Texas 2023 - 88th Regular

Texas Senate Bill SB2245 Compare Versions

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1	1	88R6917 JES-F
2	2	By: Johnson S.B. No. 2245
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the regulation of earned wage access services; creating
8	8	a criminal offense; providing an administrative penalty;
9	9	authorizing a fee.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 14.251, Finance Code, is amended by
12	12	adding Subsection (a-2) to read as follows:
13	13	(a-2) The commissioner shall assess an administrative
14	14	penalty against an earned wage access services provider who
15	15	knowingly and wilfully violates or causes a violation of Chapter
16	16	398, or a rule adopted under Chapter 398.
17	17	SECTION 2. Title 5, Finance Code, is amended by adding
18	18	Chapter 398 to read as follows:
19	19	CHAPTER 398. EARNED WAGE ACCESS SERVICES
20	20	SUBCHAPTER A. GENERAL PROVISIONS
21	21	Sec. 398.001. DEFINITIONS. In this chapter:
22	22	(1) "Commissioner" means the consumer credit
23	23	commissioner.
24	24	(2) "Consumer" means an individual who resides in this
25	25	state.
26	26	(3) "Earned but unpaid income" means wages,
27	27	compensation, or income that a consumer represents, and an earned
28	28	wage access services provider reasonably determines, has been
29	29	earned or has accrued to the benefit of the consumer but has not, at
30	30	the time of the payment of proceeds, been paid to the consumer by an
31	31	obligor.
32	32	(4) "Earned wage access services" means the business
33	33	of delivering proceeds to a consumer before the next date on which
34	34	an obligor is obligated to pay salary, wages, compensation, or
35	35	other income to the consumer.
36	36	(5) "Earned wage access services provider" or
37	37	"provider" means a person who is in the business of offering and
38	38	providing earned wage access services to consumers.
39	39	(6) "Mandatory payment" means an amount determined by
40	40	a provider that must be paid by a consumer to the provider as a
41	41	condition of receiving or repaying proceeds.
42	42	(7) "Non-mandatory payment" means an amount other than
43	43	a mandatory payment that is paid by a consumer or an obligor to a
44	44	provider. The term includes:
45	45	(A) a fee imposed by a provider for delivery or
46	46	expedited delivery of proceeds to a consumer, as long as the
47	47	provider offers the consumer at least one option to receive
48	48	proceeds at no cost to the consumer;
49	49	(B) an amount paid by an obligor to a provider on
50	50	a consumer's behalf that entitles the consumer to receive proceeds
51	51	at no cost to the consumer;
52	52	(C) a subscription or membership fee imposed by a
53	53	provider for a group of services that include earned wage access
54	54	services, as long as the provider offers the consumer at least one
55	55	option to receive proceeds at no cost to the consumer; and
56	56	(D) a tip or gratuity paid by a consumer to a
57	57	provider, as long as the provider offers the consumer at least one
58	58	option to receive proceeds at no cost to the consumer.
59	59	(8) "Nonrecourse," with respect to a repayment of
60	60	proceeds or other amounts owed, means that a provider cannot compel
61	61	or attempt to compel repayment by a consumer of outstanding
62	62	proceeds or non-mandatory payments owed by the consumer to the
63	63	provider through:
64	64	(A) a civil suit filed against the consumer;
65	65	(B) use of a third-party to pursue collection of
66	66	outstanding proceeds or non-mandatory payments on the provider's
67	67	behalf; or
68	68	(C) sale of outstanding amounts owed to a
69	69	third-party collector or debt buyer.
70	70	(9) "Obligor" means an employer or other person who is
71	71	contractually or legally obligated to pay a consumer earned but
72	72	unpaid income on an hourly, project-based, piecework, or other
73	73	basis, including to a consumer who is acting as an independent
74	74	contractor. The term does not include a service provider of an
75	75	obligor or another third party that has an obligation to make any
76	76	payment to a consumer based solely on the consumer's agency
77	77	relationship with the obligor.
78	78	(10) "Outstanding proceeds" means proceeds paid by an
79	79	earned wage access services provider to a consumer that have not
80	80	been repaid to the provider.
81	81	(11) "Person" means a corporation, partnership,
82	82	cooperative, association, or other business entity.
83	83	(12) "Proceeds" means a payment of funds by an earned
84	84	wage access services provider to a consumer that is based on earned
85	85	but unpaid income.
86	86	Sec. 398.002. PERSONS NOT COVERED. (a) This chapter does
87	87	not apply to:
88	88	(1) a person:
89	89	(A) authorized to make a loan or grant an
90	90	extension of consumer credit under the laws of this state or the
91	91	United States; and
92	92	(B) subject to regulation and supervision by this
93	93	state or the United States;
94	94	(2) a bank or savings association the deposits or
95	95	accounts of which are eligible to be insured by the Federal Deposit
96	96	Insurance Corporation or a subsidiary of the bank or association;
97	97	(3) a credit union doing business in this state;
98	98	(4) a nonprofit organization exempt from taxation
99	99	under Section 501(c)(3), Internal Revenue Code of 1986; or
100	100	(5) a consumer reporting agency.
101	101	(b) In an action under this chapter, a person claiming an
102	102	exemption under this section has the burden of proving the
103	103	exemption.
104	104	Sec. 398.003. APPLICABILITY OF OTHER LAW. A person
105	105	registered under this chapter is not subject to the provisions of
106	106	Title 4 of this code with respect to its earned wage access
107	107	services.
108	108	Sec. 398.004. WAIVER VOID. A waiver of a provision of this
109	109	chapter by a consumer is void.
110	110	SUBCHAPTER B. REGISTRATION AND DISCLOSURE STATEMENTS
111	111	Sec. 398.051. REGISTRATION STATEMENT. (a) Before
112	112	conducting business in this state, an earned wage access services
113	113	provider shall register with the secretary of state by filing a
114	114	statement that:
115	115	(1) contains the name and address of:
116	116	(A) the provider; and
117	117	(B) each person who directly or indirectly owns
118	118	or controls at least 10 percent of the outstanding shares of stock
119	119	in the provider; and
120	120	(2) fully discloses any litigation or unresolved
121	121	complaint relating to the operation of the provider filed with a
122	122	governmental authority of this state or contains a notarized
123	123	statement that there has been no litigation or unresolved complaint
124	124	of that type.
125	125	(b) The provider shall keep a copy of the registration
126	126	statement in its files.
127	127	(c) The secretary of state may not require a provider to
128	128	provide information other than information contained in the
129	129	registration statement.
130	130	(d) A registration statement expires on the first
131	131	anniversary of its date of issuance. A registered provider may
132	132	renew a registration statement by filing a renewal application, in
133	133	the form prescribed by the secretary of state, and paying the
134	134	renewal fee.
135	135	Sec. 398.052. UPDATE OF REGISTRATION STATEMENT. An earned
136	136	wage access services provider shall update information contained in
137	137	the registration statement not later than the 90th day after the
138	138	date on which the information changes.
139	139	Sec. 398.053. INSPECTION OF REGISTRATION STATEMENT. An
140	140	earned wage access services provider shall allow a consumer to
141	141	inspect the registration statement on request.
142	142	Sec. 398.054. FILING FEE. The secretary of state may charge
143	143	an earned wage access services provider a reasonable fee to cover
144	144	the cost of filing a registration statement or renewal application
145	145	in an amount not to exceed $100.
146	146	Sec. 398.055. DISCLOSURE STATEMENT. Before executing a
147	147	contract with a consumer for the provision of earned wage access
148	148	services, an earned wage access services provider shall provide the
149	149	consumer with a disclosure that:
150	150	(1) may be in written or electronic form;
151	151	(2) may be included as part of the contract to provide
152	152	earned wage access services; and
153	153	(3) contains:
154	154	(A) the terms of the earned wage access services
155	155	offered by the provider, including a description of any
156	156	non-mandatory payments that may be directly imposed by the provider
157	157	in connection with the provision of earned wage access services;
158	158	(B) a statement that the commissioner has
159	159	oversight authority over the earned wage access services performed
160	160	by the provider and includes a telephone number and an Internet
161	161	website for submission of consumer complaints to the commissioner
162	162	regarding the provider's earned wage access services;
163	163	(C) an explanation of the consumer's right to
164	164	proceed against the surety bond or account obtained under
165	165	Subchapter E; and
166	166	(D) the name and address of the surety company
167	167	that issued the surety bond or the name and address of the
168	168	depository and the trustee and the account number of the surety
169	169	account, as appropriate.
170	170	Sec. 398.056. COPY OF DISCLOSURE STATEMENT. An earned wage
171	171	access services provider shall keep in its files a copy of the
172	172	disclosure statement required under Section 398.055 that includes
173	173	consumer's written or digital signatures acknowledging receipt of
174	174	the disclosure statement until the second anniversary of the date
175	175	on which the provider provides the disclosure.
176	176	SUBCHAPTER C. CONTRACT FOR SERVICES
177	177	Sec. 398.101. FORM AND TERMS OF CONTRACT. (a) Each
178	178	contract for the provision of earned wage access services to a
179	179	consumer by a provider may be in writing or electronic form and
180	180	must:
181	181	(1) be dated;
182	182	(2) include the written or digital signature of the
183	183	consumer; and
184	184	(3) be written in language intended to be easily
185	185	understood by a layperson.
186	186	(b) Each contract must disclose that:
187	187	(1) proceeds will be provided to the consumer on a
188	188	nonrecourse basis;
189	189	(2) non-mandatory payment obligations will be treated
190	190	as nonrecourse payment obligations;
191	191	(3) proceeds will be provided to the consumer using a
192	192	method agreed to by the consumer and the provider;
193	193	(4) in any case in which a provider seeks repayment of
194	194	proceeds from the consumer, the provider will inform the consumer
195	195	when the provider will first attempt to seek the repayment of
196	196	proceeds from the consumer;
197	197	(5) the provider will comply with any applicable rules
198	198	for use of an automated clearinghouse transaction if the provider
199	199	attempts to seek repayment of proceeds from a consumer's depository
200	200	institution; and
201	201	(6) the consumer may cancel the contract at any time
202	202	without financial penalty.
203	203	Sec. 398.102. ISSUANCE OF CONTRACT. An earned wage access
204	204	services provider shall make available to the consumer a copy of the
205	205	completed contract, when receipt of the document is acknowledged by
206	206	the consumer.
207	207	SUBCHAPTER D. PROHIBITIONS
208	208	Sec. 398.151. PROHIBITED ACTS. (a) An earned wage access
209	209	services provider may not, in connection with providing earned wage
210	210	access services to consumers:
211	211	(1) impose a mandatory payment on a consumer that
212	212	directly relates to the provision of earned wage access services;
213	213	(2) make the amount of proceeds a consumer is eligible
214	214	to request or the frequency with which the provider will provide
215	215	proceeds to the consumer contingent on:
216	216	(A) whether the consumer makes any non-mandatory
217	217	payments to the provider; or
218	218	(B) the size of any non-mandatory payments a
219	219	consumer may make to the provider in connection with the provision
220	220	of earned wage access services;
221	221	(3) charge a late fee, interest, or other penalty or
222	222	charge for failure to pay outstanding proceeds;
223	223	(4) charge a fee or any other charge in connection with
224	224	deferring the collection of any outstanding proceeds beyond the
225	225	original scheduled repayment date;
226	226	(5) solicit a consumer to delay repayment of
227	227	outstanding proceeds for the purpose of increasing the total
228	228	non-mandatory payments the provider may collect;
229	229	(6) report a consumer's payment or failed repayment of
230	230	outstanding proceeds to a consumer credit reporting agency or a
231	231	debt collector;
232	232	(7) base eligibility for earned wage access services
233	233	on a consumer's credit score; or
234	234	(8) provide, sell, or otherwise disclose to any
235	235	third-party, including an obligor, any nonpublic personal
236	236	information collected from or about a consumer, except as necessary
237	237	to provide earned wage access services to the consumer or with the
238	238	consumer's written consent.
239	239	(b) The prohibition described by Subsection (a)(2) may not
240	240	be construed to prohibit a non-mandatory payment equal to a
241	241	percentage of proceeds provided.
242	242	(c) An earned wage access services provider is not precluded
243	243	from using any of the methods described by Section 398.001(8) to
244	244	compel or attempt to compel repayment of outstanding amounts
245	245	incurred by a consumer through fraudulent means.
246	246	Sec. 398.152. FALSE OR MISLEADING REPRESENTATION OR
247	247	STATEMENT. An earned wage access services provider may not make or
248	248	use a false or misleading representation or statement to a consumer
249	249	during the offer or provision of earned wage access services.
250	250	Sec. 398.153. FRAUDULENT OR DECEPTIVE CONDUCT. An earned
251	251	wage access services provider may not directly or indirectly engage
252	252	in a fraudulent or deceptive act, practice, or course of business
253	253	relating to the offer or provision of earned wage access services.
254	254	Sec. 398.154. ADVERTISING SERVICES WITHOUT FILING
255	255	REGISTRATION STATEMENT PROHIBITED. An earned wage access services
256	256	provider may not advertise its services if the provider has not
257	257	filed the registration statement required by Subchapter B.
258	258	Sec. 398.155. WAIVER OF CONSUMER RIGHT PROHIBITED. An
259	259	earned wage access services provider may not attempt to cause a
260	260	consumer to waive a right under this chapter.
261	261	SUBCHAPTER E. SURETY BOND OR ACCOUNT
262	262	Sec. 398.201. SURETY BOND. (a) The surety bond of an
263	263	earned wage access services provider must be issued by a surety
264	264	company authorized to do business in this state.
265	265	(b) A copy of the bond shall be filed with the secretary of
266	266	state.
267	267	Sec. 398.202. SURETY ACCOUNT. (a) The surety account of an
268	268	earned wage access services provider must be held in trust at a
269	269	federally insured bank or savings association located in this
270	270	state.
271	271	(b) The name of the depository and the trustee and the
272	272	account number of the surety account must be filed with the
273	273	secretary of state.
274	274	Sec. 398.203. AMOUNT OF SURETY BOND OR ACCOUNT. The surety
275	275	bond or account of an earned wage access services provider must be
276	276	in the amount of $10,000.
277	277	Sec. 398.204. BENEFICIARY OF SURETY BOND OR ACCOUNT. The
278	278	surety bond or account of an earned wage access services provider
279	279	must be in favor of:
280	280	(1) this state for the benefit of a person damaged by a
281	281	violation of this chapter; and
282	282	(2) a person damaged by a violation of this chapter.
283	283	Sec. 398.205. CLAIM AGAINST SURETY BOND OR ACCOUNT. (a) A
284	284	person making a claim against a surety bond or account of an earned
285	285	wage access services provider for a violation of this chapter may
286	286	file suit against:
287	287	(1) the provider; and
288	288	(2) the surety or trustee.
289	289	(b) A surety or trustee is liable only for actual damages,
290	290	reasonable attorney's fees, and court costs awarded under Section
291	291	398.253(a).
292	292	(c) The aggregate liability of a surety or trustee for a
293	293	provider's violation of this chapter may not exceed the amount of
294	294	the surety bond or account.
295	295	Sec. 398.206. TERM OF SURETY BOND OR ACCOUNT. The surety
296	296	bond or account of an earned wage access services provider must be
297	297	maintained until the second anniversary of the date on which the
298	298	provider ceases operations in this state.
299	299	Sec. 398.207. PAYMENT OF MONEY IN SURETY ACCOUNT TO CREDIT
300	300	SERVICES ORGANIZATION. (a) A depository may not pay money in a
301	301	surety account to an earned wage access services provider that
302	302	established the account or a representative of the provider unless
303	303	the provider or the provider's representative presents a statement
304	304	issued by the secretary of state indicating that the requirement of
305	305	Section 398.206 has been satisfied in relation to the account.
306	306	(b) The secretary of state may conduct an investigation and
307	307	require information to be submitted as necessary to enforce this
308	308	section.
309	309	SUBCHAPTER F. CRIMINAL PENALTIES AND CIVIL REMEDIES
310	310	Sec. 398.251. CRIMINAL PENALTY. (a) A person commits an
311	311	offense if the person violates this chapter.
312	312	(b) An offense under this chapter is a Class B misdemeanor.
313	313	Sec. 398.252. INJUNCTIVE RELIEF. A district court, on
314	314	application of the attorney general or a consumer, may enjoin a
315	315	violation of this chapter.
316	316	Sec. 398.253. DAMAGES. (a) A consumer injured by a
317	317	violation of this chapter is entitled to recover:
318	318	(1) actual damages in an amount not less than the
319	319	amount the consumer paid the earned wage access services provider;
320	320	(2) reasonable attorney's fees; and
321	321	(3) court costs.
322	322	(b) A consumer who prevails in an action brought under this
323	323	section may also be awarded punitive damages.
324	324	Sec. 398.254. DECEPTIVE TRADE PRACTICE. A violation of
325	325	this chapter is a deceptive trade practice actionable under
326	326	Subchapter E, Chapter 17, Business & Commerce Code.
327	327	Sec. 398.255. STATUTE OF LIMITATIONS. An action under
328	328	Section 398.253 or 398.254 must be brought not later than the fourth
329	329	anniversary of the date on which the contract to which the action
330	330	relates is executed.
331	331	SECTION 3. A person engaging in business as an earned wage
332	332	access services provider on the effective date of this Act must
333	333	register with the secretary of state under Section 398.051, Finance
334	334	Code, as added by this Act, not later than January 1, 2024.
335	335	SECTION 4. Sections 398.055 and 398.101, Finance Code, as
336	336	added by this Act, apply only to a contract for earned wage access
337	337	services entered into on or after the effective date of this Act.
338	338	SECTION 5. This Act takes effect September 1, 2023.