Bill
HB 5567
HB 5567 would exempt earned wage access services from the Regulatory Loan Act, only if HB 5558 creates a separate state licensing framework for EWA providers.
Purpose and intent
- HB 5567 amends the Regulatory Loan Act (1939 Public Act 21) to exempt earned wage access (EWA) services from the act.
- The bill includes a tie-bar with HB 5558, meaning HB 5567’s effective date is contingent on HB 5558 becoming law.
What the bill would change
- Section 20 (MCL 493.20) amendments:
- The act would not apply to:
- (a) Banks, savings banks, industrial banks, trust companies, building and loan associations, or credit unions permitted by law.
- (b) Pawnbrokers licensed under Michigan law.
- (c) Earned wage access services licensed under the Earned Wage Access Services Act (to be created by HB 5558).
- In effect, if HB 5558 becomes law, organizations providing earned wage access services would be exempt from the Regulatory Loan Act’s restrictions and regulatory regime.
Earned Wage Access Services Act context (HB 5558, summarized in accompanying materials)
- HB 5558 would create a new licensing framework for EWA services in Michigan, requiring a state license issued by the Department of Insurance and Financial Services (DIFS).
- Key definitions:
- Earned wage access services: consumer-directed and employer-integrated wage access services.
- Earned but unpaid income: wages or other compensation earned but not yet paid.
- Licensing requirements:
- Written, perjury-signed application to DIFS with detailed information about locations, officers, and ownership.
- DIFS would approve or deny licenses; hearings available if denied or not timely decided.
- Licensee obligations:
- Clear disclosure of rights and all fees prior to agreements.
- Notification of material term changes; ability for consumers to cancel without fee.
- Privacy and information security compliance.
- Fair handling of proceeds, tips, gratuities, or donations; no-fee opt-out option required.
- Prohibition on employing coercive collection practices or sharing fees with employers.
- Restrictions on underwriting with consumer credit scores; limits on excessive fees, late fees, or penalties.
- Prohibition on certain payment methods and limits on delivery fees.
- Clear license display; ongoing compliance with state and federal laws.
- Fees and bonding:
- DIFS to set a license fee schedule; annual renewal by August 1.
- Surety bond of $50,000 per licensee; a 20% or greater ownership in multiple licenses can consolidate bonds.
- Exemptions:
- Depository institutions and certain service providers or employers limited to payment behavior reports.
- Oversight and enforcement:
- DIFS can conduct investigations, issue cease-and-desist orders, suspend or revoke licenses, and impose fines ($1,000–$10,000 per violation; civil penalties for violations).
- Administrative proceedings under the Administrative Procedures Act; judicial review available.
- Fees and penalties deposited into an interest-bearing state treasury account for DIFS administration.
- Multi-location requirements:
- Separate license for each Michigan location; notices required 15 days before starting or ending services at a location.
- Compliance, reporting, and records:
- Licensees must maintain records for at least three years and periodically report revenue, transactions, and consumer counts.
- Transitional provisions:
- Individuals offering EWA services as of January 1, 2025 may continue if they apply within six months of licensing availability and comply until license decision.
Who would be affected
- If HB 5558 is enacted, EWA service providers operating in Michigan would fall under a new regulatory licensing regime and, per HB 5567, would be exempt from the Regulatory Loan Act.
- Depository institutions (banks, credit unions, etc.) would remain exempt from the EWA licensure requirements under the exemption.
- Employers and payroll service providers could be indirectly affected via EWA service integration, subject to the exemptions and licensing requirements.
Procedural and timeline aspects
- Tie-bar: HB 5567 only takes effect if HB 5558 becomes law.
- Licensing timeline (HB 5558): requires action by DIFS on license applications, with hearings if timely decisions are not made.
- Annual renewals and reporting deadlines are specified (renewal by August 1; initial license applications within 6 months of licensing availability for existing EWA providers; annual reporting date determined by the director).
Fiscal and administrative notes
- HB 5558 would create new regulatory staffing needs at DIFS; fiscal impact is indeterminate, depending on license volumes and fee levels.
- Potential fines and penalties would generate revenue for state administration and could affect local jurisdictions through court and jail costs depending on enforcement outcomes (fines range up to $10,000 per violation; misdemeanor penalties up to $1,000 fine or $5,000 fine with potential jail time).
- Revenue and costs are funneled into an interest-bearing account for administering the act.
Summary
- HB 5567 would exempt earned wage access services from the Regulatory Loan Act, contingent on HB 5558 creating and enacting a new EWA licensing framework. HB 5558 would establish a comprehensive licensing, consumer-protection, and regulatory regime for EWA providers in Michigan, with fees, bonding, location-specific licenses, reporting, and enforcement mechanisms administered by DIFS. The combined effect is to regulate EWA providers separately while removing them from the scope of the Regulatory Loan Act, subject to the enactment of HB 5558.
Compiled from official sources — confirm details with the bill’s official record.
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