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.