Relating to the regulation of earned wage access services; requiring an occupational registration; imposing fees.

89(R) HB 2043 - House Committee Report version - Bill Text

89R20571 PRL-F

By: Lambert

H.B. No. 2043

Substitute the following for H.B. No. 2043:

By: Bumgarner

C.S.H.B. No. 2043

A BILL TO BE ENTITLED

AN ACT

relating to the regulation of earned wage access services;

requiring an occupational registration; imposing fees.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle B, Title 4, Finance Code, is amended by

adding Chapter 355 to read as follows:

CHAPTER 355. EARNED WAGE ACCESS SERVICES

Sec.

355.001.

SHORT TITLE. This chapter shall be known and

may be cited as the "Texas Earned Wage Access Services Act."

Sec. 355.002. DEFINITIONS. In this chapter:

(1)

"Consumer" means an individual who resides in this

state.

(2)

"Consumer-directed wage access services"

means

offering or providing services directly to a consumer based on the

consumer's earned but unpaid income.

(3) "Control" means the power to:

(A)

directly or indirectly vote at least 25

percent or more of the outstanding voting shares or voting

interests of a provider or person in control of a provider;

(B)

elect or appoint a majority of key

individuals; or

(C)

directly or indirectly exercise a

controlling influence over the management or policies of a provider

or person in control of a provider.

(4)

"Earned but unpaid income" means salary, wages,

compensation, or income that:

(A)

a consumer represents, and a provider

reasonably determines, has been earned or has accrued to the

benefit of the consumer in exchange for the consumer's provision of

services to an employer or on the employer's behalf; and

(B)

has not, at the time of the payment of

proceeds, been paid to the consumer by the employer.

(5)

"Earned wage access services" means the business

of providing:

(A) consumer-directed wage access services;

(B) employer-integrated wage access services; or

(C)

both consumer-directed wage access services

and employer-integrated wage access services.

(6)

"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. The term does

not include:

(A)

an entity that offers or provides earned wage

access services and reports to a consumer reporting agency

described by Section 603(p), Fair Credit Reporting Act (15 U.S.C.

Section 1681a(p)), a consumer's payment or nonpayment of:

(i)

outstanding proceeds of the earned wage

access services; or

(ii)

fees, voluntary tips, gratuities, or

other donations in connection with the earned wage access services;

(B)

a service provider, including a payroll

service provider, whose role includes verification of the earned

but unpaid income but who is not contractually obligated to fund

proceeds delivered to a consumer as part of an earned wage access

service; or

(C)

an employer that offers a portion of salary,

wages, or compensation directly to its employees or independent

contractors before the scheduled pay date.

(7)

"Employer" means a person who employs a consumer

or a person who is contractually obligated to pay a consumer earned

but unpaid income on an hourly, project-based, piecework, or other

basis, in exchange for the consumer's provision of services to the

employer or on the employer's behalf, including to a consumer who is

acting as an independent contractor with respect to the employer.

The term does not include a customer of the employer or a person

whose obligation to pay salary, wages, compensation, or other

income to a consumer is not based on the consumer's provision of

services for or on behalf of that person.

(8)

"Employer-integrated wage access services" means

delivering to consumers access to earned but unpaid income that is

based on employment, income, or attendance data obtained directly

or indirectly from an employer.

(9)

"Fee" includes an amount charged by a provider for

expedited delivery or other delivery of proceeds to a consumer and

for a subscription or membership fee charged by a provider for a

bona fide group of services that includes earned wage access

services or an amount paid by an employer to a provider on a

consumer's behalf that entitles the consumer to receive proceeds at

reduced or no cost to the consumer. The term does not include a

voluntary tip, gratuity, or donation paid to the provider.

(10)

"Key individual" means an individual who is

ultimately responsible for establishing or directing policies and

procedures of a provider, including an executive officer, manager,

director, or trustee.

(11)

"Outstanding proceeds" means proceeds remitted

to a consumer by a provider that have not been repaid to that

provider.

(12)

"Proceeds" means a payment to a consumer by a

provider that is based on earned but unpaid income.

Sec.

355.003.

DETERMINATION OF CONSUMER'S RESIDENCE. A

provider may use the mailing address or state of residence provided

by a consumer to determine the consumer's state of residence for

purposes of this chapter.

Sec.

355.004.

APPLICABILITY OF OTHER LAW. A provider is not

considered to be engaging in lending, money transmission, or debt

collection in this state, or in violation of the laws of this state

governing deductions from wages or the purchase, sale, or

assignment of or an order for earned but unpaid income, if that

provider complies with the requirements of Sections 355.008 and

355.009.

Sec.

355.005.

FINANCIAL STATEMENTS. (a) A provider shall,

not later than the 30th business day after the date of a request

from the commissioner, file with the commissioner:

(1)

a financial statement, audited or unaudited, dated

as of the last day of the provider's fiscal year that ended in the

immediately preceding calendar year; and

(2)

any other information as the commissioner may

reasonably require.

(b)

An audited financial statement filed with the

commissioner under Subsection (a)(1) must be prepared:

(1)

in accordance with United States generally

accepted accounting principles; and

(2)

by an independent certified public accountant or

independent public accountant who is satisfactory to the

commissioner.

(c)

An audited financial statement filed with the

commissioner under Subsection (a)(1) must include or be accompanied

by a certificate of opinion of the independent certified public

accountant or independent public accountant that is satisfactory in

form and content to the commissioner. If the certificate of opinion

is qualified, the commissioner may order the provider to take any

action the commissioner finds necessary to enable the independent

certified public accountant or independent public accountant to

remove the qualification.

Sec.

355.006.

REPORTS OF CERTAIN EVENTS. (a) A provider

shall file a report with the commissioner not later than the first

business day after the provider has reason to know of:

(1)

the filing of a petition by or against the provider

under the United States Bankruptcy Code (11 U.S.C. Sections

101-1532) for bankruptcy or reorganization;

(2)

the filing of a petition by or against the provider

for receivership, the commencement of any other judicial or

administrative proceeding for the provider's dissolution or

reorganization, or the making of a general assignment for the

benefit of the provider's creditors; or

(3)

the commencement of a proceeding to revoke or

suspend the provider's license in a state or country in which the

provider engages in or is licensed to engage in earned wage access

services.

(b)

A provider shall file a report with the commissioner not

later than the third business day after the provider has reason to

know of the occurrence of a felony charge or conviction of:

(1) the provider or a key individual; or

(2) a person in control of the provider.

Sec.

355.007.

TIMELY TRANSMISSION. (a) A provider who

receives the proceeds of a paycheck of a consumer for forwarding all

or a portion of the proceeds to the consumer shall forward the

proceeds in accordance with the terms of the agreement between the

provider and the consumer unless the provider has a reasonable

belief or a reasonable basis to believe of the existence of fraud or

that a crime or violation of law, rule, or regulation has occurred,

is occurring, or may occur.

(b)

If a provider fails to forward the proceeds of a

paycheck received for forwarding in accordance with this section,

the provider must respond to inquiries by the consumer with the

reason for the failure unless providing the reason would violate a

local, state, or federal law.

Sec.

355.008.

REQUIREMENTS. (a) Before entering into an

agreement 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;

(3)

uses a font and language intended to be easily

understood by a layperson;

(4)

informs the consumer of the consumer's rights

under the contract; and

(5)

fully and clearly discloses each fee associated

with the earned wage access services.

(b)

An earned wage access services provider must notify a

consumer of any material change to the information provided in a

disclosure statement under Subsection (a) to that consumer, using a

font and language intended to be easily understood by a layperson,

before implementing the particular change with respect to that

consumer.

(c)

At the time that a provider charges a fee or solicits a

tip, gratuity, or donation from a consumer, the provider is

required to offer the consumer at least one reasonable option to

obtain proceeds at no cost to the consumer and clearly explain how

to elect that no-cost option. The no-cost option required by this

subsection must require the provider to initiate transmission of

the proceeds to the consumer not later than one business day after

the date the consumer makes the request.

(d)

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)

use a font and language intended to be easily

understood by a layperson.

(e) Each contract must disclose that:

(1)

fee obligations are subject to the limitations on

compelling or attempting to compel repayment under Section

355.009(a)(5);

(2)

proceeds will be provided to the consumer using a

method agreed to by the consumer and the provider;

(3)

the consumer may cancel at any time the consumer's

participation in the provider's earned wage access services without

incurring a cancellation fee;

(4)

the provider is required to develop and implement

policies and procedures to respond to questions asked and concerns

raised by consumers and to address complaints from consumers in an

expedient manner;

(5)

if a provider seeks repayment of outstanding

proceeds, a fee, or another payment from a consumer, including a

voluntary tip, gratuity, or other donation, from a consumer's

account at a depository institution, including through an

electronic funds transfer, the provider must:

(A)

comply with applicable provisions of and

regulations adopted under the Electronic Fund Transfer Act (15

U.S.C. Section 1693 et seq.); and

(B)

unless the payment sought by the provider was

incurred by the consumer using fraudulent or unlawful means,

reimburse the consumer for the full amount of any overdraft or

non-sufficient funds fees imposed on the consumer by the consumer's

depository institution if the provider attempts to seek any payment

from the consumer on a date before, or in a different amount from,

the date or amount disclosed to the consumer for that payment;

(6)

the provider is required to comply with all local,

state, and federal privacy and information security laws; and

(7)

if the provider solicits, charges, or receives a

tip, gratuity, or donation from the consumer, the provider:

(A)

must clearly and conspicuously disclose to

the consumer immediately before each transaction that the tip,

gratuity, or donation is voluntary and may be set to zero by the

consumer;

(B)

must set the amount of any default tip,

gratuity, or donation at zero;

(C)

must clearly and conspicuously disclose in

the contract and other service contracts with consumers that any

tip, gratuity, or donation from a consumer to a provider is

voluntary and the offering of earned wage access services,

including the amount of proceeds a consumer is eligible to request

and the frequency with which proceeds are provided to a consumer, is

not contingent on whether a consumer pays any tip, gratuity, or

donation or on the size of any tip, gratuity, or donation;

(D)

may not mislead or deceive the consumer

regarding the voluntary nature of the tip, gratuity, or donation;

and

(E)

may not represent that the tip, gratuity, or

donation will benefit a specific individual.

(f)

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.

Sec.

355.009.

PROHIBITIONS. (a)

An earned wage access

services provider may not, in connection with providing earned wage

access services to consumers:

(1)

share with an employer any fees, tips, gratuities,

or other donations that were received from or charged to a consumer

for earned wage access services;

(2)

accept payment of outstanding proceeds, a fee, or

a tip, gratuity, or other donation from a consumer through use of a

credit card or charge card;

(3)

charge a late fee, deferral fee, interest, or

other fee or charge for failure to pay outstanding proceeds, a fee,

or a tip, gratuity, or other donation;

(4)

require a consumer's credit score from a credit

report to determine the consumer's eligibility for earned wage

access services;

(5)

compel or attempt to compel payment by a consumer

of outstanding proceeds, a fee, or a tip, gratuity, or other

donation to the provider by:

(A)

repeatedly attempting to debit a consumer's

depository institution account in violation of applicable payment

system rules;

(B)

making outbound telephone calls to the

consumer;

(C) filing a suit against the consumer;

(D)

using a third party to pursue collection of

the payment from the consumer on the provider's behalf; or

(E)

selling the outstanding amount to a

third-party collector or debt buyer for purposes of collection from

the consumer;

(6)

make or use a false or misleading representation

or statement to a consumer during the offer or provision of earned

wage access services; or

(7)

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.

(b)

An earned wage access services provider is not precluded

from using any of the methods described by Subsection (a)(5) to:

(1)

compel or attempt to compel repayment of

outstanding amounts incurred by a consumer through fraudulent or

unlawful means; or

(2)

pursue an employer for breach of the employer's

contractual obligations to the provider.

Sec.

355.010.

REGISTRATION REQUIRED; FEES. (a) Except as

provided by Subsection (b), a person must hold a registration under

this chapter to engage in the business of offering or providing

earned wage access services in this state.

(b)

The following persons are not required to obtain a

registration under this chapter:

(1)

a bank, credit union, savings bank, or savings and

loan association organized under the laws of the United States or

under the laws of the financial institution's state of domicile; or

(2)

an employer that offers a portion of salary,

wages, or compensation directly to its employees or independent

contractors before the normally scheduled pay date.

(c)

The commissioner may prescribe the form for an

application for registration under this chapter. An application

must contain the information required by the commissioner in order

to determine an applicant's eligibility.

(d)

On the filing of each registration application, the

applicant shall pay to the commissioner an investigation fee and a

registration fee in amounts determined as provided by Section

14.107.

(e)

The commissioner shall approve the application and

issue to the applicant a registration under this chapter if the

commissioner finds that:

(1)

the financial responsibility, experience,

character, and general fitness of the applicant are sufficient to:

(A) command the confidence of the public; and

(B)

warrant the belief that the business will be

operated lawfully and fairly, within the purposes of this chapter;

and

(2)

the applicant has obtained the surety bond

required under Section 355.012.

(f)

If the commissioner does not find the eligibility

requirements of Subsection (e) are met, the commissioner shall

notify the applicant.

(g)

If an applicant requests a hearing on the application

not later than the 30th day after the date of notification under

Subsection (f), the applicant is entitled to a hearing on the denial

of the application.

(h)

A registration issued under this chapter is valid for

the period prescribed by finance commission rule adopted under

Section 14.112.

(i)

In order to maintain an active registration, a

registration holder must pay to the commissioner the following

amount determined as provided by Section 14.107:

(1)

an assessment to cover costs associated with

registration; and

(2) any direct and indirect costs of examination.

(j)

A person who is required to hold a registration under

this chapter must hold a registration for each office at which the

person conducts business under this chapter.

Sec.

355.011.

REGISTRATION SUSPENSION, REVOCATION, OR

REFUSAL TO RENEW. (a)

After notice and opportunity for a hearing,

the commissioner may suspend or revoke a registration if the

commissioner finds that:

(1)

the registration holder failed to pay the

registration fee, an examination fee, an investigation fee, or

another charge imposed by the commissioner under this chapter;

(2)

the registration holder, knowingly or without the

exercise of due care, violated this chapter or a rule adopted or

order issued under this chapter; or

(3)

a fact or condition exists that, if it had existed

or had been known to exist at the time of the original application

for the registration, clearly would have justified the

commissioner's denial of the application.

(b)

The commissioner may refuse to renew the registration of

a person who fails to comply with an order issued by the

commissioner to enforce this chapter.

Sec.

355.012.

SURETY BOND. (a) A provider must maintain a

surety bond in the amount of $200,000.

(b)

The surety bond must be in favor of this state for the

use of this state and the use of a person damaged by a violation of

this chapter.

(c)

The surety bond must be issued by a surety company

qualified to do business as a surety in this state.

(d)

The aggregate liability of a surety to all persons

damaged by the registration holder's violation of this chapter may

not exceed the amount of the bond.

Sec.

355.013.

EXAMINATION OF PROVIDERS; ACCESS TO RECORDS.

(a) The commissioner or the commissioner's representative shall,

at the times the commissioner considers necessary:

(1)

examine each place of business of each provider;

and

(2)

investigate the provider's transactions and

records.

(b) A provider shall:

(1)

give the commissioner or the commissioner's

representative free access to the provider's place of business and

records; and

(2)

allow the commissioner or the commissioner's

representative to make a copy of a record that may be investigated

under Subsection (a)(2).

Sec.

355.014.

PROVIDER'S RECORDS. (a) A provider shall

maintain a record of each transaction conducted under this chapter

as is necessary to enable the commissioner to determine whether the

provider is complying with this chapter.

(b) A provider shall keep the record until the later of:

(1)

the fourth anniversary of the date of the contract

for earned wage access services; or

(2)

the second anniversary of the date on which the

final entry is made in the record.

Sec.

355.015.

ANNUAL REPORT. (a) Each year, a provider

shall file with the commissioner a report that contains relevant

information required by the commissioner concerning the provider's

business in this state during the preceding calendar year.

(b) A report under this section must be:

(1) in the form prescribed by the commissioner; and

(2)

filed not later than the deadline set by the

commissioner.

(c) A report under this section is confidential.

Sec.

355.016.

ADOPTION OF RULES. (a) The finance

commission may adopt rules to enforce this chapter.

(b)

The commissioner shall recommend proposed rules to the

finance commission.

SECTION 2. Section 411.095(a), Government Code, is amended

to read as follows:

(a) The consumer credit commissioner is entitled to obtain

criminal history record information as provided by

Subsection (a-1) that relates to a person who is:

(1) an applicant for or holder of a license or

registration under Chapter 180, 342, 347, 348, 351, 353,
355,
371,

393, or 394, Finance Code;

(2) an employee of or volunteer with the Office of

Consumer Credit Commissioner;

(3) an applicant for employment with the Office of

Consumer Credit Commissioner;

(4) a contractor or subcontractor of the Office of

Consumer Credit Commissioner; or

(5) an officer, director, owner, or employee of a

person described by Subdivision (1) or another person having a

substantial relationship with that person under Chapter 180, 342,

347, 348, 351, 353,
355,
371, 393, or 394, Finance Code.

SECTION 3. A person engaging in business as an earned wage

access services provider on the effective date of this Act must

obtain a registration in accordance with Chapter 355, Finance Code,

as added by this Act, not later than January 1, 2026.

SECTION 4. Sections 355.008 and 355.009, 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, 2025.