Statement to Senate, No. 866 - Senate Commerce Committee (New Jersey, 2020)

Summary

A Senate Commerce Committee Statement to Senate for Senate Bill No. 866, State of New Jersey, dated January 27, 2020, reporting the bill favorably. The statement says the bill creates requirements for earned income access services, defined as the delivery of funds to a consumer that represent earned but unpaid income. It says a provider must comply with the civil and criminal usury laws and the federal "Truth in Lending Act," and that the services are to be considered a loan even if provided without recourse. The statement says a person who violates the bill is liable for a penalty of not more than $5,000 for each violation.

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     SENATE COMMERCE COMMITTEE

                   STATEMENT TO

                  SENATE, No. 866

 STATE OF NEW JERSEY
                   DATED: JANUARY 27, 2020

   The Senate Commerce Committee reports favorably Senate Bill No.
866.
   This bill creates certain requirements for earned income access
services. Under the bill, “earned income access services” means the
delivery of funds to a consumer that represent earned but unpaid
income.
   The bill requires an earned income access service provider to
offer earned income access services through a contractual
arrangement with an obligor in which the provider delivers earned
income to the consumer prior to the date on which the obligor is
scheduled to pay the consumer, and the obligor deducts the amount
of the earned income delivered by the provider to the consumer
from the consumer’s next paycheck.
   The bill provides that an obligor may not share information with
the earned income access service provider pertaining to the
obligor’s accrued and expected obligations to the consumer unless:
   (1) the obligor has entered into a contractual arrangement for
earned income access services with the earned income access
service provider; and
   (2) the consumer consents to sharing that information.
   The bill prohibits an earned income access service provider from
entering into a contractual arrangement with a consumer that
permits delivery of earned income directly to the consumer that is
to be repaid directly by the consumer to the person.
   Under the bill, the imposition of a fee on a consumer who opts to
use the services of an earned income access service provider is not
in violation of current law prohibiting deductions from an
employee’s wages, provided that the consumer is informed in
writing of the right to receive the full amount of the consumer’s
wages, without discount, if the consumer waits until the regular
payday.
   The bill requires an earned income access service provider to
comply with:
   (1) the provisions of the civil and criminal usury laws;
   (2) any provisions of Titles 17 or 56 of the Revised Statutes that
would otherwise apply to a loan or credit transaction; and
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   (3) the federal "Truth in Lending Act" and the regulations
implementing that act, to provide any disclosures required for
closed-end loans.
   For purposes of the bill, earned income access services are to be
considered a loan, even if those services are provided without
recourse. Any fees or other required or optional contributions are to
be considered as interest when determining the rate of interest for
purposes of compliance with a law with which an earned income
access service provider is required to comply.
   The bill also provides that any person who violates any provision
of the bill is liable for a penalty, in addition to any other penalty
imposed by law, of not more than $5,000 for each violation.


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