that fail to comply with the provisions of section 1[2] 31 of this act shall be subject to:
(1) the provisions of the civil usury law, R.S.31:1-1, and the criminal usury law, N.J.S. 2C:21-19;
(2) any provisions of Titles 17 or 56 of the Revised Statutes that would otherwise apply to a loan or credit transaction; and
(3) the federal "Truth in Lending Act," 15 U.S.C. s.1601 et seq. and the regulations implementing that act, 12 C.F.R. s.226 et seq., to provide any disclosures required for closed-end loans.
b. Earned income access services that do not comply with section 1[2] 31 of this act shall be considered a loan, even if those services are provided without recourse, and any 1[required]1 fees or other 1[required]1 contributions of those services shall be considered as interest when determining the rate of interest for purposes of compliance with a law with which an earned income access service provider is required to comply pursuant to the provisions of this section.
c. 1[Each earned income access service provider shall annually register with the department in a form and manner prescribed by the department. Each provider shall include with the registration a list of the fees charged by the provider. A provider may continue to operate prior to the department prescribing the form and manner of the annual registration pursuant to this subsection.
d. ]1Any person who violates any provision of this act shall be liable for a penalty, in addition to any other penalty imposed by law, of not more than $5,000 for each violation.
1[e. The provisions of this act shall not apply to a contractual arrangement between a provider and a consumer that permits delivery of earned income directly to the consumer that is to be repaid directly by the consumer to the provider.]1
1[4. This act
shall take effect on the 90th day next following enactment.]1
15. During the 24 month initial period established pursuant to this act, an earned income access service provider shall submit to the department the following information every six months:
a. the number of consumers requesting advances;
b. the number of approved advances and denied advances;
c. the average number of advances made to a single consumer in:
(1) a pay period; and
(2) a month;
d. the fee charged per advance;
e. the average term length of an advance;
f. (1) the total number of consumers for whom a withdrawal was made on an account with insufficient funds, and the number of times the account was overdrawn, per consumer;
(2) for consumers for whom a withdrawal was made on an account with insufficient funds, how many continuous withdrawals the provider made on the account and what additional fees, if any, were incurred by the consumer; and
g. consumer complaint information, including:
(1) the total number of complaints;
(2) the number of resolved complaints; and
(3) a list of the reason for the complaint listed by frequency of reason for complaint.1
16. Section 2 of this act shall take effect immediately and the remainder of this act shall take effect on 90th day after the date of enactment.1
