Provides for earned income access services offered in this state; defines terms; provides requirements for income access services; outlines reporting requirements and enforcement provisions; makes related provisions.
STATE OF NEW YORK
________________________________________________________________________
8401
2021-2022 Regular Sessions
IN ASSEMBLY
October 20, 2021
___________
Introduced by M. of A. VANEL -- read once and referred to the Committee
on Banks
AN ACT to amend the banking law, in relation to earned income access
services
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The banking law is amended by adding a new article 9-B to
2 read as follows:
3 ARTICLE 9-B
4 INCOME ACCESS SERVICES
5 Section 374-aa. Definitions.
6 374-bb. Requirements for earned income access services offered
7 in this state.
8 374-cc. Enforcement.
9 § 374-aa. Definitions. As used in this article, the following terms
10 shall have the following meanings:
11 1. "Annual percentage rate" means as calculated pursuant to the Truth
12 In Lending Act (TILA), 15 U.S.C. Sec. 1601-1667f methodology.
13 2. "Consumer" means a natural person residing in the state of New
14 York.
15 3. "Earned but unpaid income" means funds that are based on wages or
16 compensation the worker has represented, and that the provider has
17 reasonably determined have been earned but have not, at the time of the
18 remittance, been paid to the worker for work performed for or on behalf
19 of an obligor.
20 4. "Earned income access services" refers to the business of deliver-
21 ing proceeds to consumers that:
22 (a) Requires no mandatory fees to access proceeds;
23 (b) Is non-recourse; and
24 (c) The proceeds accessed are based on earned but unpaid income.
25 5. "Income access provider" or "provider" means:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD09775-03-1
A. 8401 2
1 (a) A person who contracts with an obligor to offer and provide earned
2 income access services to the obligor's employees; or
3 (b) A person who contracts with a consumer to offer and provide earned
4 income access services to that consumer.
5 6. "Non-recourse" means that a provider cannot legally compel repay-
6 ment by a consumer of outstanding proceeds.
7 7. "Notice" means digital communication from the provider to the
8 consumer in a conspicuous manner.
9 8. "Obligor" means an employer or a person, including an independent
10 contractor, who is contractually obligated to pay a consumer any sum of
11 money on an hourly, project-based, piecework, or other basis for labor
12 or services provided by the consumer. Obligor does not include the
13 customer of an obligor or another third-party that has an obligation to
14 make any payment to a consumer based solely on the consumer's agency
15 relationship with the obligor.
16 9. "Payments" or "fees" means a cost to the consumer for earned income
17 access services required by the provider.
18 10. "Proceeds" means the amount of earned but unpaid income that has
19 been remitted to the consumer by a provider. Proceeds shall not be
20 considered a loan.
21 11. "Superintendent" means the superintendent of financial services.
22 12. "Voluntary payments" means a remittance amount of the consumer's
23 choosing paid by the consumer to the provider, that may or may not be
24 considered revenue by the provider, and which shall not be subject to
25 any annual percentage rate calculation.
26 § 374-bb. Requirements for earned income access services offered in
27 this state. Any earned income access provider that offers earned income
28 access services to a consumer in this state shall comply with the
29 following:
30 1. The imposition of a fee on a consumer who opts to use the earned
31 income services of a provider, and/or the reduction or withholding from
32 a consumer's next regularly scheduled wage payment by an obligor of the
33 amount of the proceeds during that pay period and applicable fees
34 imposed in connection with those proceeds, is permitted if:
35 (a) Fees are disclosed in writing to the consumer prior to and at the
36 time of the earned income access transaction;
37 (b) The fee is not mandatory. If a fee is automatically charged, a
38 consumer can have it refunded on request. The refund process must be
39 clearly and conspicuously disclosed in advance to the consumer;
40 (c) The consumer is informed in writing of the right to receive the
41 full amount of such consumer's wage payment, without discount, in the
42 normal course, if such consumer waits until the next regular wage
43 payment date;
44 (d) Fees and voluntary payments for earned income access services
45 cannot exceed 7.5% per transaction per provider on an average basis. The
46 average shall be calculated by totaling all of the revenue for fees and
47 voluntary payments for earned income access services across all consum-
48 ers per quarter per provider, divided by the total amount of proceeds
49 accessed per quarter per provider in New York; and
50 (e) The provider shall conduct a reconciliation on an average basis
51 across all earned income access service consumers at the end of each
52 quarter, and refund any excess fees or voluntary payments received
53 during the quarter within thirty days of the end of the quarter. A
54 provider is not prohibited from conducting reconciliations and issuing
55 refunds more frequently, or instituting alternative processes to comply,
56 provided those processes result in full compliance.
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1 2. The provider shall not rely on a credit report or score in order to
2 determine the consumer's eligibility for proceeds.
3 3. Providers are not exempt from state wage garnishment laws.
4 4. The provider shall not report a consumer's repayment or failed
5 repayment of proceeds to any person other than the consumer, including
6 but not limited to a consumer credit reporting agency or a debt collec-
7 tor.
8 5. No portion of the proceeds may be used to settle or pay down prior
9 proceeds, and no proceeds may roll over or be structured in any way to
10 create any continuing obligation on the part of a consumer.
11 6. If a provider takes custody of a consumer's earned but unpaid
12 income before remitting proceeds to the consumer, the provider shall
13 ensure that the proceeds are fully insured by the Federal Deposit Insur-
14 ance Corporation at the consumer's individual account level.
15 7. Providers shall comply with National Automated Clearing House Asso-
16 ciation rules. When a debit is initiated to a consumer's account for a
17 payment, and the debit is returned for insufficient or uncollected
18 funds, the debit can be reinitiated up to two times within one hundred
19 eighty days after the original entry.
20 8. The provider shall not provide to any third-party, including obli-
21 gors, any non-public personal information except in compliance with
22 applicable federal and state law.
23 9. The provider shall not sell, share, or otherwise disclose personal
24 information, that is solicited or collected from a consumer for the
25 purpose of providing proceeds.
26 10. The provider shall not charge any interest or late fees on
27 proceeds.
28 11. The provider delivers earned but unpaid income to the consumer
29 prior to the next regularly scheduled date on which the obligor is sche-
30 duled to pay earned wages or income to the consumer.
31 12. Any provider offering income access shall obtain a license from
32 the department.
33 13. The superintendent shall prepare and enforce such additional
34 rules, guidelines and requirements applicable to providers licensed
35 under this article that are not inconsistent with the provisions of this
36 article.
37 14. A license granted pursuant to this section shall be issued upon
38 submission of the application and payment of the fee, and shall be valid
39 for three years with two allowable extensions. A license granted pursu-
40 ant to this section shall not be renewed if a licensee has not complied
41 with reporting requirements.
42 15. A provider shall file an annual report with the superintendent
43 that includes:
44 (a) Gross revenue received for the earned income access service. The
45 provider shall distinguish between revenue received from consumers and
46 revenue received from third-parties providing services to consumers;
47 (b) The total number of proceeds transactions;
48 (c) The total dollar amount of proceeds the provider remitted;
49 (d) The total dollar amount of fees and/or voluntary payments the
50 provider received from consumers for earned income access services;
51 (e) The total number of proceeds for which the provider has not
52 received any repayment;
53 (f) The total dollar amount of proceeds for which the provider has not
54 received any repayment;
55 (g) The total number of proceeds wholly uncollected from consumers,
56 and total dollar amount of those proceeds;
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1 (h) The total number of proceeds partially uncollected from consumers,
2 and total dollar amount of those proceeds; and
3 (i) The total number of unique consumers to whom the provider remitted
4 proceeds to as part of an earned income access service.
5 16. Income access services that comply with the provisions of subdivi-
6 sion one of this section shall not be considered a lending activity, and
7 such earned income access payments shall not be considered loans.
8 § 374-cc. Enforcement. 1. If, upon inspection, examination, or inves-
9 tigation, the superintendent has cause to believe that a provider is
10 violating any provision of this article or any rule or order hereunder,
11 the superintendent or his or her designee, may issue a notice to the
12 provider in writing, describing with particularity the basis of the
13 alleged violation.
14 2. A provider shall have sixty days to respond to such notice, to
15 provide further information and/or an explanation.
16 3. If the superintendent determines there is a violation, the super-
17 intendent or his or her designee can issue a correction notice to be
18 remedied in an agreed upon timeframe.
19 § 2. This act shall take effect on the one hundred twentieth day after
20 it shall have become a law. Effective immediately, the addition, amend-
21 ment and/or repeal of any rule or regulation necessary for the implemen-
22 tation of this act on its effective date are authorized to be made and
23 completed on or before such effective date.