In June, the Nevada governor signed SB 290 into law, making Nevada the first state to enact legislation creating a comprehensive statutory framework that specifically defines and regulates the provision of earned wage access (EWA) products. EWA products allow consumers to access their earned wages before their regularly scheduled pay date. While other states and federal agencies have made preliminary efforts to regulate EWA products, Nevada is the first state to impose certain substantive requirements on providers of EWA products, such as implementation of policies for responding to consumer complaints and mandatory disclosure to consumers of their rights, such rights including the ability to cancel EWA agreements at any time without being charged fees.
Providers seeking a license under SB 290 are required to submit an application that will detail the proposed terms and conditions of their EWA product. Additionally, licensees will be required to submit annual reports to the Nevada Commissioner of Financial Institutions, which will include, among other items:
- copies of any consumer complaints submitted to the Better Business Bureau and CFPB and a description of resolutions thereto;
- a summary of the total number of users who did not receive an EWA product in the prior year but who paid a subscription fee or membership fee for a group of services that includes an EWA product, including a description of the fee; and
- the total number of users who received 12 or more EWAs in the prior year.
SB 290 also subjects providers of EWA products to prohibitions on certain activities, including:
- sharing any fees, voluntary tips, gratuities, or other donations with an employer;
- using credit reports or credit scores to determine eligibility for an EWA service;
- imposing late fees or penalties for nonpayment by users;
- reporting a user’s nonpayment to a consumer reporting agency or a debt collector;
- coercing users to make payments through civil action; and
- using a third-party collector or debt buyer to pursue collections from a user.
SB 290 applies to providers of both direct-to-consumer EWA services and employer-integrated EWA services. Direct-to-consumer EWA services deliver an advance of earned but unpaid income based on data that is not employment, income or attendance data obtained directly from an employer or an employer’s payroll service provider. On the other hand, employer-integrated EWA services deliver advances based on information obtained directly or indirectly from the consumer’s employer or the employer’s payroll service provider.
Putting it into Practice: While Nevada is the first state to enact EWA legislation, several other states are considering their own EWA bills, including California, Georgia, Kansas, Mississippi, Missouri, New York, North Carolina, Texas, Vermont, and Virginia. The trend in state legislation is also likely to precipitate more formal action by federal regulators with respect to EWA products (see previous blog posts here, here, and here). Accordingly, providers of EWA products should review SB 290 and monitor for similar laws and regulations that may be forthcoming.