Consumer credit: collection practices; regulation of collection practices; provide for exemption for certain earned wage access services. Amends sec. 1 of 1981 PA 70 (MCL 445.251). TIE BAR WITH: HB 5558'26

Summary of HB 5563 (Michigan, 2025-2026)

Purpose and intent

House Bill 5563 amends the Michigan Debt Collection Act (1981 PA 70) to regulate consumer debt collection practices and to provide an exemption for certain earned wage access (EWA) services. The bill ties its effective date to passage of HB 5558 (Earned Wage Access Services Act), indicating that EWA providers meeting the Act’s requirements would be exempt from certain provisions of the collection regulation.

Key provisions and changes

• Definitions (Section 1): Replaces and clarifies terms such as “claim/debt,” “collection agency,” “consumer/debtor,” “creditor/principal,” and “regulated person.”

  • A “regulated person” includes traditional collection agencies and certain entities that perform collection-like activities, but excludes specific types of entities when operating as regulated under the earned wage access framework (see exemption).

• Exemption for EWA (Subsection 3): Regulated person does not include an EWA licensee operating under HB 5558, to the extent of its operation as an EWA licensee.

• Enabling structure (Tie to HB 5558): The act’s effectiveness is contingent on HB 5558 becoming law, creating a unified framework for EWA providers and traditional debt collectors.

Who is affected

• Regulated entities: Traditional debt collectors and others engaged in collection activities as defined (including those who use deceptive forms or fictitious names) would be subject to the amended consumer protections and enforcement provisions unless they are licensed under the EWA Act.
• Earned wage access providers: If enacted with HB 5558, EWA licensees would be exempt from certain collection-regulation provisions, provided they comply with the Earned Wage Access Services Act requirements.

Procedural and timeline aspects

• Licensing framework (via HB 5558): Establishes a comprehensive licensing regime for EWA services, including:

  • Application process, fees, and a surety bond.
  • Annual license renewals and location-based licensing for multi-location providers.
  • Financial and consumer protections, privacy, disclosures, and rules against coercive collection.
  • Administrative enforcement tools: cease and desist orders, suspension/ revocation of licenses, and penalties for violations.
  • Annual reporting requirements to the Department of Insurance and Financial Services (DIFS).

• Compliance and enforcement: DIFS would have authority to investigate complaints, issue orders, and assess fines (administrative fines ranging from $1,000 to $10,000 per violation; criminal penalties up to $1,000 fine for individuals and up to $5,000 or imprisonment for up to one year for violations of final orders).

• Financial administration: Revenues from penalties and fees would go to an interest-bearing account in the state treasury to support DIFS administration.

• Effective date: HB 5563’s applicability is contingent upon enactment of HB 5558 and related companion bills, creating a coordinated legal regime for earned wage access services and collection activities.

Potential impact

• Strengthens protections for consumers against aggressive or deceptive debt collection practices.
• Establishes a formal regulatory framework for earned wage access services in Michigan, potentially reducing predatory practices in that sector via licensing, disclosures, and consumer rights.
• Shifts enforcement and regulatory costs to DIFS, with possible fiscal impact from staff, licensing fees, and fines.

Note: HB 5563 is a tie-bar bill with HB 5558 and other related bills; its substantive changes rely on the passage of the EWA legislation and related amendments to multiple acts.