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HB 5558

Businesses: other; regulation and licensing of earned wage access service providers; provide for. Creates new act.

2025-2026 Regular Session Introduced by Greg Alexander and 8 co-sponsors

The bill creates a Michigan licensing regime for earned wage access providers, with fees, bonds, consumer protections, and DIFS enforcement.

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Bill Summary · HB 5558

Summary of HB 5558 (Michigan, 2025-2026)

Title and Purpose

  • Name: Earned Wage Access Services Act
  • Objective: Create a comprehensive licensing and regulatory regime for providers of earned wage access (EWA) services in Michigan. The act would require licensure, set operating standards, establish fees and bonds, grant rulemaking authority to the Department of Insurance and Financial Services (DIFS), and permit enforcement tools and penalties.

Definitions and Scope

  • EWA services: Both consumer-directed wage access (personal access to earned but unpaid income based on the consumer’s representation and licensee’s determination) and employer-integrated wage access (data from the employer or payroll service provider).
  • Earned but unpaid income: Wages or other compensation earned but not yet paid by the employer.
  • Consumer: Michigan resident who uses EWA services.
  • Licensee: Entity licensed to provide EWA services in Michigan.
  • Several related terms define roles, fees, bonds, and regulatory processes.

Key Provisions and Changes

  • Licensing and Eligibility
    • A license is required to engage in the business of EWA services.
    • Applicants must submit a detailed application to DIFS, including location(s), ownership, executive officers, and control information.
    • Separate licenses required for multiple physical locations unless online-only.
    • A denied application or no decision within 60 days triggers a right to a hearing.
  • Exemptions
    • Depository financial institutions (banks, savings institutions, credit unions) are exempt.
    • Payroll/service providers that verify earnings but do not fund proceeds are exempt.
    • Employers that advance pay prior to a scheduled payday are exempt.
    • Certain consumer-reporting disclosures related to EWA are exempt from licensing.
  • Fees and Financial Requirements
    • Licenses require annual fees set by the DIFS director; first payment due within 60 days of application.
    • A $50,000 surety bond is required per licensee (one bond can cover multiple licenses if ownership is shared among at least 20% of multiple licensees).
    • License renewals occur annually; licenses expire September 30 and must be renewed by August 1.
    • Travel costs for out-of-state investigations may be charged to the licensee.
  • Compliance and Consumer Protections
    • Licensees must post license copies at business locations or on websites.
    • Licensees must maintain written policies for consumer inquiries and expeditiously handle complaints.
    • Before entering an agreement, licensees must disclose consumer rights and all fees.
    • Material changes to terms must be disclosed to consumers in advance.
    • Consumers may cancel participation at any time without a fee.
    • Privacy and information security compliance is required.
    • If proceeds are delivered for a fee or tips/donations are solicited, an option to obtain no-cost proceeds must be offered and clearly explained.
    • Clear, upfront disclosure that tips are voluntary and not tied to specific benefits or service quality.
    • If seeking to collect on outstanding proceeds, licensees must comply with federal Electronic Fund Transfer Act provisions and reimburse overdraft fees caused by improper timing/amount of collections.
    • Prohibition on certain practices: sharing fees with employers, using consumer credit scores to determine eligibility, charging certain fees, using aggressive collection tactics, and misrepresenting tip voluntary nature.
  • Reporting and Recordkeeping
    • Licensees must retain books/records for at least 3 years.
    • Annual reporting of key metrics: gross revenue from EWA, number of transactions, number of unique consumers, total proceeds disbursed, and fees/tips/donations received.
    • DIFS may require additional reports by rule.
  • Enforcement and Penalties
    • Administrative fines: $1,000 to $10,000 per violation, plus reimbursement of investigation costs; deposits go to an interest-bearing state treasury account.
    • Misdemeanor for violations: up to $1,000 fine.
    • Cease-and-desist orders, suspensions, and revocations available after notice and hearing.
    • Orders prohibiting certain individuals from serving as officers or employees may be issued for fraud or other conduct; monitors and enforcement mechanisms include judicial review.
  • Transition Provision
    • Current EWA service providers operating as of Jan 1, 2025 may continue temporarily if they apply for licensure within 6 months of application availability and comply pending determinations.

Affected Parties and Impacts

  • Affected: EWA service providers (new licensees), their executives and owners, and entities with multiple Michigan locations.
  • Neutral/Exempt: Banks, credit unions, payroll verifiers that do not fund proceeds, and employers that prepay wages in limited cases.
  • Consumers: Enhanced disclosures, rights protections, no-cost payment options, privacy safeguards, and clearer complaint/grievance pathways.

Procedural and Timeline Aspects

  • Licenses expire annually on September 30; renewals due by August 1.
  • Application processing timelines: final determination within 60 days (or hearing upon request).
  • Transition for existing providers: six-month window to apply; must comply during processing.
  • DIFS can promulgate rules and may require additional reporting or disclosures as needed.

Overall, HB 5558 establishes a state-regulated licensing framework intended to professionalize and oversee earned wage access services, with consumer protections, fee oversight, and enforcement mechanisms.

Compiled from official sources — confirm details with the bill’s official record.

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