Senate Bill 2648

AN ACT TO CREATE A NEW SECTION TO BE ADDED TO CHAPTER 24 OF TITLE 75, MISSISSIPPI CODE OF 1972, THAT WILL ALLOW FOR GREATER EARNED WAGE ACCESS; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. (1) Definitions. As used in this section, the following words and phrases shall have the meanings described in subsection (1), unless the context clearly indicates otherwise:

(a) "Attorney General" means the Attorney General of the State of Mississippi.

(b) "Consumer" means a natural person residing in the State of Mississippi.

(c) "Earned but unpaid income" means wages, compensation, or income that a consumer has represented, and that a provider has reasonably determined, has been earned or has accrued to the benefit of the consumer but has not, at the time of the payment of proceeds, been paid to the consumer by an obligor.

(d) "Earned wage access services" means the business of delivering proceeds to consumers prior to the next date on which an obligor is obligated to pay salary, wages, compensation, or other income to a consumer.

(e) "Mandatory payment" means an amount determined by a provider, which must be paid by a consumer to that provider as a condition of receiving or repaying proceeds.

(f) "Nonmandatory payment" means an amount paid by a consumer or an obligor to a provider, which does not meet the definition of a mandatory payment. For purposes of this section, examples of permitted nonmandatory payments include, but are not limited to, the following:

(i) A fee imposed by a provider for delivery or expedited delivery of proceeds to a consumer, as long as the provider offers the consumer at least one (1) option to receive proceeds at no cost to the consumer;

(ii) An amount paid by an obligor to a provider on a consumer's behalf, which entitles the consumer to receive proceeds at no cost to the consumer;

(iii) A subscription or membership fee imposed by a provider for a group of services that include earned wage access services, as long as the provider offers the consumer at least one (1) option to receive proceeds at no cost to the consumer; or

(iv) A tip or gratuity paid by a consumer to a provider, as long as the provider offers the consumer at least one (1) option to receive proceeds at no cost to the consumer.

(g) "Non-recourse" means that a provider cannot compel or attempt to compel repayment by a consumer of outstanding proceeds or nonmandatory payments owed by that consumer to that provider through any of the following means:

(i) A civil suit against the consumer in a court of competent jurisdiction;

(ii) Use of a third-party to pursue collection of outstanding proceeds or nonmandatory payments on the provider's behalf; or

(iii) Sale of outstanding amounts to a third party collector or debt buyer.

The term non-recourse does not preclude the use by a provider of any of the foregoing methods to compel or attempt to compel repayment of outstanding amounts incurred by a consumer through fraudulent means.

(h) "Obligor" means an employer or another person, who is contractually or legally obligated to pay a consumer earned but unpaid income on an hourly, project-based, piecework, or other basis, including where the consumer is acting as an independent contractor. Obligor does not include a service provider 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.

(i) "Outstanding proceeds" means a payment of proceeds to a consumer by a provider, which has not yet been repaid to that provider.

(j) "Person" means a partnership, corporation, joint venture, trust, association or any legal entity other than an individual, however organized.

(k) "Proceeds" means a payment of funds to a consumer by a provider, which is based on earned but unpaid income.

(l) "Provider" means a person who is in the business of offering and providing earned wage access services to consumers."

(m) "Written" and "writing" includes communication of information in an electronic record consistent with the federal Electronic Signatures in Global and National Commerce (E-SIGN) Act, 15 USC Section 7001 et seq.

(2) Exemptions. The provisions of this section shall not apply to any bank, trust company, savings association, savings and loan association, savings bank or credit union that is chartered under the laws of this state or under federal law and domiciled or doing business in this state.

(3) Provider requirements. A provider operating in the State of Mississippi shall comply with all of the following requirements:

(a) The provider shall provide all proceeds on a non-recourse basis and shall treat nonmandatory payments as non-recourse payment obligations;

(b) Before providing a consumer with earned wage access services, the provider shall provide a consumer with a written document, which can be included as part of the contract to provide earned wage access services, and which meets all of the following requirements:

(i) Informs the consumer of the terms and conditions of the earned wage access services;

(ii) Includes a statement that the Attorney General has jurisdiction over the earned wage access services performed by the provider and provides both a phone number and a website through which consumers can submit complaints about the provider's earned wage access services to the Division of Consumer Protection within the Attorney General's office;

(iii) Is written in a font and using language intended to be easily understood by a layperson; and

(iv) Discloses any nonmandatory payments that may be directly imposed by the provider in connection with the provision of earned wage access services.

(c) The provider shall provide proceeds to a consumer via any means mutually agreed upon by the consumer and the provider;

(d) In any case in which a provider will seek repayment of proceeds from a consumer, the provider shall inform the consumer when the provider will make its first attempt to see repayment of those proceeds from the consumer;

(e) A provider that seeks repayment of proceeds from a consumer's depository institution account shall comply with applicable NACHA rules; and

(f) The provider shall permit a consumer to cancel participation in an earned wage access services contract at any time without incurring a charge for doing so.

(4) Prohibitions applicable to providers. A provider operating in the State of Mississippi shall not do any of the following:

(a) Impose a mandatory payment on a consumer that directly relates to the provision of earned wage access services;

(b) Charge a late fee, interest, or any other penalty or charge for failure to repay outstanding proceeds;

(c) Make the offering of earned wage access services, either in the amount of proceeds a consumer is eligible to request, or the frequency with which proceeds are provided to a consumer, contingent on whether the consumer makes any nonmandatory payments or on the size of any nonmandatory payments that consumer may make to that provider in connection with the provision of earned wage access services, provided, however, that this prohibition shall not be construed to prohibit a nonmandatory payment equal to a percentage of proceeds provided;

(d) Charge a deferral fee or any other charge in connection with deferring the collection of outstanding proceeds beyond the original scheduled repayment date;

(e) Solicit a consumer to delay repayment of outstanding proceeds for the purpose of increasing the total nonmandatory payments that provider may collect;

(f) Report a consumer's payment or failed repayment of outstanding proceeds to a consumer credit reporting agency or a debt collector;

(g) Require a credit score to determine a consumer's eligibility for earned wage access services;

(h) Provide, sell, or otherwise disclose to any third party, including an obligor, any non-public personal information collected from or about a consumer, except as necessary to provide earned wage access services to that consumer or in accordance with a consumer's written consent; and

(i) Advertise, display or publish, or permit to be advertised, displayed or published, in any manner whatsoever, any statement or representation that is false, misleading or deceptive.

(5) Applicability of state and federal lending laws. (a) Proceeds provided to a consumer by a provider in accordance with this section shall not be considered credit or a loan, and the provider of those proceeds shall not be considered a creditor or a lender for purposes of Mississippi law.

(b) Nonmandatory payments paid by a consumer to a provider that is operating in accordance with subsections (2) and (3) of this act shall not be considered finance charges for purposes of applying the federal Truth in Lending Act to an earned wage access transaction.

(6) Enforcement. (a) The Attorney General shall have the authority under subsections (2) and (3) to conduct civil investigations and bring civil actions.

(b) In an action brought by the Attorney General under subsections (2) and (3), the court may award or impose any relief available under state law.

(c) Upon a motion by the Attorney General and a finding by the court that there is a reasonable likelihood that a person violated subsections (2) and (3), the court may require the person to post a bond in an amount equal to a good faith estimate of the costs to litigate a claim. A hearing shall be held if either party requests a hearing.

(7) Municipal ordinances. Municipalities of this state may enact ordinances that are in compliance with, but not more restrictive than, the provisions of this act. Any existing or future order, ordinance or regulation that conflicts with this provision shall be null and void.

SECTION 2. This act shall take effect and be in force from and after July 1, 2023.