2021 - 2022 LEGISLATURE
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2021 ASSEMBLY BILL 1099
March 10, 2022 - Introduced by Representatives NEYLON and ALLEN. Referred to
Committee on Ways and Means.
1 AN ACT to amend 73.0301 (1) (d) 6., 108.227 (1) (e) 6. and 138.14 (3); and to
2 create 138.09 (1a) (c) and chapter 203 of the statutes; relating to: regulating
3 earned income access services, providing a penalty, and granting rule-making
4 authority.
Analysis by the Legislative Reference Bureau
This bill regulates persons that provide earned income access services in this
state to individuals who reside in this state (consumers) and requires such persons
to register with the Division of Banking (division) in the Department of Financial
Institutions before providing those services.
Under the bill, “earned income access service” is defined as “the business of
delivering proceeds to consumers before the date on which obligors are obligated to
pay salary, wages, or other benefits.” A person other than an individual that is in the
business of providing earned income access services to consumers is a “provider.”
The bill defines “proceeds” as “the amount of earned but unpaid income that a
provider provides to a consumer,” and “earned but unpaid income” is defined as
“money that is based on wages, compensation, or other income that a consumer
represents, and that a provider determines, has been earned by or has accrued to the
benefit of the consumer but that has not, at the time the proceeds are provided, been
paid to the consumer by an obligor.” The bill defines “obligor” as “an employer,
independent contractor, or other person that is legally obligated to pay a consumer
a sum of money on an hourly, project-based, piecework, or other basis,” but “obligor”
does not include “the customer of an obligor or a 3rd party that has an obligation to
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make a payment to a consumer based solely on the consumer's agency relationship
with the obligor.”
Under the bill, a provider that wants to provide earned income access services
in this state must apply to the division for a certificate of registration, pay a
registration fee, and do all of the following:
1. Supply certain information to the division, including the addresses of the
provider's offices or retail stores in this state and, if the provider provides earned
income access services at a location that is not an office or retail store in this state,
a brief description of the manner in which the provider provides earned income
access services.
2. Notify the division of any material changes in the information supplied to
division.
3. File with the division and maintain in force a surety bond or irrevocable
letter of credit in the amount of $25,000 for the purpose of protecting consumers or
other persons that may be damaged if the provider does not comply with the
regulations created in the bill.
4. Conspicuously post the provider's certificate of registration at the provider's
physical place of business or, if the provider conducts business on an Internet site,
post the provider's registration number on the Internet site.
Under the bill, the division generally must issue a certificate of registration to
a provider if the division finds that the character and general fitness and the
financial responsibility of the provider warrant the belief that the provider will
operate its business in compliance with the regulations created in the bill. The bill
requires the division to deny registration if the provider is liable for delinquent taxes
or unemployment insurance contributions. A registered provider must pay an
annual registration fee.
If a provider is required to register under the bill, the bill imposes various
requirements and limitations on the provider in connection with providing earned
income access services in this state to consumers, including all of the following:
1. The provider must provide proceeds to consumers on a nonrecourse basis.
2. Each time the provider provides proceeds to a consumer, the provider must
inform the consumer when the provider will make its first attempt to collect
repayment of those proceeds from the consumer.
3. If the provider attempts to collect repayment of proceeds from a consumer's
depository institution account, the provider must comply with applicable National
Automated Clearinghouse Association rules.
4. The provider may not charge a consumer a late fee or any other monetary
penalty if the consumer fails to repay proceeds.
5. The provider may not require a consumer to make a “mandatory payment,”
which the bill defines as “an amount the provider determines a consumer must pay
to the provider as a condition of receiving proceeds.”
6. The provider must, before providing proceeds to a consumer, inform the
consumer in writing of any “nonmandatory payments” that may be associated with
the provider providing earned income access services to consumers. The bill defines
“nonmandatory payment” as “an amount paid by a consumer or an obligor to a
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provider that is not a mandatory payment,” for example, a tip or gratuity a consumer
pays to the provider.
7. The provider may collect a nonmandatory payment from a consumer, but the
provider may not condition the amount of proceeds, or the frequency with which the
provider provides proceeds, based on the amount of the consumer's nonmandatory
payment.
The bill provides that current state laws that regulate persons that originate
or service payday loans do not apply to registered providers, and current laws that
regulate licensed lenders, which are certain lenders licensed by the division that
assess finance charges greater than 18 percent for consumer loans, do not apply to
registered providers. The bill also provides that the Wisconsin Consumer Act does
not apply to proceeds. Under current law, the Wisconsin Consumer Act grants
consumers certain rights and remedies and contains notice and disclosure
requirements and prohibitions relating to consumer credit transactions that are
entered into for personal, family, or household purposes. The bill also specifies that
1) proceeds provided in compliance with the regulations created in the bill are not
considered credit and a registered provider that provides proceeds is not considered
a creditor; and 2) nonmandatory payments by a consumer are not considered a
finance charge under the federal Truth in Lending Act.
The bill requires a registered provider to submit an annual report to the
division that includes certain information related to the provider's earned income
access services in this state and to keep certain books and records. The bill gives the
division the right to suspend or revoke a provider's certificate of registration under
certain circumstances, including if the provider fails to pay the annual registration
fee, fails to maintain the required bond or letter of credit, or makes a material
misstatement to the division. The bill provides the division with certain authority
to enforce the regulations created in the bill.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
1 SECTION 1. 73.0301 (1) (d) 6. of the statutes is amended to read:
2 73.0301 (1) (d) 6. A license or certificate of registration issued by the
3 department of financial institutions, or a division of it, under ss. 138.09, 138.12,
4 138.14, 202.12 to 202.14, 202.22, 203.03, 217.06, 218.0101 to 218.0163, 218.02,
5 218.04, 218.05, 224.72, 224.725, 224.93 or under subch. IV of ch. 551.
6 SECTION 2. 108.227 (1) (e) 6. of the statutes is amended to read:
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1 108.227 (1) (e) 6. A license or certificate of registration issued by the
2 department of financial institutions, or a division of it, under ss. 138.09, 138.12,
3 138.14, 202.12 to 202.14, 202.22, 203.03, 217.06, 218.0101 to 218.0163, 218.02,
4 218.04, 218.05, 224.72, 224.725, 224.93 or under subch. IV of ch. 551.
5 SECTION 3. 138.09 (1a) (c) of the statutes is created to read:
6 138.09 (1a) (c) Providers of earned income access services required to register
7 under s. 203.03 (1).
8 SECTION 4. 138.14 (3) of the statutes is amended to read:
9 138.14 (3) EXEMPTIONS. This section does not apply to banks, savings banks,
10 savings and loan associations, trust companies, credit unions, or any of their
11 affiliates or to providers of earned income access services required to register under
12 s. 203.03 (1).
13 SECTION 5. Chapter 203 of the statutes is created to read:
14 CHAPTER 203
15 EARNED INCOME ACCESS SERVICES
16 203.01 Definitions. In this chapter:
17 (1) “Consumer” means an individual who resides in this state.
18 (2) “Division" means the division of banking.
19 (3) “Earned but unpaid income” means money that is based on wages,
20 compensation, or other income that a consumer represents, and that a provider
21 determines, has been earned by or has accrued to the benefit of the consumer but that
22 has not, at the time the proceeds are provided, been paid to the consumer by an
23 obligor.
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1 (4) “Earned income access service” means the business of delivering proceeds
2 to consumers before the date on which obligors are obligated to pay salary, wages, or
3 other benefits.
4 (5) “Mandatory payment” means an amount a provider determines a consumer
5 must pay to the provider as a condition of receiving proceeds.
6 (6) “Nonmandatory payment” means an amount paid by a consumer or an
7 obligor to a provider that is not a mandatory payment. “Nonmandatory payment”
8 includes any of the following:
9 (a) A fee imposed by the provider for delivery or expedited delivery of proceeds
10 to the consumer, as long as the provider offers the consumer at least one option of
11 receiving proceeds at no cost.
12 (b) An amount paid by the obligor to the provider on the consumer's behalf that
13 entitles the consumer to receive proceeds at no cost to the consumer.
14 (c) A subscription or membership fee imposed by the provider for a group of
15 services that includes earned income access services, as long as the provider offers
16 the consumer at least one option of receiving proceeds at no cost.
17 (d) A tip or gratuity paid by the consumer to the provider, as long as the provider
18 offers the consumer at least one option of receiving proceeds at no cost.
19 (7) (a) “Nonrecourse" means that a provider may not compel or attempt to
20 compel repayment by a consumer of outstanding proceeds or nonmandatory
21 payments owed by the consumer to the provider using any of the following means:
22 1. A civil suit against the consumer in court.
23 2. Using a 3rd party to pursue collection of outstanding proceeds or
24 nonmandatory payments on the provider's behalf.
25 3. Selling the debt to a 3rd-party collector or debt buyer.
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1 (b) “Nonrecourse” does not include the use by a provider of any of the means
2 described under par. (a) 1. to 3. to compel or attempt to compel repayment of
3 outstanding proceeds or nonmandatory payments incurred by a consumer through
4 fraudulent means.
5 (8) “Obligor” means an employer, independent contractor, or other person that
6 is legally obligated to pay a consumer a sum of money on an hourly, project-based,
7 piecework, or other basis. “Obligor” does not include the customer of an obligor or
8 a 3rd party that has an obligation to make a payment to a consumer based solely on
9 the consumer's agency relationship with the obligor.
10 (9) “Outstanding proceeds” means proceeds provided to a consumer by a
11 provider but not yet repaid to the provider.
12 (10) “Proceeds” means the amount of earned but unpaid income that a provider
13 provides to a consumer.
14 (11) “Provider” means a person that is not an individual and that is in the
15 business of offering and providing earned income access services to consumers.
16 203.02 Powers of the division. (1) The division may issue any general or
17 special order in execution of or supplementary to this chapter.
18 (2) The division may promulgate such rules as it considers necessary for the
19 administration of this chapter.
20 (3) The division has the same power to conduct hearings, take testimony, and
21 secure evidence as is provided in ss. 217.17 and 217.18.
22 (4) The division for the purpose of discovering violations of this chapter may
23 investigate the business of a provider registered under this chapter that is
24 transacted under this chapter and shall investigate convictions reported to the
25 division by any district attorney for violation by a provider of this chapter. The place
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1 of business, if any, books of account, papers, records, safes, and vaults of a provider
2 registered under this chapter shall be open to inspection and examination by the
3 division for the purpose of such investigation and the division may examine under
4 oath all persons whose testimony the division may require relative to such
5 investigation.
6 (5) The cost of any investigation, examination, or hearing, including witness
7 fees or any other expenses, conducted by the division under this chapter involving
8 a provider shall be paid by the provider within 30 days after demand therefor by the
9 division, and the state may maintain an action for the recovery of such costs and
10 expenses.
11 (6) Actual costs incurred by the division to examine books and records
12 maintained outside of this state shall be paid by the provider.
13 203.03 Registration. (1) A provider, including a provider that is not
14 physically located in this state, may not provide earned income access services in this
15 state without first registering with the division and complying with the bond or letter
16 of credit requirements under sub. (5).
17 (2) A provider required to register under sub. (1) shall apply to the division for
18 a certificate of registration on a form and in the manner prescribed by the division.
19 The application shall include all of the following information:
20 (a) The name of the provider.
21 (b) The name under which the provider transacts business, if different from
22 par. (a).
23 (c) The address of the provider's principal office, which may be outside this
24 state.
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1 (d) The addresses of all of the provider's offices or retail stores, if any, in this
2 state.
3 (e) If the provider provides earned income access services at a location that is
4 not an office or retail store in this state, a brief description of the manner in which
5 the provider provides earned income access services.
6 (f) The address of the provider's designated agent upon whom service of process
7 may be made in this state.
8 (g) The provider's federal employer identification number.
9 (h) Any other similar information the division requires to administer this
10 chapter.
11 (3) Each provider required to register under sub. (1) shall update any
12 information provided in its registration application within 15 business days after a
13 material change in that information.
14 (4) A provider that submits an application for a certificate of registration under
15 sub. (2) shall pay a nonrefundable fee to the division determined in accordance with
16 rates set by the division. In setting the rates, the division shall consider the division's
17 costs of administering this chapter. The division may require an applicant to submit
18 financial and other information the division requires to determine the amount of the
19 fee an applicant is required to pay.