Bill Text: NY S00916 | 2023-2024 | General Assembly | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Provides for the licensing and regulation of income access services in the state.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-01-03 - REFERRED TO BANKS [S00916 Detail]
Download: New_York-2023-S00916-Introduced.html
Bill Title: Provides for the licensing and regulation of income access services in the state.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-01-03 - REFERRED TO BANKS [S00916 Detail]
Download: New_York-2023-S00916-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 916 2023-2024 Regular Sessions IN SENATE January 9, 2023 ___________ Introduced by Sen. COONEY -- read twice and ordered printed, and when printed to be committed to the Committee on Banks AN ACT to amend the banking law, in relation to earned wage 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 EARNED WAGE ACCESS SERVICES 5 Section 374-aa. Definitions. 6 374-bb. Registration requirements for earned wage access service 7 providers. 8 374-cc. Other requirements for earned wage access services 9 provided in this state. 10 374-dd. Annual report. 11 374-ee. Authority of the superintendent. 12 § 374-aa. Definitions. As used in this article, the following terms 13 shall have the following meanings: 14 1. "Consumer" means a natural person residing in the state of New 15 York. 16 2. "Earned but unpaid income" means funds that are based on wages, 17 compensation, or income that a consumer has represented, and that the 18 provider has reasonably determined have been earned or have accrued to 19 the benefit of the consumer but have not, at the time of the remittance 20 of proceeds, been paid to the consumer by an obligor. 21 3. "Earned wage access services" means the business of delivering 22 proceeds to a consumer prior to the next date on which an obligor is 23 obligated to pay salary, wages, or other monetary benefits to the 24 consumer. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD02550-01-3S. 916 2 1 4. "Non-recourse" means that a provider cannot compel or attempt to 2 compel repayment by a consumer of outstanding proceeds or non-mandatory 3 payments owed by such consumer to such provider through any of the 4 following means: 5 (a) a civil suit against such consumer in a court of competent juris- 6 diction; 7 (b) use of a third-party to pursue collection of outstanding proceeds 8 or non-mandatory payments on the provider's behalf; and 9 (c) sale of outstanding proceeds to a third-party collector or debt 10 purchaser. Such term does not preclude the use by a provider of any of 11 the foregoing methods to compel or attempt to compel repayment of 12 outstanding amounts incurred by a consumer through fraudulent means. 13 5. "Obligor" means an employer or another person, including an inde- 14 pendent contractor, who is contractually or legally obligated to pay a 15 consumer any sum of money on an hourly, project-based, piecework, or 16 other basis. Such term does not include the customer of an obligor or 17 another third-party that has an obligation to make any payment to a 18 consumer based solely on the consumer's agency relationship with the 19 obligor. 20 6. "Outstanding proceeds" means proceeds remitted to a consumer by a 21 provider but have not yet been repaid to such provider. 22 7. "Mandatory payment" means an amount determined by a provider which 23 must be paid by a consumer to such provider as a condition of receiving 24 proceeds. 25 8. "Non-mandatory payment" means an amount paid by a consumer or an 26 obligor to a provider for earned wage access services, which does not 27 meet the definition of a mandatory payment. For purposes of this arti- 28 cle, such term includes, but is not limited to, the following: 29 (a) a fee imposed by a provider for delivery or expedited delivery of 30 proceeds to a consumer, provided that such provider offers the consumer 31 at least one option of receiving proceeds at no cost; 32 (b) an amount paid by an obligor to a provider on the consumer's 33 behalf, which entitles the consumer to receive proceeds at no cost to 34 such consumer; 35 (c) a subscription or membership fee imposed by a provider for a group 36 of services that includes earned wage access services, provided that 37 such provider offers the consumer at least one option of receiving 38 proceeds at no cost; and 39 (d) a tip or gratuity paid by a consumer to a provider, provided that 40 such provider offers the consumer at least one option of receiving 41 proceeds at no cost. 42 9. "Proceeds" means the amount of earned but unpaid income that has 43 been remitted to the consumer by a provider. 44 10. "Provider" means a person who is in the business of offering and 45 providing earned wage access services to consumers. 46 § 374-bb. Registration requirements for earned wage access service 47 providers. 1. No person shall provide earned wage access services in the 48 state unless such person is registered as a provider with the depart- 49 ment. 50 2. An application to become registered as an earned wage access 51 service provider shall be in writing, under oath, in such form as shall 52 be prescribed by the superintendent. Notwithstanding article three of 53 the state technology law or any other law to the contrary, the super- 54 intendent may require that an application for, or renewal of, a regis- 55 tration be made or executed by electronic means, including through the 56 National Mortgage Licensing System and Registry or other entities desig-S. 916 3 1 nated by the National Mortgage Licensing System and Registry if he or 2 she deems it necessary to ensure the efficient and effective adminis- 3 tration of this article. Such application shall contain the name and 4 complete business address or addresses of the applicant. Such applica- 5 tion shall also include an affirmation of financial solvency noting such 6 capitalization requirements and access to such credit as may be required 7 by the superintendent, and such descriptions of the business activities, 8 financial responsibility, and general character and fitness of the 9 applicant as may be required by the superintendent. 10 3. As a condition for the issuance and retention of a registration, 11 and subject to such regulations as the superintendent shall prescribe, 12 applicants for a registration shall file with the superintendent a sure- 13 ty bond or make a deposit in an amount and form prescribed by regu- 14 lations of the superintendent. Such regulations shall provide for a 15 varying bond amount based upon a registrant's volume of business and any 16 other relevant factors as determined by the superintendent, but in no 17 case shall such bond be less than ten thousand dollars nor more than 18 fifty thousand dollars; provided however that if the superintendent 19 determines, in his or her sole discretion, that a registrant has engaged 20 in a pattern of conduct resulting in bona fide consumer complaints of 21 misconduct, the superintendent may require such registrant to post a 22 surety bond, or keep on deposit as provided in this subdivision, twice 23 the amount of such bond or deposit as is required consistent with such 24 regulations. In the event of the insolvency, liquidation or bankruptcy 25 of such registrant, or the surrender or revocation of such provider's 26 registration, or where the superintendent takes possession of such 27 registrant, the proceeds of each bond or deposit shall constitute a 28 trust fund to be used exclusively to reimburse consumer fees or other 29 charges determined by the superintendent to be improperly charged or 30 collected and to pay past due department of financial services examina- 31 tion costs and assessments charged to the registrant, unpaid penalties, 32 or other obligations of the registrant. The superintendent is authorized 33 to promulgate such regulations as are necessary and desirable to define 34 and implement the provisions of this subdivision. Persons and entities 35 registered prior to the effective date of any regulations of the super- 36 intendent implementing or modifying the bonding requirement authorized 37 by this subdivision shall file such bond or establish such deposit with- 38 in six months of the effective date of such regulations. 39 4. Upon the filing of an application for registration, if the super- 40 intendent shall find that the financial responsibility, experience, 41 character, and general fitness of the applicant, and of the members 42 thereof if the applicant is a co-partnership or association, and of the 43 officers and directors thereof if the applicant is a corporation, are 44 such as to command the confidence of the community and to warrant belief 45 that the business will be operated honestly, fairly, and efficiently 46 within the purpose of this article, the superintendent shall thereupon 47 register the applicant as an earned wage access service provider on a 48 roll maintained for that purpose at the department, and issue a certif- 49 icate attesting to such registration in duplicate. If the superintendent 50 shall not so find, the superintendent shall not register such applicant, 51 and shall notify the applicant of the denial. The superintendent shall 52 transmit one copy of such certificate to the applicant and file another 53 in the office of the department. Upon receipt of such certificate an 54 earned wage access service provider shall be authorized to engage in the 55 business of providing earned wage access services. Such registration 56 shall remain in full force and effect until it is surrendered by theS. 916 4 1 registrant or revoked or suspended as hereinafter provided, except that 2 such registration shall expire upon the registrant's failure to pay the 3 required assessment thirty days after the date or dates such payment or 4 payments are due. If the registrant fails to pay such charged assessment 5 by the date or dates such payment or payments are due, then the regis- 6 trant shall be required to pay, in addition, a late fee in the amount of 7 one hundred dollars. Such registration shall be reinstated if the regis- 8 trant pays such assessment charged and any applicable late fees and/or 9 interest within sixty days of such expiration. The superintendent shall 10 approve or deny every application for registration hereunder within 11 ninety days from the filing of a complete application provided, however, 12 that failure to act within the prescribed period shall not be deemed 13 approval of any such application. 14 5. The superintendent may refuse to issue a certificate pursuant to 15 this article if he or she shall find that the applicant, or any person 16 who is a director or officer of the applicant: (a) has been convicted of 17 a crime involving an activity which is a felony under this chapter or 18 under article one hundred fifty-five, one hundred seventy, one hundred 19 seventy-five, one hundred seventy-six, one hundred eighty, one hundred 20 eighty-five, one hundred eighty-seven, one hundred ninety, two hundred, 21 two hundred ten or four hundred seventy of the penal law or any compara- 22 ble felony under the laws of any other state or the United States, 23 provided that such crime would be a felony if committed and prosecuted 24 under the laws of this state; or (b) has had a license or registration 25 revoked by the superintendent; or (c) has been a director or officer of 26 an entity which has had a license or registration revoked by the super- 27 intendent. 28 6. Each certificate issued to a registered earned wage access service 29 provider under this article shall state the address or addresses at 30 which the business is to be conducted, or shall state that all business 31 of the applicant is conducted online, and shall state fully the name of 32 the registrant, and the date and place of its incorporation if applica- 33 ble. A copy of such certificate shall be prominently posted in each 34 place of business of the registrant or available online via a link on 35 the homepage of the registrant. Such certificate shall not be transfera- 36 ble or assignable. In the event the location at which the business is to 37 be conducted shall be changed, the registrant shall forthwith notify the 38 superintendent who shall thereupon without charge attach to the certif- 39 icate an amendment certificate setting forth such changed location. 40 § 374-cc. Other requirements for earned wage access services offered 41 in this state. 1. Any provider that offers earned wage access services 42 to a consumer in this state shall comply with the following: 43 (a) A provider shall provide all proceeds on a non-recourse basis and 44 shall treat non-mandatory payments as non-recourse payment obligations; 45 (b) Before providing proceeds to a consumer, a provider shall inform 46 the consumer, in writing, of any non-mandatory payments that may be 47 associated with the provision of earned wage access services by that 48 provider; 49 (c) Every time a provider provides proceeds to a consumer, the provid- 50 er shall inform the consumer when the provider will make its first 51 attempt to seek repayment of those proceeds from the consumer; and 52 (d) A provider that seeks repayment of proceeds from a consumer's 53 depository institution account shall comply with applicable National 54 Automated Clearinghouse Association rules. 55 2. A provider that is registered in the state shall not: 56 (a) require a consumer to make a mandatory payment;S. 916 5 1 (b) charge a late fee or any other penalty charge for failure to repay 2 outstanding proceeds; 3 (c) condition the amount of proceeds provided to a consumer on the 4 amount of a non-mandatory payment made by such consumer to such provid- 5 er. This prohibition shall not be construed to prohibit a non-mandatory 6 payment equal to a percentage of proceeds provided, as long as the 7 percentage applied does not vary based on the amount of proceeds 8 provided; 9 (d) condition the frequency with which proceeds are provided to a 10 consumer on the amount of a non-mandatory payment made by such consumer 11 to such provider. This prohibition shall not be construed to prohibit a 12 non-mandatory payment equal to a percentage of proceeds provided, as 13 long as the percentage applied does not vary based on the amount of 14 proceeds provided; 15 (e) report a consumer's payment or failed repayment of proceeds to a 16 consumer credit reporting agency or a debt collector; 17 (f) require a credit report or credit score to determine a consumer's 18 eligibility for earned wage access services; or 19 (g) provide, sell, or otherwise disclose to any third party, including 20 an obligor, any non-public personal information collected from or about 21 a consumer, except as necessary to provide earned wage access services 22 to the consumer and as allowed by applicable federal and state law. 23 3. Proceeds provided to a consumer by a provider in accordance with 24 this article shall not be considered credit, the provider of those 25 proceeds shall not be considered a creditor, and non-mandatory payments 26 paid to such provider shall not be considered finance charges, for 27 purposes of the federal Truth in Lending Act. 28 4. Proceeds provided to a consumer by a provider in accordance with 29 this article shall not be considered wage deductions for purposes of 30 section one hundred ninety-three of the labor law and shall not be 31 subject to regulation by the superintendent under article nine of this 32 chapter. Further, the provider of those proceeds shall not be required 33 to obtain a license under article nine of this chapter. 34 § 374-dd. Annual report. 1. On or before the first day of April of 35 each year, a provider shall submit an annual report to the superinten- 36 dent that includes all of the following information for earned wage 37 access services provided by such provider during the prior calendar 38 year: 39 (a) gross revenue attributable to earned wage access services; 40 (b) the total number of transactions in which proceeds were remitted 41 to consumers; 42 (c) the total number of unique consumers to whom proceeds were remit- 43 ted; 44 (d) the total dollar amount of proceeds the provider remitted to 45 consumers; 46 (e) the total dollar amount of non-mandatory payments the provider 47 received from consumers; 48 (f) the total number of transactions in which proceeds were remitted 49 to consumers for which the provider did not receive repayment of any 50 outstanding proceeds, and the total dollar amount of such transactions; 51 (g) the total number of transactions in which proceeds were remitted 52 to consumers, for which the provider received partial repayment of 53 outstanding proceeds, the total dollar amount of such transactions, and 54 the total dollar amount of outstanding proceeds attributable to such 55 transactions; andS. 916 6 1 (h) the total number of transactions in which outstanding proceeds 2 were repaid after the original, scheduled repayment date, and the total 3 dollar amount of such transactions. 4 2. Failure of a provider to submit a report on a timely basis in 5 accordance with this article may constitute grounds for disciplinary 6 action by the superintendent. 7 § 374-ee. Authority of the superintendent. 1. The superintendent is 8 hereby authorized and empowered to make such general rules and regu- 9 lations, and such specific rulings, demands, and findings as may be 10 necessary for the proper conduct of the business authorized and regis- 11 tered under and for the enforcement of this article, in addition hereto 12 and not inconsistent herewith. 13 2. The superintendent shall have the power to make such investigations 14 and conduct such hearings as he or she shall deem necessary to determine 15 whether any registrant or any other person has violated any of the 16 provisions of this article, or whether any registrant has conducted 17 itself in such manner as would justify the suspension or revocation of 18 its registration. 19 3. In making any investigation or conducting any hearing pursuant to 20 the provisions of this article, the superintendent, or any person duly 21 designated by him or her, shall have the power at all times to subpoena 22 witnesses; to take depositions of witnesses residing without the state, 23 in the manner provided for in civil actions in courts of record; to pay 24 such witnesses the fees and mileage for their attendance provided for 25 witnesses in civil actions in courts of record; and to administer oaths. 26 He or she shall also have the power to compel by order or subpoena the 27 production of and to examine all relevant books, records, accounts and 28 other documents. Any person who fails to obey the command of the subpoe- 29 na without reasonable excuse, or refuses without reasonable cause to be 30 served or to be examined or to answer a question or to produce a book or 31 paper when ordered so to do, or fails to perform any act required here- 32 under to be performed, shall be subject to the compulsions in such cases 33 made and provided by law, and if the person be registered hereunder, the 34 superintendent shall have the right to suspend or revoke the registra- 35 tion. 36 4. The superintendent may require of any registrant such reports, 37 under oath or otherwise, concerning the registrant's business in this 38 state, as he or she may deem necessary for the enforcement of this arti- 39 cle. 40 5. All reports of investigations and other reports rendered pursuant 41 to this section, and all correspondence and memoranda concerning or 42 arising out of such investigations or reports, including any duly 43 authenticated copy or copies thereof in the possession of any registrant 44 or the department, shall be confidential communications, shall not be 45 subject to subpoena and shall not be made public unless, in the judgment 46 of the superintendent, the ends of justice and the public advantage will 47 be subserved by the publication thereof, in which event the superinten- 48 dent may publish or authorize the publication of a copy of any such 49 report or other material referred to in this subdivision, or any part 50 thereof, in such manner as may be deemed proper. For purposes of this 51 subdivision, "reports of investigations, and other reports rendered 52 pursuant to this section and all correspondence and memoranda concerning 53 or arising out of such investigations or reports" shall have the same 54 meaning as such terms are defined pursuant to subdivision ten of section 55 thirty-six of this chapter.S. 916 7 1 6. Without limiting any power granted to the superintendent under any 2 other provision of this chapter, the superintendent may, in a proceeding 3 after notice and a hearing, impose penalties on earned wage access 4 providers who violate this article or any rules promulgated hereunder. 5 Section forty-four of this chapter shall govern the amount and nature of 6 those penalties. 7 § 2. Subdivision 10 of section 36 of the banking law, as amended by 8 section 2 of part L of chapter 58 of the laws of 2019, is amended to 9 read as follows: 10 10. All reports of examinations and investigations, correspondence and 11 memoranda concerning or arising out of such examination and investi- 12 gations, including any duly authenticated copy or copies thereof in the 13 possession of any banking organization, bank holding company or any 14 subsidiary thereof (as such terms "bank holding company" and "subsid- 15 iary" are defined in article three-A of this chapter), any corporation 16 or any other entity affiliated with a banking organization within the 17 meaning of subdivision six of this section and any non-banking subsid- 18 iary of a corporation or any other entity which is an affiliate of a 19 banking organization within the meaning of subdivision six-a of this 20 section, foreign banking corporation, licensed lender, licensed casher 21 of checks, licensed mortgage banker, registered mortgage broker, 22 licensed mortgage loan originator, licensed sales finance company, 23 registered mortgage loan servicer, licensed student loan servicer, 24 licensed insurance premium finance agency, licensed transmitter of 25 money, licensed budget planner, registered earned wage access service 26 provider, any other person or entity subject to supervision under this 27 chapter, or the department, shall be confidential communications, shall 28 not be subject to subpoena and shall not be made public unless, in the 29 judgment of the superintendent, the ends of justice and the public 30 advantage will be subserved by the publication thereof, in which event 31 the superintendent may publish or authorize the publication of a copy of 32 any such report or any part thereof in such manner as may be deemed 33 proper or unless such laws specifically authorize such disclosure. For 34 the purposes of this subdivision, "reports of examinations and investi- 35 gations, and any correspondence and memoranda concerning or arising out 36 of such examinations and investigations", includes any such materials of 37 a bank, insurance or securities regulatory agency or any unit of the 38 federal government or that of this state any other state or that of any 39 foreign government which are considered confidential by such agency or 40 unit and which are in the possession of the department or which are 41 otherwise confidential materials that have been shared by the department 42 with any such agency or unit and are in the possession of such agency or 43 unit. 44 § 3. This act shall take effect on the one hundred twentieth day after 45 it shall have become a law. Effective immediately, the addition, amend- 46 ment and/or repeal of any rule or regulation necessary for the implemen- 47 tation of this act on its effective date are authorized to be made and 48 completed on or before such effective date.
