A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ADDING Article 8 to chapter 5, title 39 to establish the "south carolina earned wage access services act", so as to provide for requirements for earned wage access services providers, and to provide for CERTAIN exemptions and limitations.

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  Chapter 5, Title 39 of the S.C. Code is amended by adding:

 

    Article 8

 

    South Carolina Earned Wage Access Services

 

    Section 39-5-810.  This article may be cited as the "South Carolina Earned Wage Access Services Act".

 

    Section 39-5-820.  As used in this article, unless the context clearly requires otherwise, the term:

    (1) "Consumer" means a natural person residing in the State of South Carolina.

    (2) "Consumer-directed wage access services" means the business of delivering proceeds to consumers prior to the date on which an obligor is obligated to pay salary, wages, compensation, or other income to that consumer, based on the consumer's representations and the provider's reasonable determination of the consumer's earned but unpaid income.

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

    (4) "Earned wage access services" means the business of providing consumer-directed wage access services or employer-integrated wage access services, or both.

    (5) "Employer-integrated wage access services" means the business of delivering proceeds to consumers prior to the date on which an obligor is obligated to pay salary, wages, compensation, or other income to that consumer, when the provider has verified the earned but unpaid income of the consumer through time and attendance, or earnings data for the relevant pay period, using information provided by an obligor or a service provider of the obligor.

    (6) "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.

    (7) "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:

       (a) a fee imposed by a provider for delivery or expedited delivery of proceeds to a consumer, as long as the provider offers the consumer the option to obtain unexpedited earned wage access services at no cost to the consumer;

       (b) 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;

       (c) 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 the option to obtain earned wage access services at no cost to the consumer;

       (d) a tip or gratuity paid by a consumer to a provider, as long as the provider offers the consumer the option to obtain earned wage access services at no cost to the consumer.

    (7) "Nonrecourse" 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:

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

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

       (c) sale of outstanding amounts to a third-party collector or debt-buyer.

The term "nonrecourse" 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.

    (8) "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.

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

    (10) "Person" means a partnership, association, corporation, or other business unit.

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

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

 

    Section 39-5-830.  This article does not apply to any person doing business under authority of and as permitted by any law of this State or the United States relating to banks, credit unions, savings and loan associations, savings banks, or trust companies.

 

    Section 39-5-840.  A provider shall comply with all of the following requirements:

    (1) The provider shall provide all proceeds on a nonrecourse basis and shall treat nonmandatory payments as nonrecourse payment obligations.

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

       (a) informs the consumer of the terms and conditions of the earned wage access services;

       (b) clearly and conspicuously describes how the consumer may obtain proceeds at no cost to that consumer;

       (c) provides a phone number or a website through which consumers can submit complaints about the provider's earned wage access services to the provider;

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

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

    (3) The provider must inform the consumer of the fact of any material changes to the terms and conditions of the earned wage access services before implementing those changes for that consumer, using a font and language intended to be easily understood by a layperson.

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

    (5) 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 seek repayment of those proceeds from the consumer.

    (6) A provider that makes earned wage access services available to a consumer on a recurring basis shall allow a consumer to discontinue receiving those services at any time, without imposing a financial penalty on that consumer.

 

    Section 39-5-850.  No person subject to this article shall do any of the following:

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

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

    (3) 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 the 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;

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

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

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

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

    (8) advertise, display, distribute, broadcast, televise, or cause or permit to be advertised, displayed, distributed, broadcasted, or televised in any manner whatsoever any false, misleading or deceptive statement or representation regarding the conditions of the earned wage access services offered and provided by the provider.

 

    Section 39-5-860.  The following shall apply in connection with the earned wage access services offered and provided by a provider in compliance with the provisions of this article:

    (A) Proceeds provided to a consumer by the provider shall not be considered a consumer loan for purposes of Section 37-3-104 or a loan for purposes of Section 37-3-106.

    (B) The provider shall not be considered a lender for purposes of Section 37-3-107(1).

    (C) Nonmandatory payments paid by a consumer to a provider shall not be considered a loan finance charge for purposes of Section 37-3-109.

 

SECTION 2.  This act takes effect upon approval by the Governor.

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