Bill Text: CA SB472 | 2019-2020 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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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  Assembly  August 13, 2019

Amended  IN  Senate  May 07, 2019

Amended  IN  Senate  April 11, 2019

Amended  IN  Senate  March 27, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill

No. 472

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Introduced by Senator Caballero

February 21, 2019

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An act to amend Section 22050 of, and to add and repeal Division 21 (commencing with Section 60000) to of, 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.

Existing law, the California Financing Law (CFL), provides for the licensure and regulation of finance lenders and brokers by the Commissioner of Business Oversight. The act authorizes several exemptions from its provisions.

This bill would require an earned income access service provider, as defined, a provider, defined as a person engaged in the business of providing wage-based or work-based advances, as defined, to register with the commissioner and to comply with certain bonding and insurance bonding, insurance, and disclosure requirements. The bill would require an earned income access service a 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 exempt wage-based and work-based advances from specified provisions under state law. law, including the CFL and the California Deferred Deposit Transaction Law. This bill would make a person who violates these provisions subject to civil suit and a civil penalty of up to $2,000 for each violation 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: NOYES   Local Program: NO  

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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Section 22050 of the Financial Code is amended to read:

22050.

 (a) This division does not apply to any person doing business under any law of any state or of the United States relating to banks, trust companies, savings and loan associations, insurance premium finance agencies, credit unions, small business investment companies, community advantage lenders, California business and industrial development corporations when acting under federal law or other state authority, or licensed pawnbrokers when acting under the authority of that license.

“Community advantage lender” means an entity authorized by the United States Small Business Administration to deliver community advantage loans.

(b) This division does not apply to a check casher who holds a valid permit issued pursuant to Section 1789.37 of the Civil Code when acting under the authority of that permit, and shall not apply to a person holding a valid license issued pursuant to Section 23005 of the Financial Code when acting under the authority of that license.

(c) This division does not apply to a college or university making a loan for the purpose of permitting a person to pursue a program or course of study leading to a degree or certificate.

(d) This division does not apply to a broker-dealer acting pursuant to a certificate then in effect and issued pursuant to Section 25211 of the Corporations Code.

(e) This division does not apply to any person who makes five or fewer loans in a 12-month period, these loans are commercial loans as defined in Section 22502, and the loans are incidental to the business of the person relying upon the exemption.

(f) This division does not apply to any public corporation as defined in Section 67510 of the Government Code, any public entity other than the state as defined in Section 811.2 of the Government Code, or any agency of any one or more of the foregoing, when making any loan so long as the public corporation, public entity, or agency of any one or more of the foregoing complies with all applicable federal and state laws and regulations.

(g) This division does not apply to the provision pursuant to Division 21 (commencing with Section 60000) of a wage-based advance or work-based advance, as those terms are defined in Section 60001.

SECTION 1.SEC. 2.

 Division 21 (commencing with Section 60000) is added to the Financial Code, to read:

DIVISION 21. Earned Income Access Service Providers Act Wage-based and Work-based Advances

60000.

 It is the intent of the Legislature that this act accomplish all of the following:

(a) Protect the interests of consumers workers in this state who avail themselves of earned income access services. wage-based and work-based advances.

(b) Provide for the safe, efficient, and orderly conduct of the business of earned income access service providers. providing wage-based and work-based advances.

(c) Provide legal certainty to earned income access service providers providers of wage-based and work-based advances by establishing a regulatory framework for their lawful conduct in this state.

(d) Maintain public confidence in earned income access service providers. providers of wage-based and work-based advances.

(e) Prohibit both employers and persons that retain independent contractors from directly profiting from workers’ use of wage-based and work-based advances.

(f) Establish a registration and reporting system facilitated by the Commissioner of Business Oversight in order to provide the state with information about the number and size of businesses providing wage-based and work-based advances in California and about the evolving nature of their business models.

60001.

 For purposes of this division, the following definitions shall apply:

(a) “Delivery” means the delivery of funds to a consumer worker by an earned income access service a 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” or “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” or “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, including an independent contractor.

(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.

(b) (1) “Obligor” means either of the following:

(A) An employer.

(B) A person, including an independent contractor, who is not an employer but who is contractually obligated to pay the worker a sum of money on an hourly, project-based, piecework, or other basis for labor or services provided by the worker to or on behalf of the other person.

(2) “Obligor” does not include a customer of an obligor or other third party whose obligation to make a payment to a worker is based solely on the worker’s agency relationship with the obligor.

(c) “Payment” means money or other consideration paid by a worker to a provider that is directly related to the provision of wage-based or work-based advances, including, but not limited to, a payment for an expedited transfer.

(d) “Payroll services provider” means a person that assists a business in meeting its payroll administration obligations by collecting information on employees and independent contractors, hours worked, pay rates, deductions, and other payroll-related data from the business and uses that information to prepare paychecks, wage statements, and related reports for the employees employed by or the independent contractors retained by the business.

(e) “Provider” means a person that is engaged in the business of delivering wage-based or work-based advances. “Provider” does not include a payroll services provider, unless that payroll services provider is separately engaged in the business of delivering wage-based or work-based advances.

(f) “Providing wage-based or work-based advances” means the delivery to a worker of a wage-based advance or a work-based advance.

(g) “Wage-based advance” or “work-based advance” means funds advanced to a worker by a provider that are based on wages or compensation the worker has represented have been earned but have not, at the time of the advance, been paid to the worker for work performed for or on behalf of an obligor.

(h) “Worker” means a natural person who has earned wages or compensation in this state as an employee or an independent contractor.

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 under state law because the funds provided to the consumer are those that the consumer has already earned.

60002.

 (a) Division 1.2 (commencing with Section 2000), Division 9 (commencing with Section 22000), and Division 10 (commencing with Section 23000) shall not apply to providing a wage-based advance or a work-based advance to a worker.

(b) The imposition of one or more fees on a consumer requirement that a worker who opts to use the services of an earned income access service a provider shall not represent be a violation of Section 212 of the Labor Code provided to the extent that the consumer worker is informed in writing of the right to receive the full amount of the consumer’s worker’s wages, without discount, if the consumer worker waits until the regular payday.

60003.

 (a) A person shall not engage in the business of providing wage-based or work-based advances without registering as a provider with the commissioner and paying all fees required by the commissioner.

(b) A person may apply to register as a provider under this division by submitting an application to the commissioner that shall be in the form prescribed by the commissioner and shall include all of the following information:

(1) The name, business address, and licensing details, if applicable, of the provider and all physical locations, internet website addresses, and mobile applications from which the provider will engage in activities subject to this division.

(2) The name and contact information for an employee of the provider who is knowledgeable about, and has the authority to execute, a contract governing a business relationship between the provider and any obligors.

(3) The name and contact information for an employee of the provider who has authority over the provider’s policies and procedures for complying with this division.

(4) A description of the provider’s business model used to provide wage-based or work-based advances.

(5) Other information the commissioner determines is necessary or convenient for the purposes of evaluating the ability of an applicant to provide wage-based and work-based advances or to implement this division.

(c) A registrant shall pay to the commissioner an assessment that is calculated based on the registrant’s pro rata share of all costs and expenses reasonably incurred in the administration of this division, as estimated by the commissioner, for the ensuing year and any deficit actually incurred or reasonably anticipated in the administration of the program in the year in which the assessment is made with respect to costs attributable to the registrant. The commissioner shall calculate a registrant’s pro rata share based on the revenue earned by the provider by providing wage-based and work-based advances in this state.

(d) The commissioner shall, by rule, establish the timelines and fees applicable to applicants for original provider registrations and annual renewals.

(e) (1) If a registered provider fails to pay a required fee or assessment by the due date specified by the commissioner, the commissioner may by order summarily suspend or revoke the provider’s registration.

(2) If, after an order is made pursuant to paragraph (1), the person who was the subject of the order files a request for hearing in writing within 30 days with the commissioner, and a hearing is not held within 60 days thereafter, the order is deemed rescinded as of the effective date of the order.

(3) During a period when its registration is revoked or suspended pursuant to paragraph (1), a provider shall not conduct business pursuant to this division except as may be permitted by order of the commissioner. However, the revocation, suspension, or surrender of a registration shall not affect the powers of the commissioner as provided in this division.

60004.

 (a) Upon reasonable notice and opportunity to be heard, the commissioner may deny an application for a registration as a provider only for either of the following reasons:

(1) A false statement of a material fact has been made in the application.

(2) The commissioner has grounds to believe that approval is likely to result in harm to the public.

(b) An application for registration as a provider shall be considered withdrawn if the applicant fails to respond to a written notification of a deficiency in the application within 90 days of the date of the notification.

(c) The commissioner shall, within 60 days after a registrant files a full and complete application for a registration and pays the required assessment, either issue a registration or file a statement of issues prepared in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. If the commissioner fails to issue a registration or file a statement of issues within 60 days from the filing of a full and complete application for a registration with the required fees, the registrant may operate provisionally until the commissioner issues a registration or files a statement of issues.

60003.

An earned income access service

60005.

 A provider shall comply with all of the following requirements when delivering earned but unpaid income to a consumer: requirements:

(a) An earned income access service A provider shall permit a consumer worker to cancel participation in the earned income access a wage-based or work-based advance 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 12-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) Before providing a wage-based or work-based advance, a provider shall provide the worker with a written or electronic document, and the worker shall acknowledge receipt of that document. That document shall meet all of the following requirements:

(1) Inform the worker of the worker’s rights under the program and include instructions for how to cancel participation in the program.

(2) Include a statement that reads as follows:

“If you have questions about the services we perform, you may contact us at [telephone or email address at which the provider may be reached]. If you wish to report a complaint about [Name of provider], you may contact the California Department of Business Oversight at 866-275-2677, or file your complaint online at https://dbo.ca.gov/file-a-complaint/.”

(3) Be separate from any other agreement the worker is asked to sign.

(4) Be written in a minimum 12-point font size, or, if provided electronically, be easily legible.

(5) Be written in language intended to be understood by a layperson.

(6) A worker shall be given the option of receiving a hard copy or an electronic copy of this document at a designated address when entering into an agreement to receive wage-based or work-based advances.

(7) If a worker accesses wage-based or work-based advances via an electronic application, the document shall also be provided with an in-app link to this document.

(b)An earned income access service

(c) A provider shall deliver funds to the consumer worker via any means mutually agreeable to the consumer worker 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.

(d) (1) Except as provided in paragraph (2), a provider shall not require a worker to open an account at a particular depository institution as a condition of providing a wage-based or work-based advance.

(2) A provider may require a worker to open an account at a particular depository institution if neither the worker nor an obligor is required to pay a fee or charge to open or maintain the account.

(e) (1) During an applicable time period, payments, whether required by the provider or at the worker’s option, received by a provider from a worker for wage-based or work-based advances shall not exceed an average of fifteen dollars ($15) per month.

(2) A provider shall not require payments totaling more than fifteen dollars ($15) in any month.

(3) For purposes of paragraph (1), “applicable time period” means either of the following:

(A) The period of time beginning January 1 and ending June 30.

(B) The period of time beginning July 1 and ending December 31.

(f) A provider shall not make more than three wage-based or work-based advances to a worker per week.

(e)

(g) A contract between an earned income access service a provider and an obligor shall not contain a limitation on provision that limits the number of pay periods during which the consumer worker may utilize the services of an earned income access service provider. wage-based or work-based advances.

(f)The amount of the earned income delivery

(h) (1) Except as provided in paragraph (2), a wage-based or work-based advance shall not exceed 50 percent of the amount of the consumer’s gross earned but unpaid income gross amount owed by an obligor to a worker as of the date and time of the consumer worker’s request.

(2) A provider may advance an amount to a worker that is larger than the maximum allowed pursuant to paragraph (1) up to two separate times in an applicable time period, as defined in paragraph (3) of subdivision (e).

(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.

(i) Wage-based advances and work-based advances shall be provided exclusively on a nonrecourse basis. For purposes of this division, nonrecourse basis means all of the following:

(1) Except as provided in paragraph (2) of subdivision (a) of Section 60006, a provider shall not 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 worker in connection with provision of wage-based or work-based advances.

(2) A provider shall not report a worker’s repayment or failed repayment of a wage-based or work-based advance to any person other than the worker, including, but not limited to, the following:

(A) A consumer credit reporting agency, as that term is defined in subdivision (d) of Section 1785.3 of the Civil Code.

(B) An investigating consumer reporting agency, as that term is defined in subdivision (d) of Section 1786.2 of the Civil Code.

(C) A consumer reporting agency, as that term is defined in subdivision (f) of Section 1681a of Title 15 of the United States Code.

(3) A worker shall not be held liable for a failed repayment of a wage-based or work-based advance if the obligor fails to meet its payroll obligation to the provider or to the worker.

(j) (1) If a provider requires a worker to make a payment in exchange for providing a wage-based or work-based advance, that payment shall not vary based on the delivery method that is used to provide a wage-based or work-based advance. For purposes of this paragraph, “delivery method” includes, but is not limited to, an automated clearinghouse or reloadable card.

(2) A payment described in paragraph (1) may vary based on the speed with which the wage-based or work-based advance is provided. A payment required for an expedited transfer shall be reasonable and proportional to the costs directly associated with the expedited transfer.

(3) A payment may either be required by the provider as a condition for providing a wage-based or work-based advance or may be optional and in an amount determined by the worker.

(k) (1) Prior to making a wage-based or work-based advance, a provider shall make a reasonable determination of the wages or compensation that have been earned but have not been paid to a worker at the date and time that worker requests a wage-based or work-based advance.

(2) For purposes of complying with paragraph (1), a provider shall not rely only on the amount of wages or compensation previously paid to the worker by an obligor.

60004.60006.

 (a) An earned income access service A provider may offer earned income access services wage-based or work-based advances through either or both any 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 funds advanced to the worker by the provider during a pay period are deducted from the consumer’s worker’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. All of the following conditions shall apply to a contractual arrangement described in this paragraph.

(A) The obligor shall not directly pass on to the worker the cost of offering the wage-based or work-based advance, but the obligor may offer to the worker an optional service package for which a fee is charged by the provider. The obligor shall not directly profit from the fees paid by workers for the optional service package.

(B) The contract between a provider and obligor may allow the provider to offer services separate from wage-based or work-based advances and to charge workers separately for those services. The obligor shall not directly profit from the charges to workers for those services. However, in no case may a provider condition the availability of a wage-based or work-based advance on a worker’s willingness to purchase a separate service.

(C) The contract shall prohibit the obligor from sharing payments with or receiving other compensation from the provider that is related to a worker’s use of wage-based or work-based advances from the provider.

(2) A contractual arrangement with a consumer worker that permits the earned income access service provider to deliver earned income directly to the consumer and provider to be repaid directly by the consumer worker via a means mutually acceptable to the consumer worker and provider. All of the following conditions shall apply to a contractual arrangement described in this paragraph.

(A) A provider shall notify a worker, at least two days before the date of the payment is due, of the total amount due and the date on which the provider will attempt to collect that amount from the worker. The provider shall make the notification by any means mutually acceptable to the worker and the provider. However, the provider shall not provide that notification solely via a provider’s mobile application, if that application requires a worker to provide a password or similar credentials to access the notification.

(B) A provider that seeks repayment from a worker through the worker’s deposit account shall take best efforts to ensure that there are sufficient funds in the account before attempting to collect from that account.

(C) A provider that seeks repayment from a worker through the worker’s deposit account shall not initiate a payment transfer from the worker’s deposit account after the provider has attempted to initiate three consecutive failed payment transfers from that account. For purposes of this subparagraph, a payment transfer shall be deemed to have failed when it results in a return indicating that the worker’s account lacks sufficient funds.

(D) A provider may contract with a worker to provide services that are separate from and unrelated to wage-based or work-based advances and may charge separately for those separate and unrelated services. However, a provider shall not condition the availability of a wage-based or work-based advance on a worker’s willingness to purchase a separate or unrelated service.

(E) A provider shall not charge a worker a fee for an unsuccessful payment transfer from that worker’s deposit account.

(b) An obligor that is notified by an earned income access service a provider that it has entered into an arrangement of this nature described in subdivision (a) with a consumer worker may, with the consumer’s worker’s consent, share information with the earned income access service provider pertaining to the obligor’s accrued and expected obligations to the consumer. worker.

60005. 60007.

 A person who engages in business as an earned income access service a 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 one-sixth of the total wage-based and work-based advances that it made in the final six calendar months of the immediately preceding calendar year, rounded to the nearest ten thousand dollars ($10,000), or two hundred fifty thousand dollars ($250,000) ($250,000), whichever is greater, 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 one-sixth of the total wage-based and work-based advances that it made in the final six calendar months of the immediately preceding calendar year, rounded to the nearest ten thousand dollars ($10,000), or two hundred fifty thousand dollars ($250,000) ($250,000), whichever is greater, in an insured escrow account at a depository institution of the provider’s choice. Interest on that amount shall accrue to the provider. Funds placed on deposit pursuant to this subdivision may be withdrawn pursuant only to a court order, an order of the commissioner, or as otherwise specified by the commissioner by rule.

(c) Maintain a policy of errors and omissions insurance in an amount not less than one-sixth of the total wage-based and work-based advances that it made in the final six calendar months of the immediately preceding calendar year, rounded to the nearest ten thousand dollars ($10,000), or two hundred fifty thousand dollars ($250,000), whichever is greater, 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 one-sixth of the total wage-based and work-based advances that it made in the final six calendar months of the immediately preceding calendar year, rounded to the nearest ten thousand dollars ($10,000), or two hundred fifty thousand dollars ($250,000) ($250,000), whichever is greater, in an insured escrow account at a depository institution of the provider’s choice. Interest on that amount shall accrue to the provider. Funds placed on deposit pursuant to this subdivision may be withdrawn pursuant only to a court order, an order of the commissioner, or as otherwise specified by the commissioner by rule.

(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.

(e) In any application for registration, and on or before the 15th day of March of each calendar year thereafter, a person who engages in business as a provider shall submit proof satisfactory to the commissioner that the person is satisfying the requirements of subdivisions (a), (b), and (c).

(f) (1) Except as provided in paragraph (2), on an annual basis, a person who engages in business as a provider shall submit to the commissioner a report, certified by an independent public accountant, that contains audited financial statements covering the calendar year or, if the provider has an established fiscal year, then for that fiscal year, within 105 days after the close of the calendar or fiscal year, as applicable. The commissioner may, pursuant to paragraph (2) of subdivision (d) of Section 6254 of the Government Code, choose not to disclose a record submitted pursuant to this section.

(2) Notwithstanding paragraph (1), a person who engages in business as a provider and who has been incorporated for less than three years as of the date on which audited financial statements are required to be submitted pursuant to this section may submit financial statements reviewed by an independent public accountant in lieu of audited financial statements.

(g) A person claiming to have sustained damage from a provider’s violation of this division may file a claim on the bonds, deposits, or letters of credit described in this section to recover the damages subject to the terms and conditions of the bonds, deposits, or letters of credit.

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)Open or maintain a direct wage deposit account at any depository institution.

(4)Sign up for any other product or service.

(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 receives notice of a failed payment transfer 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 a failed payment transfer if the additional payment transfers are authorized by the consumer.

(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.

60008.

 (a) A provider shall develop and implement policies and procedures to both respond to questions raised by workers and to address, in an expedient manner, complaints from workers.

(b) (1) Upon receipt of a complaint from a worker, a provider shall deliver the worker the following statement:

“If you have questions about the services we perform, you may contact us at [telephone or email address at which the provider may be reached]. If you wish to report a complaint about [Name of provider], you may contact the California Department of Business Oversight at 866-275-2677, or file your complaint online at https://dbo.ca.gov/file-a-complaint/.”

(2) The provider shall provide the statement described in paragraph (1) in no smaller than 12-point font size, or, if provided electronically, be easily legible.

(3) For purposes of this subdivision, “receipt of a complaint from a worker” includes receiving a review from a worker that is linked to the provider’s mobile application on a mobile application platform, including, but not limited to, a platform offered by an online or mobile device-accessible application store or comparable medium of which the provider should reasonably be aware.

(c) The commissioner shall implement a system of tracking complaints submitted to the department pursuant to this division and shall make data related to those complaints available upon request.

60009.

 A provider shall file an annual report with the commissioner, on or before the 15th day of March, giving the following information related to wage-based or work-based advances provided to workers in the most recently completed calendar year:

(a) Gross revenue received. For purposes of this subdivision, the provider shall distinguish between revenue received from workers and revenue received from obligors for providing services to their workers.

(b) The total number of wage-based or work-based advances.

(c) The total dollar amount of wage-based or work-based advances.

(d) The total number of workers served.

(e) The average and standard deviation of the number of wage-based or work-based advances per worker.

(f) The number of workers who requested advances described in paragraph (2) of subdivision (i) of Section 60005.

(g) The total number of failed payment transfers as described in subparagraph (C) of paragraph (2) of subdivision (a) of Section 60006.

(h) The total number of workers affected by at least one failed payment transfer as described in subparagraph (C) of paragraph (2) of subdivision (a) of Section 60006.

(i) For workers affected by at least one failed payment transfer as described in subparagraph (C) of paragraph (2) of subdivision (a) of Section 60006, the average and standard deviation of number of failed payment transfers per worker.

(j) Any other information the commissioner may reasonably request in connection with the commissioner’s responsibilities under this division.

60010.

 (a) A provider shall comply with all laws, rules, and orders regarding the duty to safeguard a consumer’s personal information, including, but not limited to, Title 1.81 (commencing with Section 1798.80) of Part 4 of Division 3 of the Civil Code.

(b) A provider shall comply with all requirements of the California Consumer Privacy Act of 2018 (Title 1.81.5 (commencing with Section 1798.100) of Part 4 of Division 3 of the Civil Code).

(c) A provider shall not sell, as defined in subdivision (t) of Section 1798.140 of the Civil Code, share, or otherwise disclose personal information, as defined by subdivision (o) of Section 1798.140 of the Civil Code, that is solicited or collected from a worker for the purpose of providing wage-based or work-based advances pursuant to this division.

(d) A provider shall not utilize geolocation data, however derived, to either present information to a worker regarding the availability of a wage-based or work-based advance or to invite a worker to seek or obtain information regarding a wage-based or work-based advance.

60011.

 (a) The registration of a provider issued under this division shall remain in effect until it is surrendered, revoked, or suspended.

(b) For the purpose of securing information required by the commissioner in the administration and enforcement of this division, the commissioner may, at any time, investigate and examine the books, accounts, records, and files used in the business of a person providing wage-based or work-based advances, whether the person acts or claims to act as principal or agent, or under or without the authority of this division. For the purpose of examination, the commissioner and the commissioner’s representatives shall have free access to the offices and places of business, books, accounts, papers, records, files, safes, and vaults of all these persons. The commissioner shall not be required to conduct routine examinations of a provider.

(c) The power of investigation and examination by the commissioner shall not be terminated by the surrender, suspension, or revocation of a registration issued by the commissioner pursuant to this division.

(d) (1) If, upon inspection, examination, or investigation, the commissioner has cause to believe that a provider is violating a provision of this division or a rule or order thereunder, the commissioner or the commissioner’s designee, may issue a citation to the provider in writing that describes with particularity the basis of the citation. A citation may contain an order to correct the violation or violations identified and provide a reasonable time period or periods by which the violation or violations shall be corrected. In addition, the commissioner may include a claim for ancillary relief. The ancillary relief may include, but not be limited to, restitution or disgorgement or damages on behalf of the persons injured by the act or practice constituting the subject matter of the action.

(2) The commissioner may issue an order to desist and refrain from engaging in a specific business or activity or activities or may issue an order to suspend all business operations to a provider who is engaged in or who has engaged in continued or repeated violations of this division. The sanctions authorized under this section shall be cumulative to all other administrative, civil, or criminal remedies.

(3) If, within 30 days from the receipt of the citation, the provider cited fails to notify the department that the provider intends to request a hearing as described in paragraph (4), the citation shall be deemed final.

(4) A hearing under this section shall be conducted pursuant to Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.

(5) After the exhaustion of the review procedures provided for in this section, the commissioner may apply to the appropriate superior court for an order compelling the cited person to comply with the order of the commissioner. The application, which shall include a certified copy of the final order of the commissioner, shall constitute a sufficient showing to warrant the issuance of the judgment and order.

(e) The commissioner shall suspend or revoke a registration upon notice and reasonable opportunity to be heard, if the commissioner finds any of the following:

(1) The provider has failed to comply with a demand, ruling, or requirement of the commissioner made pursuant to this division.

(2) The provider has violated a provision of this division or a rule or regulation made by the commissioner under and within the authority of this division.

(3) A fact or condition exists that, if it had existed at the time of the original application for registration, reasonably would have warranted the commissioner in refusing, pursuant to subdivision (a) of Section 60004, to issue the registration originally.

60008.60012.

 (a) A person who violates this division is subject to civil suit in a court of competent jurisdiction.

(b) A In addition to damages available in an action brought pursuant to subdivision (a), a person who violates this division shall be subject to a civil penalty of up to two thousand dollars ($2,000) for each violation.

(c) In the case of an action to enforce a liability under this division, a prevailing plaintiff shall be entitled to its reasonable attorney’s fees, costs, and expenses.

60013.

 This division shall become inoperative on January 1, 2023, and as of that date is repealed.