AB574: Bill Text

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.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

AB574,,4 The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB574,1 Section 1. 73.0301 (1) (d) 6. of the statutes is amended to read:

AB574,,6 73.0301 (1) (d) 6. A license or certificate of registration issued by the department of financial institutions, or a division of it, under ss. 138.09, 138.12, 138.14, 202.12 to 202.14, 202.22, 203.03, 217.06, 218.0101 to 218.0163, 218.02, 218.04, 218.05, 224.72, 224.725, 224.93 or under subch. IV of ch. 551.

AB574,2 Section 2. 108.227 (1) (e) 6. of the statutes is amended to read:

AB574,,8 108.227 (1) (e) 6. A license or certificate of registration issued by the department of financial institutions, or a division of it, under ss. 138.09, 138.12, 138.14, 202.12 to 202.14, 202.22, 203.03, 217.06, 218.0101 to 218.0163, 218.02, 218.04, 218.05, 224.72, 224.725, 224.93 or under subch. IV of ch. 551.

AB574,3 Section 3. 138.09 (1a) (c) of the statutes is created to read:

AB574,,10 138.09 (1a) (c) Providers of earned wage access services required to be licensed under s. 203.03 (1).

AB574,4 Section 4. 138.14 (3) of the statutes is amended to read:

AB574,,12 138.14 (3) Exemptions. This section does not apply to banks, savings banks, savings and loan associations, trust companies, credit unions, or any of their affiliates or to providers of earned wage access services required to be licensed under s. 203.03 (1).

AB574,5 Section 5. Chapter 203 of the statutes is created to read:

AB574,,15 CHAPTER 203 EARNED WAGE ACCESS SERVICES

AB574,,16 203.01 Definitions. In this chapter:

AB574,,17 (1) “Business entity” means any corporation, limited liability company, partnership, association, or other commercial entity.

AB574,,18 (2) “Consumer” means an individual who resides in this state.

AB574,,19 (3) “Consumer-directed wage access services” means the business of delivering to consumers access to earned but unpaid income that is based on the consumer’s representations and the provider’s reasonable determination of the consumer’s earned but unpaid income.

AB574,,20 (4) “Division” means the division of banking.

AB574,,21 (5) “Earned but unpaid income” means salary, wages, compensation, or other income that a consumer or an employer has represented, and that a provider has reasonably determined, has been earned or accrued to the benefit of the consumer in exchange for the consumer’s provision of services to the employer or on behalf of the employer, including on an hourly, project-based, piecework, or other basis and including circumstances in which the consumer is acting as an independent contractor of the employer, but has not, at the time of the payment of proceeds, been paid to the consumer by the employer.

AB574,,22 (6) “Earned wage access service” means the business of providing consumer-directed wage access services or employer-integrated wage access services, or both.

AB574,,23 (7) (a) Except as provided in par. (b), “employer” means any of the following:

AB574,,24 1. A person who employs a consumer.

AB574,,25 2. Any other person who is contractually obligated to pay a consumer earned but unpaid income in exchange for the consumer’s provision of services to the employer or on behalf of the employer including on an hourly, project-based, piecework, or other basis and including circumstances in which the consumer is acting as an independent contractor with respect to the employer.

AB574,,26 (b) “Employer” does not include any of the following:

AB574,,27 1. A customer of an employer.

AB574,,28 2. Any other person whose obligation to make a payment of salary, wages, compensation, or other income to a consumer is not based on the provision of services by that consumer for or on behalf of the person.

AB574,,29 (8) “Employer-integrated wage access services” means the business of 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.

AB574,,30 (9) (a) Except as provided in par. (b), “fee” includes any of the following:

AB574,,31 1. A fee imposed by a provider for delivery or expedited delivery of proceeds to a consumer.

AB574,,32 2. A subscription or membership fee imposed by a provider for a bona fide group of services that include earned wage access services.

AB574,,33 (b) “Fee” does not include a voluntary tip, gratuity, or other donation.

AB574,,34 (10) “Licensee” means a business entity that is licensed by the division under s. 203.03 (1) as an earned wage access services provider.

AB574,,35 (11) “Nationwide mortgage licensing system and registry” has the meaning given in 12 USC 5102 (6).

AB574,,36 (12) “Outstanding proceeds” means proceeds remitted to a consumer by a provider that have not yet been repaid to the provider.

AB574,,37 (13) “Proceeds” means a payment in U.S. dollars to a consumer by a provider that is based on earned but unpaid income.

AB574,,38 (14) (a) Except as provided in par. (b), “provider” means a business entity that is in the business of providing earned wage access services to consumers.

AB574,,39 (b) “Provider” does not include any of the following:

AB574,,40 1. A service provider, such as a payroll service provider, whose role may include verifying the available earnings but that is not contractually obligated to fund proceeds delivered as part of an earned wage access service.

AB574,,41 2. An employer that offers a portion of salary, wages, or compensation directly to its employees or independent contractors prior to the normally scheduled pay date.

AB574,,42 203.02 Powers of the division. (1) The division may issue any general or special order in execution of or supplementary to this chapter.

AB574,,43 (2) The division may promulgate such rules as it considers necessary for the administration of this chapter.

AB574,,44 (3) The division has the same power to conduct hearings, take testimony, and secure evidence as is provided in ss. 217.17 and 217.18.

AB574,,45 (4) The division for the purpose of discovering violations of this chapter may investigate the business of a licensee that is transacted under this chapter and shall investigate convictions reported to the division by any district attorney for violation by a provider of this chapter. The place of business, if any, books of account, papers, records, safes, and vaults of a licensee shall be open to inspection and examination by the division for the purpose of such investigation, and the division may examine under oath all persons whose testimony the division may require relative to such investigation.

AB574,,46 (5) The cost of any investigation, examination, or hearing, including witness fees or any other expenses, conducted by the division under this chapter involving a provider shall be paid by the provider within 30 days after demand therefor by the division, and the state may maintain an action for the recovery of such costs and expenses.

AB574,,47 (6) Actual costs incurred by the division to examine books and records maintained outside this state shall be paid by the provider.

AB574,,48 203.03 Licensure. (1) (a) Subject to par. (b), a provider, including a provider that is not physically located in this state, may not provide earned wage access services in this state unless the provider has been issued a license by the division.

AB574,,49 (b) This section does not apply to banks, savings banks, savings and loan associations, trust companies, credit unions, or any of their affiliates.

AB574,,50 (2) A provider required to be licensed under sub. (1) shall apply to the division for a license on a form and in the manner prescribed by the division. The application shall include all of the following information:

AB574,,51 (a) The name of the provider.

AB574,,52 (b) The name under which the provider transacts business, if different from par. (a).

AB574,,53 (c) The address of the provider’s principal office, which may be outside this state.

AB574,,54 (d) The addresses of all of the provider’s offices or retail stores, if any, in this state.

AB574,,55 (e) If the provider provides earned wage access services at a location that is not an office or retail store in this state, a brief description of the manner in which the provider provides earned wage access services.

AB574,,56 (f) The address of the provider’s designated agent upon whom service of process may be made in this state.

AB574,,57 (g) The provider’s federal employer identification number.

AB574,,58 (h) Any other similar information the division requires to administer this chapter.

AB574,,59 (3) In addition to the application under sub. (2), each licensee shall register with, and maintain a valid unique identifier issued by, the nationwide mortgage licensing system and registry.

AB574,,60 (4) Each provider required to be licensed under sub. (1) shall update any information provided in its license application within 15 business days after a material change in that information.

AB574,,61 (5) A provider that submits an application for a license under sub. (2) shall pay a nonrefundable fee to the division determined in accordance with rates set by the division. In setting the rates, the division shall determine the amount of fees needed to provide sufficient funds for the division to meet the budget requirements of administering and enforcing this chapter in each fiscal year.

AB574,,62 (6) (a) A provider required to be licensed under sub. (1) shall file with the division, and maintain in force, a surety bond that is issued by a surety company admitted to do business in this state that meets all of the following requirements:

AB574,,63 1. The bond is in an amount equal to $25,000.

AB574,,64 2. The bond is in favor of the state for the benefit of any person that is damaged by a violation of this chapter.

AB574,,65 3. The bond is in favor of any person that is damaged by a violation of this chapter.

AB574,,66 (b) A person claiming against a bond described under this subsection for a violation of this chapter may maintain an action at law against the provider that obtained the bond and against the surety that issued the bond. The surety is liable only for actual damages and not for punitive damages. The aggregate liability of the surety to all persons damaged by a provider’s violation of this chapter does not exceed the amount of the bond.

AB574,,67 (7) (a) In this subsection:

AB574,,68 1. “Applicant” means a provider that has submitted an application for a license under sub. (2).

AB574,,69 2. “Director” means a member of the applicant’s or licensee’s board of directors.

AB574,,70 3. Except in subd. 2., “member” means a person that has the right to receive upon dissolution, or has contributed, 10 percent or more of the capital of an applicant or licensee that is organized as a limited liability company or association.

AB574,,71 4. “Officer” means a person who participates or has authority to participate, other than in the capacity of a director, in major policymaking functions of an applicant or licensee, whether or not the person has an official title. “Officer” includes the chief executive officer, chief financial officer, chief operations officer, chief legal officer, chief credit officer, chief compliance officer, each executive vice president or senior vice president, and any other person meeting the standard under this subdivision.

AB574,,72 5. “Partner” means a person that has the right to receive upon dissolution, or has contributed, 10 percent or more of the capital of an applicant or licensee that is organized as a partnership.

AB574,,73 (b) Upon the filing of an application under sub. (2) and the payment of the fee required under sub. (5) by a provider, the division shall investigate the relevant facts. If the division finds that the character and general fitness and the financial responsibility of the provider, and the provider’s partners if the provider is a partnership, the provider’s members if the provider is a limited liability company or association, and the provider’s officers and directors if the provider is a corporation, warrant the belief that the provider’s business will be operated in compliance with this chapter, the division shall issue a license to the provider. If the division does not make the finding, the division shall deny the provider’s application.

AB574,,74 (8) The division may not issue a license under sub. (7) to a provider if any of the following applies:

AB574,,75 (a) The provider fails to provide any information required under sub. (2).

AB574,,76 (b) The department of revenue certifies under s. 73.0301 that the provider is liable for delinquent taxes.

AB574,,77 (c) The department of workforce development certifies under s. 108.227 that the provider is liable for delinquent unemployment insurance contributions.

AB574,,78 (9) A provider’s license remains in force and effect until the division suspends or revokes the license in accordance with this chapter or the provider surrenders the license. A licensee shall, on or before each December 10, pay to the division the annual license fee established by the division for the next succeeding calendar year. The division may, by rule, provide for the reinstatement of expired licenses consistent with the standards established by the nationwide mortgage licensing system and registry.

AB574,,79 (10) A provider may not assign a license, except as approved by the division or by operation of law in connection with a merger or conversion authorized under s. 178.1121, 178.1141, 179.1121, 179.1141, 180.1101, 180.1161, 183.1021, or 183.1041 or a similar law of this or another state.

AB574,,80 (11) A provider shall conspicuously post its license at the provider’s physical place of business, or, if the provider conducts business on a website, the provider shall post its license number on the website.

AB574,,81 (12) The division shall keep confidential the information contained in an application for a license under sub. (2) and any information obtained during the division’s investigation under sub. (7), and this information is not subject to public copying or inspection under s. 19.35 (1).

AB574,,82 203.04 Provider requirements; limitations. (1) A provider required to be licensed under s. 203.03 (1) shall do all of the following:

AB574,,83 (a) Develop and implement policies and procedures to respond to questions raised by consumers and address complaints from consumers in an expedient manner.

AB574,,84 (b) Offer to 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.

AB574,,85 (c) Before entering into an agreement with a consumer for the provision of earned wage access services, do all of the following:

AB574,,86 1. Inform the consumer of his or her rights under the agreement.

AB574,,87 2. Fully and clearly disclose all fees associated with the earned wage access services.