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HB 5561

Consumer credit: collection practices; regulation of collection agencies in the occupational code; provide for exemption for certain earned wage access services. Amends sec. 901 of 1980 PA 299 (MCL 339.901). TIE BAR WITH: HB 5558'26

2025-2026 Regular Session Introduced by Greg Alexander and 9 co-sponsors

HB 5561 broadens collection agency oversight to include earned wage access licensees, tying EWA providers to licensing, disclosures, and DIFS enforcement.

referred to second reading
#businesses:other #consumercredit:collectionpractices
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Bill Summary · HB 5561

Summary of HB 5561 (Michigan, 2025-2026 Session)

Note: HB 5561 is tied to HB 5558 and would take effect only if HB 5558 becomes law.

1) Purpose and Intent

  • HB 5561 amends the Occupational Code (section 901) to regulate collection agencies more comprehensively and to explicitly include earned wage access (EWA) licensees within the set of entities regulated under this article.
  • The amendment aligns with a broader package (HBs 5558-5569) establishing an Earned Wage Access Services Act and seeks to ensure EWA providers are licensed and subject to oversight similar to other financial services providers.

2) Key Provisions and Changes

Definitions and Scope

  • Expands the definition of “collection agency” to include:
    • Traditional debt collectors and repossessors.
    • Entities that provide or forward forms or demands for collection or repossession.
    • Use of fictitious or misrepresentative names in collection activities.
    • Excludes certain entities acting within the normal scope of their business (e.g., regular employees acting in the employer’s name, banks, credit unions, certain licensed entities, etc.).
    • Crucially, it adds “a person licensed under the earned wage access services act” as an example of a collection agency when the claims relate to that licensee’s EWA operations.
  • This ties EWA licensees into the regulatory framework for collection activities when appropriate, broadening accountability and consumer protections.

EWA Services Act: Licensing and Regulation (context from HB 5558)

  • HB 5558 would create the Earned Wage Access Services Act, requiring licenses for entities offering earned wage access (both consumer-directed and employer-integrated).
  • Licensing administered by the Department of Insurance and Financial Services (DIFS).
  • Licenses would require:
    • Application with detailed information about locations, leadership, owners, and control.
    • Post-licensing ongoing compliance with consumer rights disclosures, fee transparency, privacy, and clear no-cost alternatives for proceeds.
    • Prohibition on certain practices (e.g., sharing fees with employers, certain loan-like penalties, misleading tips, attempts to collect before fee disclosure, etc.).
    • Fees and a $50,000 surety bond per licensee (with a single bond possible for owners of multiple licenses).
    • Annual license renewal by August 1; licenses expire September 30.
  • Exemptions for depository institutions, certain service providers, and employers under specific conditions.
  • Transferability: licenses are not transferable; changes in control trigger DIFS review.
  • Compliance, reporting, and enforcement provisions include:
    • Annual reporting of revenue, transactions, consumers served, and fees collected.
    • DIFS can investigate complaints, issue cease-and-desist orders, suspend or revoke licenses, and impose fines ($1,000–$10,000 per violation; misdemeanors up to $1,000 fines).
    • Administrative proceedings and potential penalties deposited to an interest-bearing state treasury account.
    • Interstate investigation costs borne by licensees.

Interplay with Other Acts

  • HB 5558 (EWA Act) would be integrated into the Consumer Financial Services Act (as defined by HB 5562) and would modify or exempt other related acts (HB 5559-5569) to include EWA licensees or services where applicable.

3) Who or What Would Be Affected

  • Primary: Earned wage access service providers operating in Michigan (current operators and new applicants), once the EWA licensing regime is implemented.
  • Affected Entities:
    • Collection agencies and agents that engage with EWA-related claims or operate under EWA licenses.
    • Employers, financial service providers, and payroll/service providers involved in EWA arrangements, subject to exemptions or reporting requirements.
  • Consumers/Debtors:
    • Michigan residents who use EWA services would gain enhanced disclosures, protections against improper collection practices, and clearer rights, including no-cost options and fee transparency.
  • Government/Regulators:
    • DIFS would administer licensing, compliance, enforcement, and reporting for EWA activities and for entities engaged in collection activities related to EWA claims.

4) Procedural and Timeline Aspects

  • Effective Date: HB 5561 references HB 5558 for applicability. HB 5558 must be enacted for HB 5561 to take effect.
  • Licensing Timeline:
    • License applicants must pay the license fee within 60 days of submitting an application and then annually.
    • Licenses expire annually on September 30 and renewals due by August 1.
  • Regulation and Oversight:
    • DIFS would issue licenses, conduct investigations, hold hearings, and issue cease-and-desist, suspension, or revocation orders as needed.
    • Penalties: administrative fines ($1,000 to $10,000 per violation) and potential misdemeanors for violations.
  • Multi-location Servicing:
    • Licensees with multiple Michigan locations must obtain separate licenses per location.
    • Notice requirements prior to adding or ending locations (at least 15 days).
  • Compliance and Reporting:
    • Licensees must retain records for at least three years.
    • Annual reporting on revenue, transactions, consumers, and proceeds delivered.
  • Confidentiality and Privacy:
    • Licensees must adhere to privacy and information security laws.

5) Fiscal Impact (High-Level)

  • Indeterminate impact on DIFS; cost depends on the number of licensees and fee levels.
  • Potential revenue from license fees and fines; fines would bolster the state treasury’s interest-bearing accounts and may influence local judicial costs.
  • Administrative costs for DIFS (staffing, enforcement) expected but not quantified in the analysis.

6) Summary of Significance

  • HB 5561 strengthens Michigan’s regulatory framework by explicitly incorporating earned wage access activities into the licensure and oversight regime for collection-related activities within the Occupational Code.
  • When paired with HB 5558 (EWA Act), it aims to ensure licensing, transparent disclosures, consumer protections, and robust enforcement for EWA providers and their interactions with consumers and creditors.
  • The bill emphasizes consumer rights, clear fee structures, prohibition of certain aggressive collection tactics, and accountability through DIFS oversight.

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

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