bill treating earned wage advances as loans

The text as introduced · 658 words

89R2929 MLH-F

By: Menéndez
S.B. No. 3000

A BILL TO BE ENTITLED

AN ACT

relating to consumer protections for earned wage access products.

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

SECTION 1. Section 341.001, Finance Code, is amended by

adding Subdivision (6-a) and amending Subdivision (9) to read as

follows:

(6-a) "Earned wage advance" means the provision of a

cash advance to a borrower by a provider in an amount that is based,

by estimate or otherwise, on the wages or other income that the

borrower has accrued but has not yet been paid, where:

(A) the advance is to be repaid to the provider

through:

(i) wage assignment;

(ii) one or more payroll deductions;

(iii) preauthorized account debits; or

(iv) another automated means; and

(B) the provider charges, contracts for, or

receives from the borrower, directly or indirectly, one or more

charges, fees, or other amounts, including voluntary or optional

payments associated with the advance or the earned wage advance

program.

(9) "Loan" has the meaning assigned by Section 301.002

and includes a sale-leaseback transaction , [ and ] a deferred

presentment transaction , and an earned wage advance .

SECTION 2. Chapter 342, Finance Code, is amended by adding

Subchapter N to read as follows:

SUBCHAPTER N. EARNED WAGE ADVANCES

Sec. 342.701. DEFINITIONS. In this subchapter:

(1) "Cash advance" or "advance" means proceeds

received by a consumer from an earned wage advance provider.

(2) "Consumer" means an individual who resides in this

state.

(3) "Earned wage advance provider" or "provider" means

a person who is in the business of offering and providing earned

wage advance services to consumers.

Sec. 342.702. CONSUMER ASSESSMENT. An earned wage advance

provider shall, before making an advance connected to an earned

wage advance, assess a consumer's ability to repay:

(1) the advance in cash in the time and by the means

provided in the loan contract; and

(2) any other obligations owed by the consumer that

are known to the provider.

Sec. 342.703. REIMBURSEMENT. If the provider causes the

consumer to incur an overdraft fee because the provider attempts to

collect payment before the consumer's paycheck or other income is

deposited into the account, the provider shall reimburse the

consumer for all fees incurred not later than 48 hours after

receiving notice of the overdraft through any existing customer

service methods, including telephone and electronic means.

Sec. 342.704. PROHIBITIONS. (a) An earned wage advance

provider may not, in connection with providing earned wage advance

services to consumers:

(1) charge, contract for, or receive in a 30-day

period more than:

(A) 10 percent of the amount of any advances made

in that period; or

(B) $10 in total charges, fees, or other amounts;

(2) provide more than one advance on the same day to

the same consumer;

(3) compel or attempt to compel payment by a consumer

of a cash advance or other outstanding amounts associated with an

earned wage advance by:

(A) filing a suit against the consumer;

(B) using a third party to pursue collection of

payment from the consumer on the provider's behalf; or

(C) selling or assigning the outstanding amounts

to a third-party collector or debt buyer for purposes of collection

from the consumer;

(4) charge a consumer a late fee, interest, or other

penalty for failure to repay a cash advance; or

(5) report any information regarding the consumer's

inability to repay a cash advance to a consumer credit reporting

agency.

(b) For purposes of Subsection (a)(1)(B), charges, fees, or

other amounts include the sum of any:

(1) voluntary or optional charges; and

(2) required charges associated with the earned wage

advance.

Sec. 342.705. RULES. The finance commission may adopt

rules as necessary to implement this subchapter.

Sec. 342.706. DATA COLLECTION. The finance commission may

require providers to submit information considered beneficial to

public policy and consumer protection in this state to the

commission.

SECTION 3. This Act takes effect September 1, 2025.