Purpose of the Bill

This bill aims to regulate earned wage access services in Minnesota. These services allow consumers to access their earned but unpaid income before their scheduled payday. The legislation establishes requirements for service providers to ensure consumer protection and transparency.

Main Provisions

1. Definitions and Scope:

   • The bill clarifies terms like "consumer," "earned wage access services," and "provider."
   • It distinguishes between consumer-directed and employer-integrated wage access services.

2. Provider Requirements:

   • Providers must respond to consumer inquiries and complaints promptly.
   • They must offer at least one option for consumers to access proceeds at no cost and disclose all fees clearly.
   • Consumers must be informed of their rights and any changes to service terms.
   • Providers are prohibited from charging more than a 7% fee on earned wage access services.

3. Consumer Protections:

   • Consumers can cancel services without penalties.
   • The bill prohibits sharing consumer fees with employers and using credit scores for service eligibility.
   • Collection practices are restricted, and providers cannot report to credit agencies regarding non-repayment of proceeds.

4. Licensing and Regulation:

   • Providers must obtain a license from the state commissioner to operate.
   • Annual reports are required, detailing revenue and transactions.
   • The commissioner has the authority to investigate and ensure compliance.
   • Providers who do not comply may have their licenses suspended or revoked.

5. Exemptions:

   • Certain financial institutions and services governed by U.S. or Minnesota law, like banks and credit unions, are exempt from these regulations.
   • The fees or donations in this context are not considered interest.

6. Effective Operations:

   • Providers may operate without a license temporarily if they provided services before the bill's enactment and are waiting for their application to be processed.

Significant Changes to Existing Law

• This bill introduces new regulations specifically for earned wage access services, a sector that previously had limited direct legislation.
• It establishes a new licensing framework under Minnesota Statutes Chapter 47, placing specific consumer protection measures on these providers for the first time.

Relevant Terms

earned wage access, consumer protection, wage access services, providers, licensing, consumer fees, credit report, finance charges, collection practices, service transparency.