On February 20, the Wisconsin Senate passed House Bill (HB) 574 to regulate earned wage access (EWA) products and services. HB 574 creates a new chapter to the Wisconsin Statutes that requires EWA providers to be licensed by the Division of Banking and imposes substantive and disclosure rules. HB 574 expressly exempts EWA offered by licensees under the new law from the licensed loan company provisions in Wis. Stat. § 138.09 but does not clearly address whether EWA is covered by the Wisconsin Consumer Act. HB 574 will be sent to Governor Tony Evers for signature.

HB 574 would apply to both direct-to-consumer EWA services and employer-integrated EWA services. In either case, the amount being provided to the consumer must be earned by the consumer at the time of the advance. EWA providers must be licensed to offer EWA services in the state. Additionally, a licensed EWA provider will be required to submit an annual report that includes information about its operations for the prior year, and comply with various licensing requirements.

The bill would require an EWA provider to:

• Develop policies to respond to questions raised by consumers in an expedient manner.
• Offer at least one option to obtain funds at no cost and clearly explain how to elect that option.
• Disclose all fees associated with the EWA product.
• Inform the consumer of any material changes to the terms and conditions of the EWA product before implementing the change.
• Allow the consumer to cancel the EWA service at any time, without incurring a fee.
• Disclose, both in the contract and immediately before each transaction, that tips and gratuities are voluntary and that the offering of EWA services is not contingent on a tip.
• Provide proceeds to a consumer by any mutually agreed-upon means.
• Comply with applicable provisions of the federal Electronic Fund Transfer Act.
• Reimburse the consumer for any overdraft or nonsufficient funds fees caused by the provider attempting to seek payment on a date before, or in an incorrect amount from, the date or amount disclosed to the consumer.

The bill also prohibits providers from:

• Compelling a consumer to repay by filing a suit against the consumer, using a third-party collection agency, or selling outstanding amounts to a third-party collector.
  • This prohibition does not apply to providers seeking to collect any outstanding amount incurred through fraud, or to actions against an employer for breach of contract.
• Sharing with a consumer’s employer any fees or tips received from or charged to a consumer.
• Using credit reports or credit scores to determine a consumer’s eligibility for EWA services.
• Reporting a consumer’s nonpayment to a consumer reporting agency or debt collector.
• Imposing late fees, deferral fees, interest, or any other charge for failure to pay any outstanding proceeds, fees, or tips.
• Accepting payment from a consumer via credit card.
• Misleading consumers about the voluntary nature of the tips or gratuities or representing that the tips or gratuities will benefit specific individuals.
• Advertising or broadcasting any statement or representation with regard to the EWA services offered by the provider, which is false, misleading, or deceptive, or which omits to state material information.

The Division of Banking is authorized to investigate any allegations of violation by a provider. Violations can result in civil penalties ranging from $100 to $10,000.

HB 574 provides that an EWA provider that was engaged in the business of providing EWA services in the state as of January 1, 2023 may continue until the first day of the seventh month after the effective date to engage in the business of providing EWA services in this state without obtaining a license as long as the provider submits an application for a license and otherwise complies with the chapter.

HB 574 explicitly does not apply to banks, savings banks, savings and loan associations, trust companies, credit unions, or any of their affiliates.