S T A T E O F N E W Y O R K
________________________________________________________________________
8401
2021-2022 Regular Sessions
I N A S S E M B L Y
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:
Section 1. The banking law is amended by adding a new article 9-B to
read as follows:
ARTICLE 9-B
INCOME ACCESS SERVICES
SECTION 374-AA. DEFINITIONS.
374-BB. REQUIREMENTS FOR EARNED INCOME ACCESS SERVICES OFFERED
IN THIS STATE.
374-CC. ENFORCEMENT.
§ 374-AA. DEFINITIONS. AS USED IN THIS ARTICLE, THE FOLLOWING TERMS
SHALL HAVE THE FOLLOWING MEANINGS:
1. "ANNUAL PERCENTAGE RATE" MEANS AS CALCULATED PURSUANT TO THE TRUTH
IN LENDING ACT (TILA), 15 U.S.C. SEC. 1601-1667F METHODOLOGY.
2. "CONSUMER" MEANS A NATURAL PERSON RESIDING IN THE STATE OF NEW
YORK.
3. "EARNED BUT UNPAID INCOME" MEANS FUNDS THAT ARE BASED ON WAGES OR
COMPENSATION THE WORKER HAS REPRESENTED, AND THAT THE PROVIDER HAS
REASONABLY DETERMINED HAVE BEEN EARNED BUT HAVE NOT, AT THE TIME OF THE
REMITTANCE, BEEN PAID TO THE WORKER FOR WORK PERFORMED FOR OR ON BEHALF
OF AN OBLIGOR.
4. "EARNED INCOME ACCESS SERVICES" REFERS TO THE BUSINESS OF DELIVER-
ING PROCEEDS TO CONSUMERS THAT:
(A) REQUIRES NO MANDATORY FEES TO ACCESS PROCEEDS;
(B) IS NON-RECOURSE; AND
(C) THE PROCEEDS ACCESSED ARE BASED ON EARNED BUT UNPAID INCOME.
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
(A) A PERSON WHO CONTRACTS WITH AN OBLIGOR TO OFFER AND PROVIDE EARNED
INCOME ACCESS SERVICES TO THE OBLIGOR'S EMPLOYEES; OR
(B) A PERSON WHO CONTRACTS WITH A CONSUMER TO OFFER AND PROVIDE EARNED
INCOME ACCESS SERVICES TO THAT CONSUMER.
6. "NON-RECOURSE" MEANS THAT A PROVIDER CANNOT LEGALLY COMPEL REPAY-
MENT BY A CONSUMER OF OUTSTANDING PROCEEDS.
7. "NOTICE" MEANS DIGITAL COMMUNICATION FROM THE PROVIDER TO THE
CONSUMER IN A CONSPICUOUS MANNER.
8. "OBLIGOR" MEANS AN EMPLOYER OR A PERSON, INCLUDING AN INDEPENDENT
CONTRACTOR, WHO IS CONTRACTUALLY OBLIGATED TO PAY A CONSUMER ANY SUM OF
MONEY ON AN HOURLY, PROJECT-BASED, PIECEWORK, OR OTHER BASIS FOR LABOR
OR SERVICES PROVIDED BY THE CONSUMER. OBLIGOR DOES NOT INCLUDE THE
CUSTOMER OF AN OBLIGOR OR ANOTHER THIRD-PARTY THAT HAS AN OBLIGATION TO
MAKE ANY PAYMENT TO A CONSUMER BASED SOLELY ON THE CONSUMER'S AGENCY
RELATIONSHIP WITH THE OBLIGOR.
9. "PAYMENTS" OR "FEES" MEANS A COST TO THE CONSUMER FOR EARNED INCOME
ACCESS SERVICES REQUIRED BY THE PROVIDER.
10. "PROCEEDS" MEANS THE AMOUNT OF EARNED BUT UNPAID INCOME THAT HAS
BEEN REMITTED TO THE CONSUMER BY A PROVIDER. PROCEEDS SHALL NOT BE
CONSIDERED A LOAN.
11. "SUPERINTENDENT" MEANS THE SUPERINTENDENT OF FINANCIAL SERVICES.
12. "VOLUNTARY PAYMENTS" MEANS A REMITTANCE AMOUNT OF THE CONSUMER'S
CHOOSING PAID BY THE CONSUMER TO THE PROVIDER, THAT MAY OR MAY NOT BE
CONSIDERED REVENUE BY THE PROVIDER, AND WHICH SHALL NOT BE SUBJECT TO
ANY ANNUAL PERCENTAGE RATE CALCULATION.
§ 374-BB. REQUIREMENTS FOR EARNED INCOME ACCESS SERVICES OFFERED IN
THIS STATE. ANY EARNED INCOME ACCESS PROVIDER THAT OFFERS EARNED INCOME
ACCESS SERVICES TO A CONSUMER IN THIS STATE SHALL COMPLY WITH THE
FOLLOWING:
1. THE IMPOSITION OF A FEE ON A CONSUMER WHO OPTS TO USE THE EARNED
INCOME SERVICES OF A PROVIDER, AND/OR THE REDUCTION OR WITHHOLDING FROM
A CONSUMER'S NEXT REGULARLY SCHEDULED WAGE PAYMENT BY AN OBLIGOR OF THE
AMOUNT OF THE PROCEEDS DURING THAT PAY PERIOD AND APPLICABLE FEES
IMPOSED IN CONNECTION WITH THOSE PROCEEDS, IS PERMITTED IF:
(A) FEES ARE DISCLOSED IN WRITING TO THE CONSUMER PRIOR TO AND AT THE
TIME OF THE EARNED INCOME ACCESS TRANSACTION;
(B) THE FEE IS NOT MANDATORY. IF A FEE IS AUTOMATICALLY CHARGED, A
CONSUMER CAN HAVE IT REFUNDED ON REQUEST. THE REFUND PROCESS MUST BE
CLEARLY AND CONSPICUOUSLY DISCLOSED IN ADVANCE TO THE CONSUMER;
(C) THE CONSUMER IS INFORMED IN WRITING OF THE RIGHT TO RECEIVE THE
FULL AMOUNT OF SUCH CONSUMER'S WAGE PAYMENT, WITHOUT DISCOUNT, IN THE
NORMAL COURSE, IF SUCH CONSUMER WAITS UNTIL THE NEXT REGULAR WAGE
PAYMENT DATE;
(D) FEES AND VOLUNTARY PAYMENTS FOR EARNED INCOME ACCESS SERVICES
CANNOT EXCEED 7.5% PER TRANSACTION PER PROVIDER ON AN AVERAGE BASIS. THE
AVERAGE SHALL BE CALCULATED BY TOTALING ALL OF THE REVENUE FOR FEES AND
VOLUNTARY PAYMENTS FOR EARNED INCOME ACCESS SERVICES ACROSS ALL CONSUM-
ERS PER QUARTER PER PROVIDER, DIVIDED BY THE TOTAL AMOUNT OF PROCEEDS
ACCESSED PER QUARTER PER PROVIDER IN NEW YORK; AND
(E) THE PROVIDER SHALL CONDUCT A RECONCILIATION ON AN AVERAGE BASIS
ACROSS ALL EARNED INCOME ACCESS SERVICE CONSUMERS AT THE END OF EACH
QUARTER, AND REFUND ANY EXCESS FEES OR VOLUNTARY PAYMENTS RECEIVED
DURING THE QUARTER WITHIN THIRTY DAYS OF THE END OF THE QUARTER. A
PROVIDER IS NOT PROHIBITED FROM CONDUCTING RECONCILIATIONS AND ISSUING
REFUNDS MORE FREQUENTLY, OR INSTITUTING ALTERNATIVE PROCESSES TO COMPLY,
PROVIDED THOSE PROCESSES RESULT IN FULL COMPLIANCE.
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2. THE PROVIDER SHALL NOT RELY ON A CREDIT REPORT OR SCORE IN ORDER TO
DETERMINE THE CONSUMER'S ELIGIBILITY FOR PROCEEDS.
3. PROVIDERS ARE NOT EXEMPT FROM STATE WAGE GARNISHMENT LAWS.
4. THE PROVIDER SHALL NOT REPORT A CONSUMER'S REPAYMENT OR FAILED
REPAYMENT OF PROCEEDS TO ANY PERSON OTHER THAN THE CONSUMER, INCLUDING
BUT NOT LIMITED TO A CONSUMER CREDIT REPORTING AGENCY OR A DEBT COLLEC-
TOR.
5. NO PORTION OF THE PROCEEDS MAY BE USED TO SETTLE OR PAY DOWN PRIOR
PROCEEDS, AND NO PROCEEDS MAY ROLL OVER OR BE STRUCTURED IN ANY WAY TO
CREATE ANY CONTINUING OBLIGATION ON THE PART OF A CONSUMER.
6. IF A PROVIDER TAKES CUSTODY OF A CONSUMER'S EARNED BUT UNPAID
INCOME BEFORE REMITTING PROCEEDS TO THE CONSUMER, THE PROVIDER SHALL
ENSURE THAT THE PROCEEDS ARE FULLY INSURED BY THE FEDERAL DEPOSIT INSUR-
ANCE CORPORATION AT THE CONSUMER'S INDIVIDUAL ACCOUNT LEVEL.
7. PROVIDERS SHALL COMPLY WITH NATIONAL AUTOMATED CLEARING HOUSE ASSO-
CIATION RULES. WHEN A DEBIT IS INITIATED TO A CONSUMER'S ACCOUNT FOR A
PAYMENT, AND THE DEBIT IS RETURNED FOR INSUFFICIENT OR UNCOLLECTED
FUNDS, THE DEBIT CAN BE REINITIATED UP TO TWO TIMES WITHIN ONE HUNDRED
EIGHTY DAYS AFTER THE ORIGINAL ENTRY.
8. THE PROVIDER SHALL NOT PROVIDE TO ANY THIRD-PARTY, INCLUDING OBLI-
GORS, ANY NON-PUBLIC PERSONAL INFORMATION EXCEPT IN COMPLIANCE WITH
APPLICABLE FEDERAL AND STATE LAW.
9. THE PROVIDER SHALL NOT SELL, SHARE, OR OTHERWISE DISCLOSE PERSONAL
INFORMATION, THAT IS SOLICITED OR COLLECTED FROM A CONSUMER FOR THE
PURPOSE OF PROVIDING PROCEEDS.
10. THE PROVIDER SHALL NOT CHARGE ANY INTEREST OR LATE FEES ON
PROCEEDS.
11. THE PROVIDER DELIVERS EARNED BUT UNPAID INCOME TO THE CONSUMER
PRIOR TO THE NEXT REGULARLY SCHEDULED DATE ON WHICH THE OBLIGOR IS SCHE-
DULED TO PAY EARNED WAGES OR INCOME TO THE CONSUMER.
12. ANY PROVIDER OFFERING INCOME ACCESS SHALL OBTAIN A LICENSE FROM
THE DEPARTMENT.
13. THE SUPERINTENDENT SHALL PREPARE AND ENFORCE SUCH ADDITIONAL
RULES, GUIDELINES AND REQUIREMENTS APPLICABLE TO PROVIDERS LICENSED
UNDER THIS ARTICLE THAT ARE NOT INCONSISTENT WITH THE PROVISIONS OF THIS
ARTICLE.
14. A LICENSE GRANTED PURSUANT TO THIS SECTION SHALL BE ISSUED UPON
SUBMISSION OF THE APPLICATION AND PAYMENT OF THE FEE, AND SHALL BE VALID
FOR THREE YEARS WITH TWO ALLOWABLE EXTENSIONS. A LICENSE GRANTED PURSU-
ANT TO THIS SECTION SHALL NOT BE RENEWED IF A LICENSEE HAS NOT COMPLIED
WITH REPORTING REQUIREMENTS.
15. A PROVIDER SHALL FILE AN ANNUAL REPORT WITH THE SUPERINTENDENT
THAT INCLUDES:
(A) GROSS REVENUE RECEIVED FOR THE EARNED INCOME ACCESS SERVICE. THE
PROVIDER SHALL DISTINGUISH BETWEEN REVENUE RECEIVED FROM CONSUMERS AND
REVENUE RECEIVED FROM THIRD-PARTIES PROVIDING SERVICES TO CONSUMERS;
(B) THE TOTAL NUMBER OF PROCEEDS TRANSACTIONS;
(C) THE TOTAL DOLLAR AMOUNT OF PROCEEDS THE PROVIDER REMITTED;
(D) THE TOTAL DOLLAR AMOUNT OF FEES AND/OR VOLUNTARY PAYMENTS THE
PROVIDER RECEIVED FROM CONSUMERS FOR EARNED INCOME ACCESS SERVICES;
(E) THE TOTAL NUMBER OF PROCEEDS FOR WHICH THE PROVIDER HAS NOT
RECEIVED ANY REPAYMENT;
(F) THE TOTAL DOLLAR AMOUNT OF PROCEEDS FOR WHICH THE PROVIDER HAS NOT
RECEIVED ANY REPAYMENT;
(G) THE TOTAL NUMBER OF PROCEEDS WHOLLY UNCOLLECTED FROM CONSUMERS,
AND TOTAL DOLLAR AMOUNT OF THOSE PROCEEDS;
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(H) THE TOTAL NUMBER OF PROCEEDS PARTIALLY UNCOLLECTED FROM CONSUMERS,
AND TOTAL DOLLAR AMOUNT OF THOSE PROCEEDS; AND
(I) THE TOTAL NUMBER OF UNIQUE CONSUMERS TO WHOM THE PROVIDER REMITTED
PROCEEDS TO AS PART OF AN EARNED INCOME ACCESS SERVICE.
16. INCOME ACCESS SERVICES THAT COMPLY WITH THE PROVISIONS OF SUBDIVI-
SION ONE OF THIS SECTION SHALL NOT BE CONSIDERED A LENDING ACTIVITY, AND
SUCH EARNED INCOME ACCESS PAYMENTS SHALL NOT BE CONSIDERED LOANS.
§ 374-CC. ENFORCEMENT. 1. IF, UPON INSPECTION, EXAMINATION, OR INVES-
TIGATION, THE SUPERINTENDENT HAS CAUSE TO BELIEVE THAT A PROVIDER IS
VIOLATING ANY PROVISION OF THIS ARTICLE OR ANY RULE OR ORDER HEREUNDER,
THE SUPERINTENDENT OR HIS OR HER DESIGNEE, MAY ISSUE A NOTICE TO THE
PROVIDER IN WRITING, DESCRIBING WITH PARTICULARITY THE BASIS OF THE
ALLEGED VIOLATION.
2. A PROVIDER SHALL HAVE SIXTY DAYS TO RESPOND TO SUCH NOTICE, TO
PROVIDE FURTHER INFORMATION AND/OR AN EXPLANATION.
3. IF THE SUPERINTENDENT DETERMINES THERE IS A VIOLATION, THE SUPER-
INTENDENT OR HIS OR HER DESIGNEE CAN ISSUE A CORRECTION NOTICE TO BE
REMEDIED IN AN AGREED UPON TIMEFRAME.
§ 2. This act shall take effect on the one hundred twentieth day after
it shall have become a law. Effective immediately, the addition, amend-
ment and/or repeal of any rule or regulation necessary for the implemen-
tation of this act on its effective date are authorized to be made and
completed on or before such effective date.