Bill Text: NY A08401 | 2021-2022 | General Assembly | Introduced
Bill Title: Provides for earned income access services offered in this state; defines terms; provides requirements for income access services; outlines reporting requirements and enforcement provisions; makes related provisions.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2022-01-05 - referred to banks [A08401 Detail]
Download: New_York-2021-A08401-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 8401 2021-2022 Regular Sessions IN ASSEMBLY October 20, 2021 ___________ Introduced by M. of A. VANEL -- read once and referred to the Committee on Banks AN ACT to amend the banking law, in relation to earned income access services The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The banking law is amended by adding a new article 9-B to 2 read as follows: 3 ARTICLE 9-B 4 INCOME ACCESS SERVICES 5 Section 374-aa. Definitions. 6 374-bb. Requirements for earned income access services offered 7 in this state. 8 374-cc. Enforcement. 9 § 374-aa. Definitions. As used in this article, the following terms 10 shall have the following meanings: 11 1. "Annual percentage rate" means as calculated pursuant to the Truth 12 In Lending Act (TILA), 15 U.S.C. Sec. 1601-1667f methodology. 13 2. "Consumer" means a natural person residing in the state of New 14 York. 15 3. "Earned but unpaid income" means funds that are based on wages or 16 compensation the worker has represented, and that the provider has 17 reasonably determined have been earned but have not, at the time of the 18 remittance, been paid to the worker for work performed for or on behalf 19 of an obligor. 20 4. "Earned income access services" refers to the business of deliver- 21 ing proceeds to consumers that: 22 (a) Requires no mandatory fees to access proceeds; 23 (b) Is non-recourse; and 24 (c) The proceeds accessed are based on earned but unpaid income. 25 5. "Income access provider" or "provider" means: EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD09775-03-1A. 8401 2 1 (a) A person who contracts with an obligor to offer and provide earned 2 income access services to the obligor's employees; or 3 (b) A person who contracts with a consumer to offer and provide earned 4 income access services to that consumer. 5 6. "Non-recourse" means that a provider cannot legally compel repay- 6 ment by a consumer of outstanding proceeds. 7 7. "Notice" means digital communication from the provider to the 8 consumer in a conspicuous manner. 9 8. "Obligor" means an employer or a person, including an independent 10 contractor, who is contractually obligated to pay a consumer any sum of 11 money on an hourly, project-based, piecework, or other basis for labor 12 or services provided by the consumer. Obligor does not include the 13 customer of an obligor or another third-party that has an obligation to 14 make any payment to a consumer based solely on the consumer's agency 15 relationship with the obligor. 16 9. "Payments" or "fees" means a cost to the consumer for earned income 17 access services required by the provider. 18 10. "Proceeds" means the amount of earned but unpaid income that has 19 been remitted to the consumer by a provider. Proceeds shall not be 20 considered a loan. 21 11. "Superintendent" means the superintendent of financial services. 22 12. "Voluntary payments" means a remittance amount of the consumer's 23 choosing paid by the consumer to the provider, that may or may not be 24 considered revenue by the provider, and which shall not be subject to 25 any annual percentage rate calculation. 26 § 374-bb. Requirements for earned income access services offered in 27 this state. Any earned income access provider that offers earned income 28 access services to a consumer in this state shall comply with the 29 following: 30 1. The imposition of a fee on a consumer who opts to use the earned 31 income services of a provider, and/or the reduction or withholding from 32 a consumer's next regularly scheduled wage payment by an obligor of the 33 amount of the proceeds during that pay period and applicable fees 34 imposed in connection with those proceeds, is permitted if: 35 (a) Fees are disclosed in writing to the consumer prior to and at the 36 time of the earned income access transaction; 37 (b) The fee is not mandatory. If a fee is automatically charged, a 38 consumer can have it refunded on request. The refund process must be 39 clearly and conspicuously disclosed in advance to the consumer; 40 (c) The consumer is informed in writing of the right to receive the 41 full amount of such consumer's wage payment, without discount, in the 42 normal course, if such consumer waits until the next regular wage 43 payment date; 44 (d) Fees and voluntary payments for earned income access services 45 cannot exceed 7.5% per transaction per provider on an average basis. The 46 average shall be calculated by totaling all of the revenue for fees and 47 voluntary payments for earned income access services across all consum- 48 ers per quarter per provider, divided by the total amount of proceeds 49 accessed per quarter per provider in New York; and 50 (e) The provider shall conduct a reconciliation on an average basis 51 across all earned income access service consumers at the end of each 52 quarter, and refund any excess fees or voluntary payments received 53 during the quarter within thirty days of the end of the quarter. A 54 provider is not prohibited from conducting reconciliations and issuing 55 refunds more frequently, or instituting alternative processes to comply, 56 provided those processes result in full compliance.A. 8401 3 1 2. The provider shall not rely on a credit report or score in order to 2 determine the consumer's eligibility for proceeds. 3 3. Providers are not exempt from state wage garnishment laws. 4 4. The provider shall not report a consumer's repayment or failed 5 repayment of proceeds to any person other than the consumer, including 6 but not limited to a consumer credit reporting agency or a debt collec- 7 tor. 8 5. No portion of the proceeds may be used to settle or pay down prior 9 proceeds, and no proceeds may roll over or be structured in any way to 10 create any continuing obligation on the part of a consumer. 11 6. If a provider takes custody of a consumer's earned but unpaid 12 income before remitting proceeds to the consumer, the provider shall 13 ensure that the proceeds are fully insured by the Federal Deposit Insur- 14 ance Corporation at the consumer's individual account level. 15 7. Providers shall comply with National Automated Clearing House Asso- 16 ciation rules. When a debit is initiated to a consumer's account for a 17 payment, and the debit is returned for insufficient or uncollected 18 funds, the debit can be reinitiated up to two times within one hundred 19 eighty days after the original entry. 20 8. The provider shall not provide to any third-party, including obli- 21 gors, any non-public personal information except in compliance with 22 applicable federal and state law. 23 9. The provider shall not sell, share, or otherwise disclose personal 24 information, that is solicited or collected from a consumer for the 25 purpose of providing proceeds. 26 10. The provider shall not charge any interest or late fees on 27 proceeds. 28 11. The provider delivers earned but unpaid income to the consumer 29 prior to the next regularly scheduled date on which the obligor is sche- 30 duled to pay earned wages or income to the consumer. 31 12. Any provider offering income access shall obtain a license from 32 the department. 33 13. The superintendent shall prepare and enforce such additional 34 rules, guidelines and requirements applicable to providers licensed 35 under this article that are not inconsistent with the provisions of this 36 article. 37 14. A license granted pursuant to this section shall be issued upon 38 submission of the application and payment of the fee, and shall be valid 39 for three years with two allowable extensions. A license granted pursu- 40 ant to this section shall not be renewed if a licensee has not complied 41 with reporting requirements. 42 15. A provider shall file an annual report with the superintendent 43 that includes: 44 (a) Gross revenue received for the earned income access service. The 45 provider shall distinguish between revenue received from consumers and 46 revenue received from third-parties providing services to consumers; 47 (b) The total number of proceeds transactions; 48 (c) The total dollar amount of proceeds the provider remitted; 49 (d) The total dollar amount of fees and/or voluntary payments the 50 provider received from consumers for earned income access services; 51 (e) The total number of proceeds for which the provider has not 52 received any repayment; 53 (f) The total dollar amount of proceeds for which the provider has not 54 received any repayment; 55 (g) The total number of proceeds wholly uncollected from consumers, 56 and total dollar amount of those proceeds;A. 8401 4 1 (h) The total number of proceeds partially uncollected from consumers, 2 and total dollar amount of those proceeds; and 3 (i) The total number of unique consumers to whom the provider remitted 4 proceeds to as part of an earned income access service. 5 16. Income access services that comply with the provisions of subdivi- 6 sion one of this section shall not be considered a lending activity, and 7 such earned income access payments shall not be considered loans. 8 § 374-cc. Enforcement. 1. If, upon inspection, examination, or inves- 9 tigation, the superintendent has cause to believe that a provider is 10 violating any provision of this article or any rule or order hereunder, 11 the superintendent or his or her designee, may issue a notice to the 12 provider in writing, describing with particularity the basis of the 13 alleged violation. 14 2. A provider shall have sixty days to respond to such notice, to 15 provide further information and/or an explanation. 16 3. If the superintendent determines there is a violation, the super- 17 intendent or his or her designee can issue a correction notice to be 18 remedied in an agreed upon timeframe. 19 § 2. This act shall take effect on the one hundred twentieth day after 20 it shall have become a law. Effective immediately, the addition, amend- 21 ment and/or repeal of any rule or regulation necessary for the implemen- 22 tation of this act on its effective date are authorized to be made and 23 completed on or before such effective date.
