Bill Text: CA SB472 | 2019-2020 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Wage-based, work-based, and income-based advances.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2019-09-06 - Re-referred to Com. on B. & F. pursuant to Assembly Rule 77.2. [SB472 Detail]
Download: California-2019-SB472-Amended.html
Bill Title: Wage-based, work-based, and income-based advances.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2019-09-06 - Re-referred to Com. on B. & F. pursuant to Assembly Rule 77.2. [SB472 Detail]
Download: California-2019-SB472-Amended.html
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Amended
IN
Senate
April 11, 2019 |
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Amended
IN
Senate
March 27, 2019 |
CALIFORNIA LEGISLATURE—
2019–2020 REGULAR SESSION
| Senate Bill | No. 472 |
| Introduced by Senator Caballero |
February 21, 2019 |
An act to add Division 21 (commencing with Section 60000) to the Financial Code, relating to financial institutions.
LEGISLATIVE COUNSEL'S DIGEST
SB 472, as amended, Caballero.
Earned income access service providers.
Existing law provides for licensure and regulation of various financial institutions by the Commissioner of Business Oversight. Existing law, the California Deferred Deposit Transaction Law, provides for the licensure and regulation by the Commissioner of Business Oversight of persons engaged in the business of making or arranging deferred deposit transactions, also known as payday loans, which are transactions whereby a person defers depositing a customer’s personal check until a specific date pursuant to a written agreement for a fee or other charge.
This bill would require an earned income access service provider, as defined, to comply with certain bonding and insurance requirements. The bill would require an earned income access service provider to, among other things, deliver funds to a consumer in a manner mutually agreed upon and
prohibit the provider from charging certain fees. The bill would prohibit delivery of earned but unpaid income from being construed as a credit transaction. This bill would make a person who violates these provisions subject to civil suit and would authorize a person claiming to have sustained damage because of a failure to comply with these provisions to file a claim on specified bonds, deposits, or letters of credit to recover the damages.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
Division 21 (commencing with Section 60000) is added to the Financial Code, to read:DIVISION 21. Earned Income Access Service Providers Act
60000.
It is the intent of the Legislature that this act accomplish all of the following:(a) Protect the interests of consumers in this state who avail themselves of earned income access services.
(b) Provide for the safe, efficient, and orderly conduct of the business of earned income access service providers.
(c) Provide legal certainty to earned income access service providers by establishing a regulatory framework for their lawful conduct in this state.
(d) Maintain public confidence in earned income access
service providers.
60001.
For purposes of this division, the following definitions shall apply:(a) “Delivery” means the delivery of funds to a consumer by an earned income access service provider.
(b) “Consumer” means a natural person.
(c) “Earned income” means moneys that a consumer has represented, and the earned income access service provider has reasonably determined, have accrued to the benefit of that consumer for services rendered to an earned income obligor. “Earned income” includes, but is not limited to, “accrued wages” as defined in Supplement I to Part 1041 of Title 12 of
the Code of Federal Regulations as it read on January 1, 2019.
(d) “Earned but unpaid income” means earned income that has not yet been paid to the consumer by an earned income obligor.
(e) “Earned income access services” means the delivery of funds to a consumer that represent earned but unpaid income.
(f) “Earned income access service provider” means any person that is engaged in the business of delivering earned but unpaid income to a consumer in California.
(g) “Earned income obligor” means either of the following:
(1) An employer.
(2) Another person who is contractually obligated to pay the consumer any sum of money on an hourly, project-based, piecework, or other basis for labor or services provided by the consumer to or on behalf of the other person.
(h) An “earned income obligor” does not include a customer of an earned income obligor or other third party whose obligation to make any payment to a consumer is based solely on the consumer’s agency relationship with the earned income obligor.
60002.
(a) Notwithstanding any law, the delivery of earned but unpaid income to a consumer by an earned income access service provider as set forth in this division shall not be construed as a credit transaction because the funds provided to the consumer are those that the consumer has already earned.(b) The imposition of one or more fees on a consumer who opts to use the services of an earned income access service provider shall not represent a violation of Section 212 of the Labor Code provided that the consumer is informed of the right to receive the full amount of the consumer’s wages, without discount, if the consumer waits until the regular
payday.
60003.
An earned income access service provider shall comply with all of the following requirements when delivering earned but unpaid income to a consumer:(a) An earned income access service provider shall permit a consumer to cancel participation in the earned income access program at any time without incurring a charge for doing so. An earned income access service provider shall provide each consumer with a document, receipt of which the consumer acknowledges, in writing that informs the consumer of the consumer’s rights under the program and includes instructions for how to cancel participation in the program. This document shall be separate from any earned income access services agreement
the consumer is asked to sign, shall be written in a minimum 10-point font size, and shall be written in language intended to be understood by a layperson. Each consumer shall be given the option of receiving a hard copy, or an electronic copy of this document, at a designated address, when enrolling in an earned income access program.
(b) An earned income access service provider shall deliver funds to the consumer via any means mutually agreeable to the consumer and the provider. Fees charged to the consumer by the provider shall not vary based on the manner in which the consumer elects to receive the funds.
(c) Fees charged to the consumer in connection with the provision of earned income access services shall be limited to any of the following but in any case shall not exceed
fourteen dollars ($14) for a monthly pay period or the prorated amount for shorter pay periods:
(1) A periodic charge for participating in the earned income access program or in any benefit or enhancement program that includes an earned income access program.
(2) A charge for funds delivery that is not based on the amount of the delivery.
(3) A combination of the charges described in paragraphs (1) and (2).
(d) An earned income access service provider shall not allow a consumer to receive delivery of earned income more than three separate times during each pay period.
(e) A contract
between an earned income access service provider and an obligor shall not contain a limitation on the number of pay periods during which the consumer may utilize the services of an earned income access service provider.
(f) The amount of the earned income delivery shall not exceed 50 percent of the amount of the consumer’s gross earned but unpaid income as of the date and time of the consumer request.
(g) An earned income access service provider shall provide in its contract with an obligor, a consumer, or both, as applicable, that there shall be no liability on the part of the consumer in connection with the receipt of earned but unpaid income other than payment of participation fees and repayment of funds advanced under an earned income access service agreement or program.
(h) An earned income access service provider shall provide in its contract with an obligor that the obligor shall not charge a consumer, directly or indirectly, for participating in an earned income access program.
60004.
(a) An earned income access service provider may offer earned income access services through either or both of the following:(1) A contractual arrangement with an earned income obligor in which the provider delivers earned income to the consumer prior to the date on which the obligor is scheduled to pay the consumer, and the obligor deducts the amount of the earned income delivered by the provider to the consumer from the consumer’s next paycheck. If earned income access services are offered in this manner, the obligor shall not directly pass on to the consumer the cost
of offering the services but may offer the earned income access services as part of an optional service package for which a fee is charged by the earned income access service provider.
(2) A contractual arrangement with a consumer that permits the earned income access service provider to deliver earned income directly to the consumer and to be repaid directly by the consumer via a means mutually acceptable to the consumer and provider.
(b) An obligor that is notified by an earned income access service provider that it has entered into an arrangement of this nature with a consumer may, with the consumer’s consent, share information with the earned income access service provider pertaining to the obligor’s accrued and expected obligations to the
consumer.
60005.
A person who engages in business as an earned income access service provider shall at all times comply with all of the following:(a) Maintain a minimum net worth, excluding assets that exist to satisfy the requirements of subdivision (b) or (c), of at least two hundred fifty thousand dollars ($250,000) as determined by generally accepted accounting standards.
(b) Maintain a fidelity bond or bonds in an amount not less than two hundred fifty thousand dollars ($250,000) executed by an insurer authorized to do business in this state or an eligible surplus line insurer pursuant to Section 1765.1 of the Insurance Code. In the
alternative, a provider may deposit an amount of cash or securities or irrevocable letters of credit in an amount not less than two hundred fifty thousand dollars ($250,000) in an insured account at a depository institution of the provider’s choice. Interest on that amount shall accrue to the provider.
(c) Maintain a policy of errors and omissions insurance in an amount not less than two hundred fifty thousand dollars ($250,000), executed by an insurer authorized to do business in this state or an eligible surplus line insurer pursuant to Section 1765.1 of the Insurance Code. In the alternative, a provider may deposit an amount of cash or securities or irrevocable letters of credit in an amount not less than two hundred fifty thousand dollars ($250,000) in an insured account at a depository institution of the provider’s choice. Interest on that
amount shall accrue to the provider.
(d) The requirements of subdivisions (a), (b), and (c) are independent of one another, and an action taken to satisfy one of those subdivisions shall not be construed to satisfy the requirements of any other requirement of this section.
60006.
A person claiming to have sustained damage from an earned income access service provider’s violation of this division may file a claim on the bonds, deposits, or letters of credit described in Section 60005 to recover the damages subject to the terms and conditions of the bonds, deposits, or letters of credit.60007.
A person engaged in business as an earned income access service provider shall not do any of the following:(a) Require a consumer to do any of the following:
(1) Open or maintain a demand deposit account at a particular depository institution.
(2) Close a demand deposit account at a particular depository institution.
(3) Require Open or maintain a
direct wage deposit account at any depository institution.
(4) Sign up for any other product or service that entails an additional cost as a condition of offering earned income access services to a consumer.
(b) Attempt to collect, either directly or through a third party, or sell or transfer to a third party the right to collect, funds from a consumer other than the fees imposed pursuant to subdivision (c) of Section 60003 or funds advanced to the consumer under a transaction made pursuant to Section 60004.
(c) Report to a consumer reporting agency concerning the inability of an earned income access service provider to debit a consumer’s deposit account in the amount legally due to the earned income access service
provider.
(d) Provide in a contract with either an obligor or a consumer that there may be liability on the part of the consumer arising out of a delivery of earned income other than for payment of participation fees and repayment of funds advanced to the consumer.
(e) Initiate a payment transfer from a consumer’s account after the provider has attempted to initiate three consecutive failed payment transfers from that account. For purposes of this subdivision, a payment transfer is deemed to have failed when it results in a return indicating that the consumer’s account lacks sufficient funds. Notwithstanding this prohibition, a provider may initiate additional payment transfers from a consumer’s account after three consecutive failed payment transfers if the additional payment
transfers are authorized by the consumer following the failed attempts.
(f) Initiate any draft against a consumer’s deposit account or other asset account without first notifying the consumer, at least two days before the date of each draft, of the amount due and the date the draft will be made. An earned income access service provider may notify the consumer by any means mutually acceptable to the consumer and the earned income access service provider.
(g) Make any material misrepresentations concerning any earned income access service that are intended to mislead.
(h) Pursue a continued or flagrant course of misrepresentation or make false statements through advertising or other courses of action.
(i) Fail, within a reasonable time, to account for any moneys belonging to others that may be in the possession of, or under control of, the provider.
(j) Engage in conduct constituting fraudulent or dishonest dealings.
(k) Commit a crime involving fraud, misrepresentation, deceit, embezzlement, misappropriation of funds, robbery, or theft.
(l) Materially fail to fulfill its contractual duties to a consumer or an obligor, unless that failure is due to circumstances beyond the control of the person engaging in business as an earned income access service provider.
