On April 19, less than a month after Wisconsin, Kansas has followed suit by enacting comprehensive earned wage access legislation. Kansas' law is set to take effect immediately upon publication.
The law creates an annual registration requirement for any individual or entity who offers an EWA product. EWA providers must register with the Kansas State Bank Commissioner, the state's financial services regulator.
In addition to the licensing requirements, the law has the following provisions:
- Non-recourses basis. All proceeds and fees are treated as non-recourse payment obligations.
- Fee disclosures. EWA providers must (i) "fully and clearly disclose all fees" associated with the EWA services and (ii) "clearly and conspicuously describe how the consumer may obtain proceeds at no cost."
- Tipping disclosures and no tip sharing. EWA providers must (i) disclose that tipping is voluntary, both prior to each transaction, and in the service contract; (ii) disclose that the amount of proceeds a consumer is eligible to request, as well as the frequency with which proceeds, are not contingent on tipping; (iii) refrain from misleading or deceiving consumers about the voluntary nature of tips; and (iv) refrain from making representations that tipping will benefit any specific individuals. Moreover, EWA providers may not share with a consumer's employer any fees or tips received from or charged to a consumer for EWA services.
- No debt collection and reporting. EWA providers may not (i) initiate lawsuits against a consumer, make phone calls to a consumer, or use or sell the debt to a third party in an attempt to compel repayments, or (ii) report a consumer's nonpayment to a consumer reporting agency or debt collector.
- No credit payments. EWA providers may not accept credit of any kind as payment from a consumer of outstanding proceeds or non-mandatory payments.
- No late fees. EWA providers may not charge late fees, deferral fees, interest or other penalties for failure to pay outstanding proceeds, fees, or tips.
- No credit scores. EWA providers may not require a credit score to determine a consumer's eligibility.
Putting It Into Practice: While the CFPB has been slow to introduce its promised EWA regulations, states are quickly adopting their own EWA legislation. Four states have enacted laws, and more than a dozen have introduced similar bills. EWA providers should promptly evaluate their business and compliance procedures to comply with the newly effective Kansas law. Additionally, they should be prepared to submit their registration applications as soon as the application form becomes available.
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