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AN ACT relating to earned income access transactions. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
SECTION 1. SUBTITLE 13 OF KRS CHAPTER 286 IS ESTABLISHED, 3
AND A NEW SECTION THEREOF IS CREATED TO READ AS FOLLOWS: 4
As used in this subtitle: 5
(1) "Consumer" means a natural person who is a resident of this state; 6
(2) "Earned but unpaid income" means wages or compensation that has been 7
earned by, or has accrued to the benefit of, a consumer for labor or services 8
performed for or on behalf of an employer but has not been paid by the employer 9
to the consumer; 10
(3) "Earned income access provider" means a person that: 11
(a) Provides or offers to provide, on behalf of an employer, earned income 12
access transactions to consumers earning wages or compensation from the 13
employer; or 14
(b) Offers earned income access transactions to, or enters into earned income 15
transactions with, consumers; 16
(4) "Earned income access transaction" or "transaction" means the payment of 17
earned but unpaid income to a consumer at a time other than the consumer's 18
regular payday or other regularly scheduled time on which an employer pays the 19
consumer wages or compensation that has been earned by, or has accrued to the 20
benefit of, the consumer; 21
(5) "Employer": 22
(a) Means a person that is obligated to pay a consumer any sum of money on 23
an hourly basis, project-based basis, piecework basis, or other basis for 24
labor or services performed by the consumer for or on behalf of the person; 25
and 26
(b) Does not include: 27 UNOFFICIAL COPY 25 RS BR 406
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1. A customer of a person referenced in paragraph (a) of this subsection; 1
or 2
2. Another third party that has an obligation to make any payment to a 3
consumer based solely on the consumer's agency relationship with the 4
person referenced in paragraph (a) of this subsection; 5
(6) "Employer-integrated earned income access transaction" means an earned 6
income access transaction that is based on employment, income, or attendance 7
data obtained directly from an: 8
(a) Employer; or 9
(b) Employer's payroll service provider; 10
(7) "Licensee" means a person licensed as an earned income access provider under 11
Section 2 of this Act; and 12
(8) "Proceeds" means funds received by a consumer pursuant to an earned income 13
access transaction. 14
SECTION 2. A NEW SECTION OF SUBTITLE 13 OF KRS CHAPTER 286 15
IS CREATED TO READ AS FOLLOWS: 16
(1) As used in this section, "exempt organization" means any: 17
(a) Bank, bank holding company, trust company, savings and loan association, 18
savings and loan association holding company, or credit union that is 19
organized under the laws of this state, another state, or the United States; 20
(b) Instrumentality: 21
1. Created by a state or the United States; and 22
2. That has the power to make mortgage loans; 23
(c) Subsidiary of any entity referenced in paragraph (a) or (b) of this 24
subsection; 25
(d) Consumer loan company as defined in Section 12 of this Act; 26
(e) Service provider, including a payroll service provider, that: 27 UNOFFICIAL COPY 25 RS BR 406
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1. Verifies available earnings; and 1
2. Is not contractually obligated to pay earned but unpaid income as part 2
of an earned income access transaction; or 3
(f) Employer that offers a portion of wages or compensation directly to its 4
employees or independent contractors prior to the regular payday or other 5
regularly scheduled time on which the employer pays wages or 6
compensation to the employees or independent contractors. 7
(2) A person shall not do the following unless the person first obtains an earned 8
income access provider license from the commissioner or is an exempt 9
organization: 10
(a) Provide or offer to provide, on behalf of an employer, earned income access 11
transactions to consumers earning wages or compensation from the 12
employer; or 13
(b) Offer earned income access transactions to, or enter into earned income 14
transactions with, consumers. 15
(3) An application for an earned income access provider license shall be: 16
(a) Made in writing and in the format required by the commissioner; and 17
(b) Accompanied by the following: 18
1. A license fee of one thousand dollars ($1,000); and 19
2. An investigation fee of two hundred fifty dollars ($250). 20
(4) (a) Upon the filing of a complete application for an earned income access 21
provider license, the commissioner shall, after conducting a substantive 22
review of the application: 23
1. Approve the application and issue the license; or 24
2. Subject to subsection (5) of this section, deny the application if the 25
commissioner finds that the financial responsibility or experience of 26
the applicant, or any person associated with the applicant, is not 27 UNOFFICIAL COPY 25 RS BR 406
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sufficient to: 1
a. Command the confidence of the community; or 2
b. Reasonably demonstrate that the applicant or person associated 3
with the applicant will operate honestly, lawfully, fairly, and 4
efficiently in accordance with the purposes of this subtitle. 5
(b) As used in this subsection, "applicant" includes: 6
1. If the applicant is a partnership, limited liability company, or 7
association, the members of the applicant; and 8
2. If the applicant is a corporation, the officers and directors of the 9
applicant. 10
(5) (a) The commissioner shall provide written notice to an applicant prior to 11
denying an application for an earned income access provider license. 12
(b) An applicant that receives a notice of the commissioner's intent to deny an 13
application may file a written petition for an administrative hearing in 14
accordance with KRS Chapter 13B within thirty (30) days of the date of the 15
notice. 16
(c) If an applicant fails to timely request a hearing under paragraph (b) of this 17
subsection, the commissioner may enter a default order denying the 18
application. 19
(6) If the commissioner denies an application for an earned income access provider 20
license, the commissioner shall: 21
(a) Return to the applicant the sum paid as a license fee; and 22
(b) Retain the investigation fee to cover the costs of investigating the applicant. 23
(7) An earned income access provider license shall: 24
(a) State: 25
1. The name and address of the licensee; 26
2. If the licensee is a partnership, limited liability company, or 27 UNOFFICIAL COPY 25 RS BR 406
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association, the name of each member of the partnership, limited 1
liability company, or association; and 2
3. If the licensee is a corporation, the date and place of its incorporation; 3
(b) Be conspiciously posted: 4
1. In the office of the licensee; and 5
2. On the mobile application or website of the licensee; 6
(c) Be valid unless it is: 7
1. Revoked or suspended by the commissioner; 8
2. Surrendered by the licensee; or 9
3. Expired; and 10
(d) Not be transferred or assigned. 11
(8) (a) On or before December 31, each licensee shall pay to the commissioner an 12
annual license fee of one thousand dollars ($1,000) for the following 13
calendar year. 14
(b) Failure of a licensee to pay the annual license fee required under 15
paragraph (a) of this subsection shall result in the expiration of the 16
licensee's license on January 1 of the following year. 17
(c) The commissioner may reinstate an expired license if, within thirty-one (31) 18
days of expiration, the licensee: 19
1. Satisfies all requirements of this subtitle; and 20
2. Pays a late fee of one hundred dollars ($100). 21
(d) Any reinstatement of a license under paragraph (c) of this subsection shall 22
be retroactive to January 1 of the calendar year in which it expired. 23
(9) The commissioner shall promulgate an administrative regulation in accordance 24
with KRS Chapter 13A to establish the format for the application required under 25
subsection (3) of this section. 26
SECTION 3. A NEW SECTION OF SUBTITLE 13 OF KRS CHAPTER 286 27 UNOFFICIAL COPY 25 RS BR 406
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IS CREATED TO READ AS FOLLOWS: 1
(1) As used in this section: 2
(a) "Control": 3
1. Means possession, directly or indirectly, of the power to direct or cause 4
the direction of the management and policies of a licensee, whether 5
through the ownership of the licensee's voting stock, the ownership of 6
voting stock of any person that possesses such power over the licensee, 7
or otherwise; 8
2. Shall be presumed to exist if any person, directly or indirectly, owns, 9
controls, or holds with power to vote, ten percent (10%) or more of the 10
following: 11
a. The voting stock of a licensee; or 12
b. The voting stock of a person that owns, controls, or holds with 13
power to vote, ten percent (10%) or more of a licensee's voting 14
stock; and 15
3. Shall not be presumed to exist solely because a person is an officer or 16
director of a licensee or person referenced in this paragraph; and 17
(b) "Legal representative" means a person duly appointed by a court of 18
competent jurisdiction to act as executor, administrator, trustee, committee, 19
conservator, or receiver, including a person who, in accordance with the 20
provisions of the court appointment: 21
1. Succeeds a legal representative; or 22
2. Acts in an ancillary capacity to a legal representative. 23
(2) (a) Except as provided in subsection (4) of this section, a person shall not take 24
any action that results in a change of control without prior written approval 25
of the commissioner. 26
(b) A person seeking to acquire control shall: 27 UNOFFICIAL COPY 25 RS BR 406
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1. Make a written application to the commissioner for approval of the 1
change of control; and 2
2. Pay an investigation fee. 3
(c) The commissioner shall promulgate an administrative regulation in 4
accordance with KRS Chapter 13A to prescribe: 5
1. The format for, and any information to be included in, the application 6
required under paragraph (b) of this subsection that the commissioner 7
deems necessary and appropriate for the purpose of making a 8
determination under paragraph (d) of this subsection; and 9
2. The amount of the investigation fee required under paragraph (b)2. of 10
this subsection. 11
(d) Upon receipt of a complete application for approval of a change of control, 12
the commissioner shall approve or disapprove the application. 13
(3) (a) The commissioner may determine whether the ownership, control, or 14
holding of voting stock constitutes, or would constitute, control for purposes 15
of this section. 16
(b) The following may make a request to the commissioner for a determination 17
under paragraph (a) of this subsection: 18
1. A licensee; 19
2. Any person that, directly or indirectly, owns, controls, or holds the 20
power to vote, any voting stock of a licensee; or 21
3. Any person that seeks to own, control, or hold power to vote, any 22
voting stock of a licensee. 23
(4) For a change of control by operation of law to a legal representative, the legal 24
representative shall, within six (6) months from the date of the legal 25
representative's qualification or within any additional period of time as the 26
commissioner may approve in writing, make an application to the commissioner 27 UNOFFICIAL COPY 25 RS BR 406
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under subsection (2)(b) of this section for approval of the change of control. 1
SECTION 4. A NEW SECTION OF SUBTITLE 13 OF KRS CHAPTER 286 2
IS CREATED TO READ AS FOLLOWS: 3
(1) A licensee shall: 4
(a) Use in its business such books, accounts, and records as will enable the 5
commissioner to determine whether the licensee is complying with: 6
1. This subtitle; and 7
2. Any administrative regulations promulgated under this subtitle; and 8
(b) Keep the books, accounts, and records referenced in paragraph (a) of this 9
subsection for a minimum of six (6) years after making the final entry with 10
respect to any earned income access transaction recorded therein. 11
(2) Photographic reproductions or records in photographic form of the books, 12
accounts, and records referenced in subsection (1) of this section shall constitute 13
compliance with subsection (1)(b) of this section. 14
SECTION 5. A NEW SECTION OF SUBTITLE 13 OF KRS CHAPTER 286 15
IS CREATED TO READ AS FOLLOWS: 16
(1) Each licensee shall annually file a report with the commissioner providing any 17
information as the commissioner may require concerning the licensee's earned 18
income access transaction business operations, and the operations of any 19
business with which the licensee's earned income access transaction business is 20
operationally or financially consolidated, for the preceding calendar year. 21
(2) The commissioner may require additional regular or special reports from a 22
licensee as the commissioner deems necessary for the proper supervision of 23
licensees under this subtitle. 24
(3) Any report submitted under subsection (1) or (2) of this section shall be in a form 25
prescribed by the commissioner. 26
(4) The commissioner shall promulgate an administrative regulation in accordance 27 UNOFFICIAL COPY 25 RS BR 406
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with KRS Chapter 13A to prescribe the form and requirements for any report 1
required to be submitted under subsection (1) of this section, which shall, at a 2
minimum, include: 3
(a) The date by which the report shall be submitted to the commissioner; and 4
(b) The information to be included in the report. 5
SECTION 6. A NEW SECTION OF SUBTITLE 13 OF KRS CHAPTER 286 6
IS CREATED TO READ AS FOLLOWS: 7
(1) (a) The commissioner may make any investigation that he or she deems 8
necessary to determine whether any: 9
1. Person has violated this subtitle; or 10
2. Licensee has conducted itself in such a manner as would justify the 11
revocation of its license. 12
(b) To the extent necessary to make an investigation under paragraph (a) of 13
this subsection, the commissioner may: 14
1. Compel the attendance of any person or obtain any books, accounts, 15
or records by subpoenas; 16
2. Administer oaths and affirmations; and 17
3. Examine under oath or affirmation all persons whose testimony he or 18
she may require. 19
(2) (a) The commissioner may make any examination of the books, accounts, and 20
records of any licensee's earned income access transaction business, and 21
any business with which any licensee's earned income access transaction 22
business is operationally or financially consolidated, as the commissioner 23
deems necessary to determine whether the licensee has violated this subtitle. 24
(b) 1. Subject to subparagraph 2. of this paragraph, the expenses incurred in 25
making an examination under paragraph (a) of this subsection shall 26
be assessed against and paid by the examined licensee. 27 UNOFFICIAL COPY 25 RS BR 406
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2. Any traveling and subsistence expenses incurred in making an 1
examination under paragraph (a) of this subsection shall be included 2
in the expenses assessed under subparagraph 1. of this paragraph in 3
the proportion the commissioner deems just and reasonable. 4
(c) Upon written notice of the amount assessed under paragraph (b) of this 5
subsection, the licensee shall become liable for and pay the assessment to 6
the department. 7
(3) (a) Except as provided in paragraph (b) of this subsection, all reports of, and all 8
correspondence and memoranda concerning or arising out of, any 9
examination or investigation made under this section, including any duly 10
authenticated copy or copies thereof in the possession of any licensee or the 11
department, shall: 12
1. Be confidential; and 13
2. Not: 14
a. Be subject to subpoena; 15
b. Be subject to disclosure under KRS 61.870 to 61.884; and 16
c. Otherwise be made public. 17
(b) If in the judgment of the commissioner the ends of justice and public 18
advantage will be subserved by the publication of any report, 19
correspondence, or memoranda referenced in paragraph (a) of this 20
subsection, the commissioner may publish, or authorize the publication of 21
the report, correspondence, or memoranda, or any part thereof in a manner 22
the commissioner deems proper. 23
SECTION 7. A NEW SECTION OF SUBTITLE 13 OF KRS CHAPTER 286 24
IS CREATED TO READ AS FOLLOWS: 25
(1) As used in this section: 26
(a) "Debt collection activity" means the business of: 27 UNOFFICIAL COPY 25 RS BR 406
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1. Collection of any debts, directly or indirectly, owed or due or asserted 1
to be owed or due to another; 2
2. A buyer of debts who seeks to collect the debts, directly or indirectly; 3
or 4
3. Any creditor collecting its own debts if the creditor uses any name 5
other than its own that would suggest or indicate that a person other 6
than the creditor is collecting or attempting to collect the debt; 7
(b) "Employer-integrated earned income access provider" means an earned 8
income access provider engaged in the business of offering or providing 9
employer-integrated earned income access transactions; 10
(c) "Fee" means any mandatory amount that is charged or received for an 11
earned income access transaction, including any charge for obtaining 12
proceeds within the timeframe established in subsection (2)(a)6.b. of this 13
section; 14
(d) "Nonrecourse" means the unavailability of any legal cause of action or 15
remedy against a consumer relating to an earned income access 16
transaction; and 17
(e) "Notice" means communication from a licensee to a consumer in a clear 18
and conspicuous manner. 19
(2) A licensee: 20
(a) Shall: 21
1. Offer to each consumer, and clearly explain how to elect, at least one 22
(1) reasonable option to obtain proceeds at no cost to the consumer; 23
2. Prior to entering into an earned income access transaction, provide 24
notice to the consumer of the costs of the transaction, including all 25
fees associated with the transaction; 26
3. Provide the consumer with written notice of, and obtain the 27 UNOFFICIAL COPY 25 RS BR 406
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consumer's consent to, any amendment to the contract or terms of 1
service for an earned income access transaction before proceeding 2
with the transaction to which the amendments would apply; 3
4. Ensure that each earned income access transaction entered into by the 4
licensee: 5
a. Is nonrecourse; and 6
b. Does not result in the proceeds of the transaction rolling over or 7
otherwise being structured in a way that creates any continuing 8
obligation of the consumer to the licensee; 9
5. If the licensee takes custody of a consumer's earned but unpaid 10
income before paying proceeds to the consumer, ensure that the 11
proceeds are fully insured by the Federal Deposit Insurance 12
Corporation at the consumer's individual account level; 13
6. Ensure that a consumer receives proceeds not later than the earlier of 14
the following: 15
a. Three (3) business days after the consumer's request for 16
processing that is not subject to a fee; 17
b. One (1) business day after the consumer's request for processing 18
that is subject to a fee; or 19
c. One (1) business day prior to the next regularly scheduled date 20
on which the employer is scheduled to pay earned but unpaid 21
income to the consumer; 22
7. If the licensee offers consumers the opportunity to tip, make a 23
donation, or otherwise pay an additional amount for an earned 24
income access transaction voluntarily: 25
a. Provide written notice to the consumer that paying any 26
additional amount is not required in order for the consumer to 27 UNOFFICIAL COPY 25 RS BR 406
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receive proceeds; and 1
b. Offer zero dollars ($0) among any amounts suggested to the 2
consumer, including when the licensee: 3
i. Offers amount options from which the consumer may 4
select; 5
ii. Prefills the additional amount in any form used in the 6
transaction process; and 7
iii. Uses any other transaction process designed to require the 8
consumer to take an affirmative action to avoid or opt-out 9
of paying the additional amount; 10
8. Comply with: 11
a. The National Automated Clearing House Association rules; and 12
b. All applicable local, state, and federal privacy and information 13
security laws and administrative regulations; 14
9. If repayment is to be made through a debit of the consumer's account, 15
including any subsequent initiation of a debit after an initial debit is 16
returned for insufficient or uncollected funds, ensure that the debit 17
complies with the requirements established under subsection (5)(a) of 18
this section; and 19
10. Not less than annually, provide a written notice to each consumer to 20
whom the licensee has paid proceeds in the previous year that contains 21
at a minimum: 22
a. An itemization of the consumer's transactions and costs, 23
including the total amount the consumer has paid in: 24
i. Fees; and 25
ii. Tips, donations, and other additional amounts paid 26
voluntarily; 27 UNOFFICIAL COPY 25 RS BR 406
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b. An explanation of the costs of the services provided; 1
c. Information on how to report complaints to the: 2
i. Licensee; and 3
ii. Commissioner; 4
d. Definitions of terms used in the notice; and 5
e. Other information prescribed by the commissioner; and 6
(b) Except as provided in subsection (3) of this section, shall not: 7
1. Pull a credit report or otherwise assess the credit risk of a consumer 8
prior to, during, or after entering into an earned income access 9
transaction with the consumer, except the licensee may verify the 10
consumer's source of income as part of determining the amount of the 11
proceeds; 12
2. Report on any earned income access transaction to a consumer 13
reporting agency prior to, during, or after entering into the 14
transaction; 15
3. Require a consumer to waive the right to class action relief as a 16
condition of an earned income access transaction; 17
4. Enter into an earned income access transaction unless: 18
a. The consumer is eighteen (18) years of age or older; and 19
b. The total proceeds received by the consumer from all 20
outstanding transactions does not exceed five hundred dollars 21
($500); 22
5. Charge or receive a fee for an earned income access transaction that 23
exceeds five dollars ($5) per one hundred dollars ($100) of the 24
proceeds; 25
6. Charge for a subscription or membership service unless the charge is: 26
a. Optional; and 27 UNOFFICIAL COPY 25 RS BR 406
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b. For a bona fide group of services that include earned income 1
access transactions; 2
7. Use any earned but unpaid income, or any portion thereof, to be paid 3
as part of an earned income access transaction before receipt by the 4
consumer to settle or pay down an obligation arising from a prior 5
transaction; 6
8. Impose a late fee or prepayment penalty on an earned income access 7
transaction; 8
9. Engage in, or retain the services of another to engage in, debt 9
collection activity in connection with an earned income access 10
transaction; 11
10. Convey debt created by an earned income access transaction; or 12
11. Directly or indirectly make, orally, in writing, or by any other method, 13
practice, or device, a representation that the licensee is licensed under 14
the banking laws other than a representation that the licensee is 15
licensed as an earned income access provider under this subtitle. 16
(3) An employer-integrated earned income access provider shall not: 17
(a) Enter into an employer-integrated earned income access transaction unless 18
the total proceeds received by the consumer for the transaction does not 19
exceed the consumer's earned but unpaid income less any taxes and 20
deductions to the consumer; or 21
(b) Be subject to subsection (2)(b)4.b. or 5. of this section for an employer-22
integrated earned income access transaction. 23
(4) Tips, donations, and other amounts paid voluntarily for an earned income access 24
transaction made in accordance with this section shall not be subject to usury 25
laws. 26
(5) The commissioner shall promulgate an administrative regulation in accordance 27 UNOFFICIAL COPY 25 RS BR 406
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with KRS Chapter 13A to establish the following for earned income access 1
transactions entered into by licensees: 2
(a) Requirements for the repayment of earned income access transactions 3
through a debit of a consumer's account; and 4
(b) Information to be included in the notice required under subsection (2)(a)10. 5
of this section. 6
SECTION 8. A NEW SECTION OF SUBTITLE 13 OF KRS CHAPTER 286 7
IS CREATED TO READ AS FOLLOWS: 8
(1) The commissioner shall: 9
(a) Implement a common database with real-time access through an internet or 10
application programming interface connection for use by the department 11
and licensees in accordance with this section; and 12
(b) Either: 13
1. Operate the database; or 14
2. Contract with a third-party provider to operate the database. 15
(2) If the commissioner contracts with a third-party provider to operate the database, 16
all of the following apply: 17
(a) The commissioner shall: 18
1. Ensure that the third-party provider selected as the database provider 19
operates the database in accordance with this subtitle; and 20
2. Consider ability to meet all the requirements of this subtitle in 21
selecting a third-party provider as the database provider; 22
(b) The third-party provider shall use the data collected under this subtitle only 23
as prescribed in this subtitle and the contract with the department and for 24
no other purpose; 25
(c) If the third-party provider violates this subtitle: 26
1. The commissioner may terminate the third-party provider's contract; 27 UNOFFICIAL COPY 25 RS BR 406
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and 1
2. The third-party provider may be barred from becoming a party to any 2
other state contracts; and 3
(d) A person injured by the third-party provider's violation of this subtitle may: 4
1. Maintain a civil cause of action against the third-party provider; and 5
2. Recover actual damages plus reasonable attorney's fees and court 6
costs in the civil action. 7
(3) The database shall be accessible to: 8
(a) Licensees to: 9
1. Verify whether entering into an earned income access transaction with 10
a particular consumer would be in violation of subsection (2)(b)4.b. of 11
Section 7 of this Act; and 12
2. Submit data under subsection (4) of this section; and 13
(b) The commissioner to administer and enforce this subtitle. 14
(4) Before entering into an earned income access transaction, a licensee shall submit 15
the following data into the database in a format prescribed by the commissioner: 16
(a) The consumer's: 17
1. Name; 18
2. Social Security number, alien registration number as shown on an 19
employment authorization document, or a unique identifier 20
established by the commissioner; 21
3. Address; and 22
4. Driver's license number; 23
(b) The amount of the transaction; 24
(c) The date of the transaction; 25
(d) The date that the transaction is closed; and 26
(e) Any additional information required by the commissioner. 27 UNOFFICIAL COPY 25 RS BR 406
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(5) (a) Except as provided in paragraph (b) of this subsection, the commissioner 1
shall impose a fee not to exceed three dollars ($3) per transaction for data 2
required to be submitted for an earned income access transaction, which 3
may be charged to the consumer. 4
(b) The fee referenced in paragraph (a) of this subsection shall not: 5
1. Be charged to a consumer for a no-cost earned income access 6
transaction; or 7
2. Apply to an employer-integrated earned income access transaction. 8
(6) A licensee: 9
(a) May rely on information contained in the database as accurate; and 10
(b) Shall not be subject to any administrative penalty or civil liability due to 11
reliance on inaccurate information contained in the database. 12
(7) The commissioner shall use the database to administer and enforce this subtitle. 13
(8) If the commissioner contracts with a third-party to operate the database, the 14
commissioner shall require the database provider to file a report containing the 15
following information by April 1 of each year: 16
(a) The total number and dollar amount of earned income access transactions: 17
1. Entered into in the calendar year ending December 31 of the previous 18
year; and 19
2. Outstanding as of December 31 of the previous year; 20
(b) The total dollar amount of the following collected for earned income access 21
transactions as of December 31 of the previous year: 22
1. Fees, as defined in Section 7 of this Act; 23
2. Tips, donations, and other amounts paid voluntarily; 24
(c) As of December 31 of the previous year, the following per consumer: 25
1. The average earned income access transaction amount; 26
2. The average number of transactions; and 27 UNOFFICIAL COPY 25 RS BR 406
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3. The average aggregate earned income access transaction amount 1
entered into; 2
(d) The average number of days a consumer was engaged in an earned income 3
access transaction for the previous year; 4
(e) An estimate of the average total amount of the following paid per consumer 5
for earned income access transactions for the previous year: 6
1. Fees, as defined in Section 7 of this Act; and 7
2. Tips, donations, and other amounts paid voluntarily; 8
(f) The total number of unique consumers that entered into an earned income 9
access transaction for the previous year; 10
(g) For the previous year, the total number of earned income access 11
transactions in which the proceeds were issued: 12
1. Directly to the consumer; and 13
2. Through an integrated employer; and 14
(h) Any other information required by the commissioner. 15
(9) The commissioner may promulgate an administrative regulation in accordance 16
with KRS Chapter 13A to administer this section and ensure that the database is 17
used by licensees in accordance with this section. 18
SECTION 9. A NEW SECTION OF SUBTITLE 13 OF KRS CHAPTER 286 19
IS CREATED TO READ AS FOLLOWS: 20
(1) Subject to subsection (2) of this section, a license issued under Section 2 of this 21
Act shall not be renewed, and shall be revoked or suspended, by the commissioner 22
upon a finding that: 23
(a) The licensee has: 24
1. Not complied with any applicable reporting requirements; 25
2. Violated: 26
a. This subtitle; or 27 UNOFFICIAL COPY 25 RS BR 406
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b. Any administrative regulation promulgated under this subtitle; 1
or 2
3. Been convicted under any federal law or administrative regulation 3
governing crimes involving moral turpitude; 4
(b) Any fact or condition exists that clearly would have warranted the 5
commissioner denying the license if that fact or condition had existed at the 6
time of the original application for the license; or 7
(c) The licensee has failed to: 8
1. Pay any sum of money lawfully demanded by the department; or 9
2. Comply with any demand, ruling, or requirement of the commissioner 10
or department. 11
(2) (a) Except as provided in paragraph (b) of this subsection: 12
1. The commissioner shall provide written notice to the licensee prior to 13
suspending or revoking a license issued under Section 2 of this Act; 14
2. A licensee that receives a notice of the commissioner's intent to 15
suspend or revoke a license may file a written petition for an 16
administrative hearing in accordance with KRS Chapter 13B within 17
thirty (30) days of the date of the notice; and 18
3. If a licensee fails to timely request a hearing under subparagraph 2. of 19
this paragraph, the commissioner may enter a default order of 20
revocation or suspension. 21
(b) 1. The commissioner may, on good cause shown or where there is a 22
substantial risk of public harm, suspend any license issued under 23
Section 2 of this Act for not more than thirty (30) days pending 24
investigation without notice and hearing. 25
2. For purposes of subparagraph 1. of this paragraph, good cause shown 26
shall only exist when the licensee: 27 UNOFFICIAL COPY 25 RS BR 406
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a. Has engaged in, or is likely to engage in, a practice prohibited by 1
this subtitle; or 2
b. Engages in dishonest or inequitable practices which may cause 3
substantial harm to the persons afforded protection under this 4
subtitle. 5
(c) The commissioner may reinstate a suspended license, or issue a new license 6
to a person whose license was revoked, if no fact or condition exists at the 7
time of the application or reinstatement which clearly warrants the 8
commissioner's denial of the license. 9
(3) (a) 1. A license issued under Section 2 of this Act may be surrendered by the 10
licensee by delivering written notice of the surrender to the 11
department. 12
2. For purposes of this paragraph, "written notice" includes electronic 13
notice. 14
(b) The surrender of a license shall not affect the licensee's civil or criminal 15
liability for acts committed prior to the surrender. 16
SECTION 10. A NEW SECTION OF SUBTITLE 13 OF KRS CHAPTER 286 17
IS CREATED TO READ AS FOLLOWS: 18
The commissioner may promulgate administrative regulations in accordance with KRS 19
Chapter 13A, conduct hearings, and make specific rulings, orders, demands, and 20
findings as may be necessary for: 21
(1) Proper conduct of business authorized under this subtitle; and 22
(2) The enforcement of this subtitle. 23
SECTION 11. A NEW SECTION OF SUBTITLE 13 OF KRS CHAPTER 286 24
IS CREATED TO READ AS FOLLOWS: 25
(1) (a) The commissioner may levy a civil penalty against any person that: 26
1. Violates or participates in the violation of any: 27 UNOFFICIAL COPY 25 RS BR 406
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a. Provision of this subtitle; 1
b. Administrative regulation promulgated under this subtitle; or 2
c. Order of the commissioner issued under this subtitle; 3
2. Knowingly makes any incorrect statement of material fact in any 4
application, report, or statement filed under this subtitle; 5
3. Knowingly omits any material fact necessary to provide the 6
commissioner any information lawfully required by him or her under 7
this subtitle; or 8
4. Refuses to permit any investigation or examination authorized under 9
this subtitle. 10
(b) The civil penalty levied under paragraph (a) of this subsection shall not be 11
less than one thousand dollars ($1,000) nor more than five thousand dollars 12
($5,000) per violation for each day the violation is outstanding, plus the 13
state's costs and expenses for examination, investigation, and prosecution of 14
the matter, including reasonable attorney's fees and court costs. 15
(2) Any earned income access transaction made in violation of subsection (2) of 16
Section 2 of this Act shall be void and the earned income access provider shall 17
not have a right to collect any principal, fee, or recompense whatsoever. 18
(3) Any civil penalties imposed under this section shall be in addition to any other 19
remedy or penalty authorized under this subtitle. 20
Section 12. KRS 286.4-410 is amended to read as follows: 21
(1) As used in this subtitle, unless the context requires otherwise: 22
(a) "Applicant" means a person filing an application under this subtitle; 23
(b) "Consumer loan company" means a person licensed under this subtitle to 24
engage in the business of making loans to a consumer for personal, family, or 25
household use in the amount or value of fifteen thousand dollars ($15,000) or 26
less; 27 UNOFFICIAL COPY 25 RS BR 406
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(c) "Control" means the power to direct the management or policies of a licensee 1
or applicant, whether through ownership of securities, by contract, or 2
otherwise; 3
(d) "Executive officer" means a natural person holding the title or responsibility 4
of president, vice president, chief executive officer, chief financial officer, 5
chief operational officer, or chief compliance officer; 6
(e) "Licensee" means a person licensed under this subtitle; 7
(f) "Managing principal" means a natural person who meets the requirements of 8
KRS 286.4-450 and actively participates in and is primarily responsible for 9
the operations of a licensee; 10
(g) "Material fact" means a fact that a reasonable person knows, or should know, 11
that could reasonably be expected to influence any decision or action taken by 12
the commissioner under this subtitle; 13
(h) "Nationwide consumer reporting agency" means a consumer reporting agency 14
that compiles and maintains files on consumers on a nationwide basis as 15
defined by Section 603(p) of the Fair Credit Reporting Act, 15 U.S.C. sec. 16
1681a(p); and 17
(i) "Person in control of a licensee or applicant" means, with respect to an 18
applicant or licensee, any of the following: 19
1. A director, general partner, or executive officer; 20
2. In the case of a limited liability company, a managing member or 21
manager; 22
3. Any person who directly or indirectly has the right to vote twenty-five 23
percent (25%) or more of a class of voting securities; 24
4. Any person who has the power to sell or direct the sale of twenty-five 25
percent (25%) or more of a class of voting securities; 26
5. In the case of a partnership or limited liability company, any person that 27 UNOFFICIAL COPY 25 RS BR 406
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has the right to receive twenty-five percent (25%) or more of the capital 1
upon dissolution; or 2
6. Any person that exercises control. 3
(2) This subtitle shall not apply to: 4
(a) Any person doing business under and as permitted by any law of this state or 5
of the United States relating to banks, savings banks, trust companies, savings 6
and loan associations, agricultural cooperative associations, credit unions, or 7
licensed pawnbrokers;[. This subtitle does not apply to ] 8
(b) The purchase or acquisition, directly or indirectly, of notes, chattel mortgages, 9
installment or conditional sales contracts, embodying liens or evidencing title 10
retention arising from the bona fide sale of goods or services by a seller of the 11
goods or services; or 12
(c) Any person doing business under and as permitted by Subtitle 13 of this 13
chapter. 14
Section 13. KRS 371.150 is amended to read as follows: 15
KRS 371.110 to 371.150 do not apply to any: 16
(1) National or state bank;[, or to any ] 17
(2) Credit union;[ or ] 18
(3) Trust company; or 19
(4) Person doing business under and as permitted by Subtitle 13 of KRS Chapter 286. 20
Section 14. Sections 1 to 11 of this Act may be cited as the Kentucky Earned 21
Wage Access Act. 22
Section 15. If any provision of this Act or the application thereof to any person 23
or circumstance is held invalid, the invalidity thereof shall not affect other provisions or 24
applications of the Act which can be given effect without the invalid provision or 25
application, and to this end the provisions and applications of this Act are severable. 26
Section 16. This Act applies to earned income access transactions offered or 27 UNOFFICIAL COPY 25 RS BR 406
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provided on or after January 1, 2026. 1