Regulating earned wage access services, granting rule-making authority, and providing a penalty. (FE)

The bill requires a provider, before providing earned wage access services in this state, to be licensed by the division. This requirement applies even if the provider is not physically located in this state, such as when the provider conducts business by means of a website. However, these provisions do not apply to financial institutions and their affiliates. An applicant for a license must pay a fee to the division, file and maintain a surety bond, and provide specified information to the division.

The bill imposes various requirements on a licensed provider, including requiring a licensed provider to do all of the following:

1. Develop and implement policies and procedures to respond to consumer questions and complaints.

2. Offer to the consumer at least one reasonable option to obtain proceeds at no cost and explain how to elect this option.

3. Before entering into an earned wage access services agreement with a consumer, inform the consumer of his or her rights under the agreement and disclose all fees associated with these services.

4. Inform the consumer of material changes to the terms and conditions of the earned wage access services before implementing them.

5. Allow the consumer to cancel use of the provider's earned wage access services at any time, without incurring a cancellation fee or penalty imposed by the provider.

6. If the provider solicits, charges, or receives tips, gratuities, or other donations (tips) from consumers, disclose in its service contract that tips are voluntary and the provider's services are not contingent on tips and further disclose before each transaction that a tip is voluntary.

7. If the provider will seek repayment of proceeds remitted to the consumer but not yet repaid (outstanding proceeds) or payment of fees or other amounts from a consumer's bank account, including through electronic funds transfer, reimburse the consumer for overdraft or non-sufficient funds fees caused by the provider's attempted payment before the date, or in an amount different from, that disclosed to the consumer.

The bill imposes various limitations on a licensed provider, including prohibiting a licensed provider from doing any of the following:

1. Sharing consumer fees or tips with the consumer's employer.

2. Accepting a consumer's payment of outstanding proceeds, fees, or tips by means of a credit card.

3. Charging a late fee, deferral fee, interest, or other penalty for failure to pay outstanding proceeds, fees, or tips.

4. Reporting to a consumer reporting agency or debt collector information about the consumer's nonpayment to the provider of outstanding proceeds, fees, or tips.

5. Compelling the consumer's payment of outstanding proceeds, fees, or tips through a lawsuit in court, use of a third-party debt collector, or sale of the obligation to a third-party debt collector or debt buyer, unless the consumer acted through fraudulent or other unlawful means.

6. Misleading or deceiving consumers about the voluntary nature of tips or making representations that tips will benefit any specific individual.

7. Advertising, publishing, or broadcasting any statement or representation regarding the provider's earned wage access services that is false, misleading, or deceptive.

The bill specifies that a licensed provider's earned wage access services are not, and do not fall within the scope of current law regulation of, any of the following: 1) a payday loan, or any other form of loan or form of credit or debt; 2) the Wisconsin Consumer Act; 3) money transmission (which current law refers to as a “seller of checks” business); or 4) a violation or noncompliance with state laws governing the sale or assignment of an individual's wages or other compensation earned or accrued but not yet paid. In addition, the bill specifies that fees and tips paid by a consumer to a provider are not considered interest or finance charges.

The bill requires a licensed provider to submit an annual report to the division that includes certain information related to the provider's earned wage access services in this state and to keep certain books and records. The bill gives the division the right to suspend or revoke a provider's license under certain circumstances and provides the division with certain authority to enforce the regulations created in the bill.