SB 5328 — Establishing a new chapter for the licensing and regulation of businesses providing earned wage access services.

(2) If a transaction violates subsection (1) of this section, any:

(a) Fees, subscription fees, tips, gratuities, donations, and voluntary contributions charged or received in connection with the employer-integrated wage access services must be refunded to the consumer;

and (b) Outstanding proceeds are null, void, uncollectable, and unenforceable.

NEW SECTION.

Sec.

5.

and (e) SuchOther other information asthat the director may require by rule.

p.(b) As part of or in connection with an application for a license under this chapter, or periodically upon license renewal, the director may receive criminal history record information that includes nonconviction data as defined in RCW 10.97.030.

4 SSB 5328 (b) As part of or in connection with an application for a license under this chapter, or periodically upon license renewal, the director is authorized to receive criminal history record information that includes nonconviction data as defined in RCW 10.97.030.

(3)p. At the time of filing an application for a license under this chapter, each applicant shall pay to the director or through the nationwide mortgage licensing system and registry an investigation fee and the license fee in an amount determined by rule by the director to be sufficient to cover the director's costs in administering this chapter.

(4)4 EachSB 5328 (3) At the time of filing an application for a license under this chapter, each applicant mustshall filepay to the director or through the nationwide mortgage licensing system and maintainregistry aan suretyinvestigation bondfee and the license fee in accordancean withamount sectiondetermined 6by ofrule by the director to be sufficient to cover the director's costs in administering this act.chapter.

(4) Each applicant must file and maintain a surety bond, approved by the director, executed by the applicant as obligor and by a surety company authorized to do a surety business in this state as surety, whose liability as such surety must not exceed in the aggregate the penal sum of the bond.

The penal sum of the bond must be a minimum of $30,000.

The bond must run to the state of Washington as obligee for the use and benefit of the state and of any person or persons who may have a cause of action against the obligor under this chapter.

The bond must be conditioned that the obligor as licensee will faithfully conform to and abide by this chapter and all the rules adopted under this chapter.

The bond must pay to the state and any person or persons having a cause of action against the obligor all moneys that may become due and owing to the state and those persons under this chapter.

The bond must be continuous and may be canceled by the surety upon the surety giving written notice to the director of its intent to cancel the bond.

The cancellation applies 45 days after the notice is received by the director.

Instead of a surety bond, if the applicant is a Washington business corporation, the applicant may maintain unimpaired capital, surplus, and long-term subordinated debt in an amount that at any time its outstanding promissory notes or other evidences of debt, other than long-term subordinated debt, in an aggregate sum do not exceed three times the aggregate amount of its unimpaired capital, surplus, and long-term subordinated debt.

The director may define qualifying "long-term subordinated debt" for purposes of this section.

6.5.

(1)LICENSE— EachDIRECTOR'S licenseeDUTIES. shall maintain a surety bond in an amount based on the previous year's total dollar volume of proceeds.

(1) The minimumdirector suretyshall bondissue mustand bedeliver ata leastlicense $50,000.to the applicant to offer and provide earned wage access services in accordance with this chapter if, after investigation, the director finds that:

The director may adopt rules to implement this section.

(2) The bond must run to the state of Washington as obligee for the use and benefit of the state and of any person or persons who may have a cause of action against the obligor under this chapter.

The bond will pay to the state and any person or persons having a cause of action against the obligor all moneys that may become due and owing to the state and those persons under and by virtue of this chapter.

(3) The bond must be continuous and may be canceled by the surety upon the surety giving written notice to the director of its intent to cancel the bond.

The cancellation is effective 30 days after the notice is received by the director or the director's designee.

Whether or not the bond is renewed, continued, replaced, or modified, including increases or decreases in the penal sum, it is considered one continuous obligation, and the surety upon the bond is not liable in aggregate or cumulative amount exceeding the penal sum set forth on the face of the bond.

In no event may the penal sum, or any portion thereof, at two or more points in time, be added together in determining the surety's liability.

p.

5 SSB 5328 (4) The director may increase the amount of a bond required based on the nature and volume of business activities, the financial health of the company, and other criteria specified by the director in rule.

NEW SECTION.

Sec.

7.

(1) The director shall issue and deliver a license to the applicant to offer and provide employer-integrated wage access services in accordance with this chapter if, after investigation, the director finds that:

(b)p. The applicant has submitted a complete application in compliance with section 5 of this act;

(c)5 NeitherSB the5328 applicant(b) norThe itsapplicant officershas orsubmitted principals have had a licensecomplete application in thiscompliance statewith orsection another4 state, revoked or suspended within the last five years of thethis dateact; of filing of the application;

(c) Neither the applicant nor its officers or principals have had a license issued under this section or any other section, in this state or another state, revoked or suspended within the last five years of the date of filing of the application;

and (e) The financial responsibility, experience, character, and general fitness of the applicant hasare demonstratedsuch itas canto operatecommand inthe confidence of the community and to warrant a safebelief that the business will be operated honestly, fairly, and soundefficiently manner;within the purposes of this chapter.

and(2) (f)If The financial responsibility, experience, character, and general fitness of the applicantdirector aredoes suchnot asfind to command the confidenceconditions of thesubsection community(1) andof tothis warrantsection ahave beliefbeen thatmet, the businessdirector willmay benot operatedissue honestly, fairly, and efficiently within the purposeslicense. of this chapter.

(2) If the director does not find the conditions of subsection (1) of this section have been met, the director shall not issue the license.

(3) The director may,shall approve or deny every application for goodlicense cause,under conditionthis chapter within 90 days from the issuancefiling of a license.complete application with the fees and the approved bond.

(4) The director may waive one or more requirements of this section or permit an applicant to submit other information in lieu of the required information.

8.6.

ALICENSE license—INFORMATION underCONTAINED. this chapter is not transferable or assignable.

p.(1) The license must display the following information:

6(a) SSBThe 5328address NEWat SECTION.which the business is to be conducted or whether the business is to be conducted entirely online;

(b) The full name of the licensee, and, if the licensee is a copartnership or association, the names of its members;

and (c) If the licensee is a corporation, the date and place of its incorporation.

(2) The license is not transferable or assignable.

NEW SECTION.

9.7.

LICENSEE —ASSESSMENT — BOND TIME TIME OF PAYMENT.

The licensee is responsible for paymentp. of the annual assessment for the previous calendar year if the licensee had a license for any time during the preceding calendar year, regardless of whether the licensee surrendered the license during the calendar year or whether the license was suspended or revoked.

At6 SB 5328 payment of the sameannual time,assessment for the licenseeprevious shallcalendar fileyear withif the directorlicensee thehad requireda bondlicense orfor otherwiseany demonstratetime complianceduring withthe sectionpreceding 6calendar year, regardless of thiswhether act.they surrendered their license during the calendar year or whether their license was suspended or revoked.

At the same time, the licensee shall file with the director the required bond or otherwise demonstrate compliance with section 4 of this act.

10.8.

LICENSING —APPLICATIONS — REGULATION OF LICENSEES— DIRECTOR'S DUTIES AND AUTHORITY — FINES— ORDERS— STATUTE OF LIMITATIONS.

(a) Failure of the applicant to demonstrate within its application for a license that it meets the requirements for licensing in sections 54 and 75 of this act;

(c) Revocation or suspension of a license to offer or provide earned wage access services by this state, another state, or by the federal government within five years of the date of submittal of a complete application for a license;

or (d) Filing an incomplete application when that incomplete application has been filed with the department for 60 or more days, ifprovided that the director has given notice to the licensee that the application is incomplete, informed the applicant why the application is incomplete, and allowed at least 20 days for the applicant to complete the application.

The director may give notice through the nationwide mortgage licensing system and registry.

(b) The licensee, either knowingly or without the exercise of due care, has violated any provision of this chapter or any rule adopted under this chapter;

7 SSBSB 5328 (b)(c) TheA licenseefact violatedor anycondition provisionexists that, if it had existed at the time of thisthe chapteroriginal orapplication anyfor rulethe adoptedlicense, underclearly thiswould chapter;have allowed the director to deny the application for the original license;

(c) A fact or condition(d) existsThe that,licensee iffailed itto hadcomply existedwith atany thedirective, timeorder, ofor thesubpoena originalissued applicationby for the license, would have allowed the director tounder denythis thechapter. application for the original license;

(d)(4) The licenseedirector failedmay tocondition, complyrevoke, or suspend the license with anyrespect directive,to order,which orgrounds subpoenafor issuedconditioning, byrevocation, theor directorsuspension undermay thisoccur chapter;or exist.

or(5) (e) The licenseedirector hasmay operatedimpose infines anof unsafeup to $100 per day, per violation, upon the licensee or unsoundother manner.person subject to this chapter for:

(4) The director may impose fines of up to $100 per day, per violation, upon the licensee or other person subject to this chapter for:

(5)(6) The director may issue an order directing the licensee or other person subject to this chapter to:

or (d) Refund all fees,fees subscription fees, tips, gratuities, donations, and voluntary contributions received through any violation of this chapter.

(6)(7) The director may issue an order removing from office or prohibiting from participation in the affairs of any licensee, or both, any officer, principal, or any person subject to this chapter for:

(c) Suspension or revocation of a license to offer or provide earned wage access services in this state or another state;

8 SSBSB 5328 (7)(8) Except to the extent prohibited by another statute, the director may engage in informal settlement of complaints or enforcement actions including, but not limited to, payment to the department for purposes of financial literacy and education programs authorized under RCW 43.320.150.

(8)(9) Whenever the director determines that the public is likely to be substantially injured by delay in issuing a cease and desist order, the director may immediately issue a temporary cease and desist order.

The order appliesbecomes effective at the time specified in the order.

Every temporary cease and desist order must include a provision that a hearing willmust be held upon request to determine whether the order will become permanent.

(9)(10) A licensee may surrender a license by delivering to the director written notice of surrender, but the surrender does not affect the licensee's civil or criminal liability, if any, for acts committed before the surrender, including any administrative action initiated by the director to suspend or revoke a license, impose fines, compel the payment of restitution to borrowers or other persons, or exercise any other authority under this chapter.

SurrenderThe statute of alimitations licenseon appliesactions uponnot approvalsubject to RCW 4.16.160 that are brought under this chapter by the director.director is five years.

(10)(11) The revocation, suspension, or surrender of a license does not impair or affect the obligation of a preexisting lawful contract between the licensee and a consumer.

(11)(12) Every license issued under this chapter remains in force and effect until it has been surrendered, revoked, expired, or suspended in accordance with this chapter.

However, the director may reinstate suspended or expired licenses or issue new licenses to a licensee whose license hasor licenses have been revoked if the director finds that the licensee meets all the requirements of this chapter.

(12) A license issued under this chapter expires upon the licensee's failure to comply with the annual assessment requirements p.

9 SSBSB 5328 (13) A license issued under this chapter expires upon the licensee's failure to comply with the annual assessment requirements in section 97 of this act.

The licensee must receive notice priorbefore to expiration and have the opportunity to stop the expiration as set forth in rule.

11.9.

(1)LICENSEE'S AOBLIGATIONS. licensee may not charge to, or receive from, a consumer more than $5 per employer-integrated earned wage advance transaction, and no more than $10 total per calendar month.

(2)A Theperson followingrequired moneysto chargedbe bylicensed orunder receivedthis fromchapter theshall employer-integratedcomply wagewith access services provider count towards the limitsfollowing inrequirements: subsection (1) of this section:

(a)(1) TransferDevelop fees;and implement policies and procedures to respond to questions raised by consumers and address complaints from consumers in an expedient manner;

(b)(2) ExpeditedWhenever transfera fees;provider offers a consumer the option to receive proceeds for a fee, offer that consumer at least one reasonable option to obtain proceeds at no cost and clearly explain how to elect that no-cost option;

(c)(3) SubscriptionBefore fees;entering into an agreement with a consumer for the provision of earned wage access services, do both of the following:

and(a) (d)Inform Tips,the gratuities,consumer donations,of voluntarytheir contributions,rights andunder the like.agreement;

(3)(b) AFully licenseeand mayclearly continuedisclose toall providefees advancesassociated duringwith the remainderearned ofwage theaccess calendarservices; month to the consumer but may not charge additional moneys to, or receive additional moneys from, that consumer.

and (c) Inform the consumer of the services and fees associated with subscriptions or memberships that are not provided for in section 10(4) of this act;

(4) Inform the consumer of any material changes to the terms and conditions of the earned wage access services before implementing those changes for that consumer;

(5) Allow the consumer to cancel use of the licensee's earned wage access services at any time, without incurring a cancellation fee imposed by the licensee;

(6) Comply with all applicable local, state, and federal privacy and information security laws;

(7) If a licensee solicits, charges, or receives a tip, gratuity, or other donation from a consumer, the licensee shall do both of the following:

p.

10 SB 5328 (a) Clearly and conspicuously disclose to the consumer immediately before each transaction that a tip, gratuity, or other donation amount may be zero and is voluntary;

and (b) Clearly and conspicuously disclose in its service contract with the consumer and elsewhere that tips, gratuities, or donations are voluntary and that the offering of earned wage access services, including the amount of proceeds a consumer is eligible to request and the frequency with which proceeds are provided to a consumer, is not contingent on whether the consumer pays any tip, gratuity, or other donation or on the size of the tip, gratuity, or other donation;

(8) Provide proceeds to a consumer by any means mutually agreed upon by the consumer and the licensee;

(9) If the licensee will seek repayment of outstanding proceeds or payment of fees or other amounts owed, including voluntary tips, gratuities, or other donations, in connection with the activities covered by this chapter, from a consumer's depository institution, including by means of electronic funds transfer, the licensee shall do both of the following:

(a) Comply with applicable provisions of the federal electronic funds transfer act, 15 U.S.C.

Sec.

1693 et seq., and regulations adopted under that act;

and (b) Reimburse the consumer for the full amount of any overdraft or nonsufficient funds fees imposed on a consumer by the consumer's depository institution that were caused by the licensee attempting to seek payment of any outstanding proceeds, fees, or other payments, in connection with the activities covered by this chapter, including voluntary tips, gratuities, or other donations, on a date before, or in an incorrect amount from, the date or amount disclosed to the consumer.

However, the licensee is not subject to the requirements of this subsection with respect to payments of outstanding amounts or fees incurred by a consumer through fraudulent or other unlawful means.

12.10.

PROHIBITED ACTS BY LICENSEES.

A person required to be licensed under this chapter may not do any of the following:

(1) Share with an employer a portion of any fees, voluntary tips, gratuities, or other donations that were received from or charged to a consumer for earned wage access services;

p.

11 SB 5328 (2) Require a consumer's credit report or a credit score provided or issued by a consumer reporting agency to determine a consumer's eligibility for earned wage access services;

(3) Accept payment of outstanding proceeds, fees, voluntary tips, gratuities, or other donations from a consumer by means of a credit card or charge card;

(4) Charge a fee for delivery or expedited delivery in excess of $7.00 per earned wage access services transaction;

(5) Charge a late fee, deferral fee, interest, or any other penalty or charge for failure to pay outstanding proceeds, fees, voluntary tips, gratuities, or other donations;

(6) Report to a consumer reporting agency or debt collector any information about the consumer regarding the inability of the provider to be repaid outstanding proceeds, fees, voluntary tips, gratuities, or other donations;

(7)(a) Compel or attempt to compel payment by a consumer of outstanding proceeds, fees, voluntary tips, gratuities, or other donations to the provider through any of the following means:

(i) Use of unsolicited outbound telephone calls;

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

(iii) Use of a third party to pursue collection from the consumer on the provider's behalf;

or (iv) Sale of outstanding amounts to a third-party collector or debt buyer for collection from the consumer.

(b) This subsection (7) does not preclude the use by a licensee of any of the foregoing methods to compel payment of outstanding amounts or fees incurred by a consumer through fraudulent or other unlawful means, nor does this subsection preclude a licensee from pursuing an employer for breach of its contractual obligations to the licensee;

(8) If the provider solicits, charges, or receives tips, gratuities, or other donations from a consumer, do any of the following:

(a) Mislead or deceive consumers about the voluntary nature of the tips, gratuities, or donations;

(b) Make representations that tips, gratuities, or other donations will benefit any specific individuals;

or (c) Present such voluntary payments as a default option to the consumer.

p.

12 SB 5328 NEW SECTION.

Sec.

11.

VIOLATIONS.

(1) Directly or indirectly employ any scheme, device, or artifice to defraud or mislead any person;consumer;

(2) Directly or indirectly engage in any unfair or deceptive act or practice toward any person;consumer;

(3) Make, in any manner, any false or deceptive statement or representation with regard to the employer-integratedearned wage access services offered and provided by the licensee;

p.

10 SSB 5328 NEW SECTION.

Sec.

13.

The legislature finds that the practices covered by this chapter are matters vitally affecting the public interest for the purpose of applying the consumer protection act, chapter 19.86 RCW.

A violation of this chapter is not reasonable in relation to the development and preservation of business and is an unfair or deceptive act in trade or commerce and an unfair method of competition for the purpose of applying the consumer protection act, chapter 19.86 RCW.

14.12.

(1)ADVERTISEMENTS NoOR licenseePROMOTIONS. may advertise, print, display, publish, distribute, or broadcast or cause or permit to be advertised, printed, displayed, published, distributed, or broadcast, in any manner whatsoever, any statement or representation with regard to the terms and conditions of employer-integrated wage access services that is false, misleading, or deceptive.

(2) A licensee shallmay submitnot theadvertise, dataprint, requireddisplay, bypublish, sectiondistribute, 19or ofbroadcast thisor actcause intoor thepermit third-partyto databasebe advertised, printed, displayed, published, distributed, or broadcast, in aany formatmanner prescribedwhatsoever, byany statement or representation with regard to the director.terms and conditions of earned wage access services that is false, misleading, or deceptive.

15.13.

(1)SUBPOENA TheAUTHORITY director— orAPPLICATION— theCONTENTS director's— designeeNOTICE— mayFEES. apply for and obtain a superior court order approving and authorizing a subpoena in advance of its issuance.

(1) The director or authorized assistants may apply for and obtain a superior court order approving and authorizing a subpoena in advance of its issuance.

(2) When an application under this section is made to the satisfaction of the court, the court must issue an order approving the subpoena.

An order under this subsection constitutes authority of law for the agency to subpoena the documents, records, evidence, or testimony.

1113 SSBSB 5328 (3)(2) TheWhen director or the director's designee may seek approval and a court may issue an orderapplication under this section withoutis priormade notice to anythe person,satisfaction includingof the personcourt, to whom the subpoenacourt ismust directedissue andan theorder personapproving who is the subjectsubpoena. of an investigation.

An order under this subsection constitutes authority of law for the agency to subpoena the documents, records, evidence, or testimony.

(3) The director or authorized assistants may seek approval and a court may issue an order under this section without prior notice to any person, including the person to whom the subpoena is directed and the person who is the subject of an investigation.

16.14.

INVESTIGATIONS AND EXAMINATIONS— DIRECTOR'S DUTIES AND POWERS — PRODUCTION OF INFORMATION — COSTS.

(b) May require the attendance of and examine under oath all persons whose testimony may be required about the business or the subject matter of any investigation, examination, or hearing and may require such personpersons to produce books, accounts, papers, records, files, and any other information the director or thedesignated director'spersons designeedeem deems relevant to the inquiry;

and (d)p. May issue a subpoena or subpoena duces tecum requiring attendance by any person identified in this section or compelling production of any books, accounts, papers, records, files, or other documents or information identified in this section.

14 SB 5328 (d) May issue a subpoena or subpoena duces tecum requiring attendance by any person identified in this section or compelling production of any books, accounts, papers, records, files, or other documents or information identified in this section.

p.(3) Every licensee examined or investigated by the director or the director's designee must pay to the director the cost of the examination or investigation of each licensed place of business as determined by rule by the director.

12 SSB 5328 (3) Every licensee examined or investigated by the director or the director's designee must pay to the director the cost of the examination or investigation of each licensed place of business as determined by rule by the director.

17.15.

LICENSEE— RECORDKEEPING —DIRECTOR'S ACCESS — REPORT REQUIREMENT — FAILURE TO REPORT.

The directorp. shall have free access to such books, accounts, records, papers, documents, files, and other information wherever located.

Every15 licenseeSB 5328 director shall preservehave thefree access to such books, accounts, records, papers, documents, files, and other information relevantwherever tolocated. an employer-integrated earned wage advance transaction for at least six years.

NoEvery licensee orshall personpreserve subjectthe tobooks, examinationaccounts, orrecords, investigationpapers, underdocuments, thisfiles, chapterand shallother withhold,information abstract,relevant remove,to mutilate,an destroy,earned orwage secreteaccess anyservices books,transaction accounts,for records,at papers,least documents,three files,years. or other information.

A licensee or person subject to examination or investigation under this chapter may not withhold, abstract, remove, mutilate, destroy, or secrete any books, accounts, records, papers, documents, files, or other information.

(2) Each licensee shall, on or before the first day of July of each year, file a report with the director giving relevant information concerning the earned wage access services business and operations of each licensee during the preceding calendar year, including all of the following information:

(a) Gross revenue attributable to those earned wage access services;

(b) The total number of transactions in which the licensee provided proceeds to consumers;

(c) The total number of unique consumers to whom the licensee provided proceeds;

(d) The total dollar amount of proceeds the licensee provided to consumers;

(e) The total dollar amount of fees, voluntary tips, gratuities, or other donations the licensee received from consumers;

(f) The total number of transactions in which the proceeds were provided to consumers for which the provider did not receive repayment of any outstanding proceeds;

(g) The total dollar amount of transactions described under (f) of this subsection;

(h) The total number of transactions in which proceeds were provided to consumers for which the licensee received partial repayment of outstanding proceeds;

(i) The total dollar amount of transactions described under (h) of this subsection and the total dollar amount of unpaid outstanding proceeds attributable to those transactions;

(j) The total number of transactions in which outstanding proceeds were repaid after the original scheduled repayment date;

and (k) The total dollar amount of transactions described under (j) of this subsection.

1316 SSBSB 5328 (2)(3) EachThe licenseereport shall,must onbe ormade beforeunder theoath firstand daymust ofbe Marchin of each year, file a report with the directorform giving relevant information as prescribed by the directordirector, concerningwho theshall employer-make integratedand wagepublish accessannually servicesan businessanalysis and operationsrecapitulation of each licensee during the precedingreports. calendar year.

(3) The report required in subsection (2) of this section must be made under oath and must be in the form prescribed by the director, who may make and publish annually an analysis and recapitulation of the reports.

18.16.

EachDIRECTOR licensee—BROAD shallADMINISTRATIVE submitDISCRETION call— reportsRULE inMAKING the— formACTIONS andIN containingSUPERIOR theCOURT. information as prescribed by the director.

NEW(1) SECTION.The director has the power, and broad administrative discretion, to administer and interpret this chapter to facilitate the delivery of earned wage access services to the citizens of this state by persons subject to this chapter.

Sec.The director shall adopt all rules necessary to administer this chapter and to ensure complete and full disclosure by licensees of earned wage access services transactions governed by this chapter.

19.

(1) The director has the power, and broad administrative discretion, to administer and interpret this chapter to facilitate the delivery of financial services to the citizens of this state by persons subject to this chapter.

The director shall adopt all rules necessary to administer this chapter and to ensure complete and full disclosure by licensees of employer-integrated earned wage advance transactions governed by this chapter.

(3) ForThe purposesdirector ofor thisdesignated section,persons, "conductingwith businessor inwithout anprior injuriousadministrative manner"action, meansmay conductingbring businessan action in asuperior mannercourt thatto violatesenjoin anythe provisionacts or practices that constitute violations of this chapter orand thatto createsenforce thecompliance reasonablewith likelihoodthis ofchapter aor violationany ofrule anyor provisionorder ofmade under this chapter.

(4)Upon Theproper directorshowing, orinjunctive therelief director's designee, with or withouta priortemporary administrativerestraining action, may bring an action in superior court to enjoin the acts or practices that constitute violations of this chapter and to enforce compliance with this chapter or any rule or order mademust underbe thisgranted. chapter.

Upon proper showing, injunctive relief or a temporary restraining order shall be granted.

p.(4) For purposes of this section, "conducting business in an injurious manner" means conducting business in a manner that violates any provision of this chapter or that creates the reasonable likelihood of a violation of any provision of this chapter.

14 SSB 5328 (5) The director shall implement a common database with real-time access through an internet or application programming interface connection for use by the department and any licensee entering into an employer-integrated wage access services transaction in accordance with this section;

and either:

(a) Operate the database;

or (b) Contract with a third-party provider to operate the database.

(6) If the director contracts with a third-party provider for the operation of the database, all of the following apply:

(a) The director shall ensure that the third-party provider selected as the database provider operates the database pursuant to the provisions of this section;

(b) The third-party provider shall use the data collected under this chapter only as prescribed in this chapter and the contract with the department and for no other purpose.

(7) The database must be accessible to licensees to:

(a) Submit each earned wage access services transaction into the database;

(b) Verify whether entering into an earned wage access services transaction with a particular consumer would be in violation of this chapter;

and (c) Assist in submitting data under this chapter for annual reporting requirements as outlined in this chapter.

(8) Before entering into an earned wage access services transaction, a licensee shall submit the following data into the database in a format prescribed by the director that includes:

(a) The consumer's name;

(b) The consumer's social security number or employment authorization alien number;

(c) The consumer's address;

(d) The amount of the transaction;

(e) The date of the transaction;

(f) The date that the transaction closed;

and (g) Any additional information required by the director.

(9) The director shall impose a fee per transaction for data required to be submitted for an earned wage access services transaction.

The fee in this subsection may not be charged for a no- cost earned wage access services transaction.

(10) A licensee may rely on information contained in the database as accurate and may not be subject to any administrative penalty or p.

15 SSB 5328 civil liability due to reliance on inaccurate information contained in the database.

(11) The director shall use the database to administer and enforce this chapter.

(12) If the director contracts with a third party to operate the database, the director shall require the database provider to file a report containing the following information by July 31st of each year:

(a) The total number and dollar amount of earned wage access services transactions entered into in the previous calendar year ending December 31st;

(b) The total dollar amount of the following collected for earned wage access services transactions as of December 31st of the previous year:

(i) Fees;

and (ii) Tips, donations, and other amounts paid voluntarily;

(c) As of December 31st of the previous year, the following per consumer:

(i) The average earned wage access services transaction amount;

(ii) The average number of transactions;

and (iii) The average aggregate earned wage access services transaction amount entered into;

(d) The average number of days a consumer was engaged in an earned wage access services transaction for the previous year;

(e) An estimate of the average total amount of the following paid per consumer for earned wage access services transactions for the previous year:

(i) Fees;

and (ii) Tips, donations, and other amounts paid voluntarily;

(f) The total number of unique consumers that entered into an earned wage access services transaction for the previous year;

and (g) Any other information required by the director.

(13) The director may adopt rules to administer this section and ensure that the database is used by licensees in accordance with this section.

(14) A provider licensed under this chapter offering earned wage access services transactions may use the information found in the database to assist with filing the report outlined in this section with the department.

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16 SSB 5328 NEW SECTION.

Sec.

20.

(1) The director shall establish fees by rule sufficient to cover the costs of administering this chapter.

These fees may include:

(a) An annual assessment specified in rule by the director paid by each licensee on or before the annual assessment due date;

(b) A late fee or late payment of the annual assessment as specified in rule by the director;

(c) An hourly fee to cover the costs of any examination or investigation of the books and records of a licensee or other person subject to this chapter;

(d) A nonrefundable application fee to cover the costs of processing licensing applications made to the director under this chapter;

(e) An initial fee to cover the period from the date of licensure to the end of the calendar year in which the license is initially granted;

and (f) A transaction fee or set of transaction fees to cover the administrative costs associated with processing administrative changes as specified in rule by the director.

(2) The director shall ensure that when an examination or investigation, or any part of the examination or investigation, of any licensee, applicant, or person subject to licensing under this chapter, requires travel and services outside this state by the director or designee, the licensee, applicant, or person subject to licensing under this chapter that is the subject of the examination or investigation shall pay the actual travel expenses incurred by the director or designee conducting the examination or investigation.

(3) All money, fees, and penalties collected under this chapter shall be deposited into the financial services regulation account.

(4) The director or designee may waive all or a portion of the fees and assessments under this chapter.

21.17.

IfVIOLATION the—NO licenseePENALTY isPRESCRIBED an— individual,GROSS theMISDEMEANOR department—GOOD shallFAITH immediatelyEXCEPTION. suspend the license of a person who has been certified pursuant to RCW 74.20A.320 by the department of social and health services as a person who is not in compliance with a support order.

If(1) theA person haswho continuedviolates, toor meetknowingly allaids otheror requirementsabets forin reinstatementthe duringviolation theof suspension,any reissuanceprovision of thethis licensechapter, isfor automaticwhich uponno thepenalty department'shas receiptbeen ofprescribed, and a releaseperson who fails to perform any act that is the person's duty to perform under p.

17 SSBSB 5328 issuedthis bychapter theand departmentfor ofwhich socialno andpenalty healthhas servicesbeen statingprescribed thatfor thefailure licenseeto do so, is inguilty complianceof witha thegross order.misdemeanor.

(2) A provision imposing civil penalties or criminal liability under this chapter or rule adopted under this chapter does not apply to an act taken or omission made in good faith in conformity with a written notice, interpretation, or examination report of the director or the director's agent.

22.18.

(1)APPLICABILITY. A person who violates, or knowingly aids or abets in the violation of any provision of this chapter, for which no penalty has been prescribed, and a person who fails to perform any act that is the person's duty to perform under this chapter and for which no penalty has been prescribed for failure to do so, is guilty of a gross misdemeanor.

(2)(1) NoNotwithstanding provisionany imposingother civilprovision penaltiesof orlaw, criminalearned liabilitywage underaccess thisservices chapteroffered orand ruleprovided adoptedby undera thislicensee chapter applies to an act taken or omission made in goodaccordance faithwith inthis conformitychapter withmay anot writtenbe notice,considered interpretation,to orbe examinationany report of the directorfollowing: or the director's designee.

(a) A violation of or noncompliance with any law of this state governing deductions from wages or the purchase, sale or assignment of, or an order for, earned but unpaid income;

(b) A loan or other form of credit or debt, nor shall the provider be considered a creditor, credit grantor, credit service business, debt collector, or lender with respect thereto;

or (c) Money transmission, nor shall the provider be considered a money transmitter for purposes of any law of this state.

(2) Notwithstanding any other provision of law, fees, voluntary tips, gratuities, or other donations paid by a consumer to a licensee in accordance with this chapter shall not be considered interest or finance charges.

If there is a conflict between the provisions of this chapter and any other statute, the provisions of this chapter control.

23.19.

TheAPPLICATION proceedingsOF forADMINISTRATIVE denyingPROCEDURE licenseACT. applications, issuing cease and desist orders, suspending or revoking licenses, and imposing civil penalties or other remedies under this chapter, and any review or appeal of such action, shall be governed by the provisions of the administrative procedure act, chapter 34.05 RCW.

The proceedings for denying license applications, issuing cease and desist orders, suspending or revoking licenses, and imposing civil penalties or other remedies under this chapter, and any review or appeal of such action, are governed by the provisions of the administrative procedure act, chapter 34.05 RCW.

24.20.

(1)ENFORCEMENT TheOF directorCHAPTER— orDIRECTOR'S theDISCRETION— director'sHEARING designee—SANCTIONS may,—RECOVERY atOF theirCOSTS. discretion, take such action as provided for in this chapter to enforce this chapter.

If(1) theThe persondirector subject to such action does not appear in person or by counsel at the time and place designated forpersons anymay, administrativeat hearingtheir thatdiscretion, maytake besuch heldaction onas theprovided action,for thenin thethis personchapter is deemed to consentenforce tothis thechapter. action.

If the person subject to such action does not appear in person or by counsel at the time and place designated for any administrative hearing that may be p.

18 SB 5328 held on the action, then the person is deemed to consent to the action.

NEW SECTION.

25.21.

RCWSHORT 31.04.015TITLE. and 2018 c 62 s 9 are each amended to read as follows:

p.This chapter may be known and cited as the Washington state earned wage access services act.

18 SSB 5328 The definitions set forth in this section apply throughout this chapter unless the context clearly requires a different meaning.

(1) "Add-on method" means the method of precomputing interest payable on a loan whereby the interest to be earned is added to the principal balance and the total plus any charges allowed under this chapter is stated as the loan amount, without further provision for the payment of interest except for failure to pay according to loan terms.

The director may adopt by rule a more detailed explanation of the meaning and use of this method.

(2) "Affiliate" means any person who, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with another person.

(3) "Applicant" means a person applying for a license under this chapter.

(4) "Borrower" means any person who consults with or retains a licensee or person subject to this chapter in an effort to obtain, or who seeks information about obtaining a loan, regardless of whether that person actually obtains such a loan.

"Borrower" includes a person who consults with or retains a licensee or person subject to this chapter in an effort to obtain, or who seeks information about obtaining a residential mortgage loan modification, regardless of whether that person actually obtains a residential mortgage loan modification.

(5) "Department" means the state department of financial institutions.

(6) "Depository institution" has the same meaning as in section 3 of the federal deposit insurance act on July 26, 2009, and includes credit unions.

(7) "Director" means the director of financial institutions.

(8) "Educational institution" means any entity that is a degree- granting institution as defined in RCW 28B.85.010, a private vocational school as defined in RCW 28C.10.020, or school as defined in RCW 18.16.020.

(9) "Federal banking agencies" means the board of governors of the federal reserve system, comptroller of the currency, director of the office of thrift supervision, national credit union administration, and federal deposit insurance corporation.

(10) "Individual servicing a mortgage loan" means a person on behalf of a lender or servicer licensed by this state, who collects or receives payments including payments of principal, interest, p.

19 SSB 5328 escrow amounts, and other amounts due, on existing obligations due and owing to the licensed lender or servicer for a residential mortgage loan when the borrower is in default, or in reasonably foreseeable likelihood of default, working with the borrower and the licensed lender or servicer, collects data and makes decisions necessary to modify either temporarily or permanently certain terms of those obligations, or otherwise finalizing collection through the foreclosure process.

(11) "Insurance" means life insurance, disability insurance, property insurance, involuntary unemployment insurance, and such other insurance as may be authorized by the insurance commissioner.

(12) "License" means a single license issued under the authority of this chapter.

(13) "Licensee" means a person to whom one or more licenses have been issued.

"Licensee" also means any person, whether located within or outside of this state, who fails to obtain a license required by this chapter.

(14) "Loan" means a sum of money lent at interest or for a fee or other charge and includes both open-end and closed-end loan transactions.

"Loan" also includes consumer-directed wage access services, as defined in section 2 of this act.

(15) "Loan processor or underwriter" means an individual who performs clerical or support duties as an employee at the direction of and subject to the supervision and instruction of a person licensed, or exempt from licensing, under this chapter.

(16) "Making a loan" means advancing, offering to advance, or making a commitment to advance funds to a borrower for a loan.

(17) "Mortgage broker" means the same as defined in RCW 19.146.010, except that for purposes of this chapter, a licensee or person subject to this chapter cannot receive compensation as both a consumer loan licensee making the loan and as a consumer loan licensee acting as the mortgage broker in the same loan transaction.

(18)(a) "Mortgage loan originator" means an individual who for compensation or gain (i) takes a residential mortgage loan application, or (ii) offers or negotiates terms of a residential mortgage loan.

"Mortgage loan originator" also includes individuals who hold themselves out to the public as able to perform any of these activities.

"Mortgage loan originator" does not include any individual who performs purely administrative or clerical tasks;

and does not include a person or entity solely involved in extensions of p.

20 SSB 5328 credit relating to timeshare plans, as that term is defined in section 101(53D) of Title 11, United States Code.

For the purposes of this definition, administrative or clerical tasks means the receipt, collection, and distribution of information common for the processing of a loan in the mortgage industry and communication with a consumer to obtain information necessary for the processing of a residential mortgage loan.

(b) "Mortgage loan originator" also includes an individual who for direct or indirect compensation or gain performs residential mortgage loan modification services or holds himself or herself out as being able to perform residential mortgage loan modification services.

(c) "Mortgage loan originator" does not include a person or entity that only performs real estate brokerage activities and is licensed or registered in accordance with applicable state law, unless the person or entity is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such a lender, mortgage broker, or other mortgage loan originator.

For the purposes of chapter 120, Laws of 2009, the term "real estate brokerage activity" means any activity that involves offering or providing real estate brokerage services to the public, including:

(i) Acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property;

(ii) Bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property;

(iii) Negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property, other than in connection with providing financing with respect to such a transaction;

(iv) Engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law;

and (v) Offering to engage in any activity, or act in any capacity, described in (c)(i) through (iv) of this subsection.

(d) This subsection does not apply to employees of a housing counseling agency approved by the United States department of housing and urban development unless the employees of a housing counseling agency are required under federal law to be individually licensed as mortgage loan originators.

p.

21 SSB 5328 (19) "Nationwide mortgage licensing system" means a licensing system developed and maintained by the conference of state bank supervisors for licensing and registration.

(20) "Officer" means an official appointed by the company for the purpose of making business decisions or corporate decisions.

(21) "Person" includes individuals, partnerships, associations, limited liability companies, limited liability partnerships, trusts, corporations, and all other legal entities.

(22) "Principal" means any person who controls, directly or indirectly through one or more intermediaries, alone or in concert with others, a ten percent or greater interest in a partnership;

company;

association or corporation;

or a limited liability company, and the owner of a sole proprietorship.

(23) "Registered mortgage loan originator" means any individual who meets the definition of mortgage loan originator and is an employee of a depository institution;

a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency;

or an institution regulated by the farm credit administration and is registered with, and maintains a unique identifier through, the nationwide mortgage licensing system.

(24) "Residential mortgage loan" means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other consensual security interest on a dwelling, as defined in the truth in lending act, or residential real estate upon which is constructed or intended to be constructed a dwelling.

(25) "Residential mortgage loan modification" means a change in one or more of a residential mortgage loan's terms or conditions.

Changes to a residential mortgage loan's terms or conditions include but are not limited to forbearances;

repayment plans;

changes in interest rates, loan terms, or loan types;

capitalizations of arrearages;

or principal reductions.

(26) "Residential mortgage loan modification services" includes negotiating, attempting to negotiate, arranging, attempting to arrange, or otherwise offering to perform a residential mortgage loan modification for compensation or gain.

"Residential mortgage loan modification services" also includes the collection of data for submission to an entity performing mortgage loan modification services.

p.

22 SSB 5328 (27) "S.A.F.E.

act" means the secure and fair enforcement for mortgage licensing act of 2008, Title V of the housing and economic recovery act of 2008 ("HERA"), P.L.

110-289, effective July 30, 2008.

(28) "Senior officer" means an officer of a licensee at the vice president level or above.

(29) "Service or servicing a loan" means on behalf of the lender or investor of a residential mortgage loan:

(a) Collecting or receiving payments on existing obligations due and owing to the lender or investor, including payments of principal, interest, escrow amounts, and other amounts due;

(b) collecting fees due to the servicer;

(c) working with the borrower and the licensed lender or servicer to collect data and make decisions necessary to modify certain terms of those obligations either temporarily or permanently;

(d) otherwise finalizing collection through the foreclosure process;

or (e) servicing a reverse mortgage loan.

(30) "Service or servicing a reverse mortgage loan" means, pursuant to an agreement with the owner of a reverse mortgage loan:

Calculating, collecting, or receiving payments of interest or other amounts due;

administering advances to the borrower;

and providing account statements to the borrower or lender.

(31) "Simple interest method" means the method of computing interest payable on a loan by applying the annual percentage interest rate or its periodic equivalent to the unpaid balances of the principal of the loan outstanding for the time outstanding.

(a) On a nonresidential loan each payment is applied first to any unpaid penalties, fees, or charges, then to accumulated interest, and the remainder of the payment applied to the unpaid balance of the principal until paid in full.

In using such method, interest must not be payable in advance nor compounded.

The prohibition on compounding interest does not apply to reverse mortgage loans made in accordance with the Washington state reverse mortgage act.

The director may adopt by rule a more detailed explanation of the meaning and use of this method.

(b) On a residential mortgage loan payments are applied as determined in the security instrument.

(32) "Student education loan" means any loan solely for personal use to finance postsecondary education and costs of attendance at an educational institution.

A student education loan includes a loan made to refinance a student education loan.

A student education loan does not include a payment plan or accounts receivable at a higher p.

23 SSB 5328 education institution as defined in RCW 28B.07.020(4) only during the time of a student's enrollment in the higher education institution, not to include a refinanced payment plan or accounts receivable, an extension of credit under an open-end consumer credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling.

(33) "Student education loan borrower" means:

(a) Any resident of this state who has received or agreed to pay a student education loan;

or (b) any person who shares responsibility with such resident for repaying the student education loan.

(34) "Student education loan servicer" means any person, wherever located, responsible for the servicing of any student education loan to any student education loan borrower.

(35) "Student education loan servicing" or "service a student education loan" means:

(a) Receiving any scheduled periodic payments from a student education loan borrower pursuant to the terms of a student education loan;

(b) applying the payments of principal and interest and such other payments with respect to the amounts received from a student education loan borrower, as may be required pursuant to the terms of a student education loan;

(c) working with the student education loan borrower to collect data, or collecting data, to make decisions to modify the loan;

or (d) performing other administrative services with respect to a student education loan including collection activities.

"Student education loan servicing" does not include third-party student education loan modification services.

(36) "Third-party residential mortgage loan modification services" means residential mortgage loan modification services offered or performed by any person other than the owner or servicer of the loan.

(37) "Third-party service provider" means any person other than the licensee or a mortgage broker who provides goods or services to the licensee or borrower in connection with the preparation of the borrower's loan and includes, but is not limited to, credit reporting agencies, real estate brokers or salespersons, title insurance companies and agents, appraisers, structural and pest inspectors, or escrow companies.

(38) "Third-party student education loan modification services" means for compensation or other consideration by or on behalf of the borrower working with the student education loan borrower or his or p.

24 SSB 5328 her representative to collect data or prepare or submit documents, or collecting data and preparing or submitting documents, to modify, refinance, or consolidate the loan, or change repayment plans.

(39) "Unique identifier" means a number or other identifier assigned by protocols established by the nationwide mortgage licensing system.

Sec.

26.

RCW 31.04.025 and 2024 c 249 s 2 are each amended to read as follows:

(1) Each loan made to a resident of or a person physically located in this state by a licensee, or persons subject to this chapter, is subject to the authority and restrictions of this chapter.

(2) A person may not engage in any device, subterfuge, or pretense to evade the requirements of this chapter including, but not limited to:

Making loans disguised as personal property sale and leaseback transactions;

disguising loan proceeds as a cash rebate for the pretextual installment sale of goods or services;

or making, offering, assisting, or arranging a debtor to obtain a loan with a greater rate of interest, consideration, or charge than permitted by this chapter through any method, including mail, telephone, internet, or any electronic means regardless of whether the person has a physical location in the state.

(3) If a loan exceeds the rate permitted under this chapter, a person is a lender making a loan subject to the requirements of this chapter notwithstanding the fact that the person purports to act as an agent, service provider, or in another capacity for another person that is exempt from this chapter, if, among other things:

(a) The person holds, acquires, or maintains, directly or indirectly, the predominant economic interest in the loan;

or (b) The totality of the circumstances indicate that the person is the lender, and the transaction is structured to evade the requirements of this chapter.

(4) This chapter does not apply to the following:

(a) Any person doing business under, and as permitted by, any law of this state or of the United States relating to banks, savings banks, trust companies, savings and loan or building and loan associations, or credit unions;

(b) Any person making loans under chapter 19.60 RCW (pawnbroking);

p.

25 SSB 5328 (c) Any person conducting transactions under chapter 63.14 RCW (retail installment sales of goods and services), unless credit is extended to purchase merchandise certificates, coupons, open or closed loop stored value, or other similar items issued and redeemable by a retail seller other than the retail seller extending the credit;

(d) Any person making loans under chapter 31.45 RCW (check cashers and sellers);

(e) Any person making a loan primarily for business, commercial, or agricultural purposes unless the loan is secured by a lien on the borrower's primary dwelling;

(f) Any person selling property owned by that person who provides financing for the sale when the property does not contain a dwelling and when the property serves as security for the financing.

This exemption is available for five or fewer transactions in a calendar year.

This exemption is not available to individuals subject to the federal S.A.F.E.

act or any person in the business of constructing or acting as a contractor for the construction of residential dwellings;

(g) Any person making loans made to government or government agencies or instrumentalities or making loans to organizations as defined in the federal truth in lending act;

(h) Any person making loans under chapter 43.185A RCW (housing trust fund);

(i) Any person making loans under programs of the United States department of agriculture, department of housing and urban development, or other federal government program that provides funding or access to funding for single-family housing developments or grants to low-income individuals for the purchase or repair of single-family housing;

(j) Nonprofit housing organizations making loans, or loans made, under housing programs that are funded in whole or in part by federal or state programs if the primary purpose of the programs is to assist low-income borrowers with purchasing or repairing housing or the development of housing for low-income Washington state residents;

(k) Any person making loans which are not residential mortgage loans under a credit card plan;

(l) Individuals employed by a licensed residential mortgage loan servicing company engaging in activities related to servicing, unless licensing is required by federal law or regulation;

((and)) p.

26 SSB 5328 (m) Any person licensed under chapter 18.44 RCW that ((process[es])) processes payments on seller-financed loans secured by liens on real or personal property;

((and)) (n) Any person that extends money or credit to another person on a nonrecourse basis in exchange for a contingent right to receive an amount of the potential proceeds of any award, judgment, settlement, verdict, or other resolution from a pending legal action.

This exemption does not apply to any person that requires repayment in the event the person does not prevail in their civil proceeding ;

and (o) Any person making employer-integrated wage access services pursuant to chapter 31.-- RCW (the new chapter created in section 27 of this act).

(5) The director may, at his or her discretion, waive applicability of the consumer loan company licensing provisions of this chapter to other persons, not including individuals subject to the S.A.F.E.

act, making or servicing loans when the director determines it necessary to facilitate commerce and protect consumers.

(6) The burden of proving the application for an exemption or exception from a definition, or a preemption of a provision of this chapter, is upon the person claiming the exemption, exception, or preemption.

(7) The director may adopt rules interpreting this section.

27.22.

Sections 1 through 2421 of this act constitute a new chapter in Title 31 RCW.

2719 SSBSB 5328