Senate Commerce Committee Statement - Assembly Bill No. 3450, New Jersey (December 16, 2021)

Summary

Senate Commerce Committee statement to [Third Reprint] Assembly, No. 3450 with committee amendments, State of New Jersey, dated December 16, 2021. The committee reports favorably and with committee amendments Assembly Bill No. 3450 (3R), which as amended creates requirements for earned income access service providers. It establishes an Office of Earned Income Access Services within the Division of Banking in the Department of Banking and Insurance to regulate those services for a 24-month initial period. The statement says a provider is not to charge a consumer for earned income access services more than two times in any week, with no limit when funds can be delivered without a fee. It adds that the bill is identical to Senate Bill No. 3611, as also amended and reported by the committee.

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     SENATE COMMERCE COMMITTEE

                    STATEMENT TO

                       [Third Reprint]
               ASSEMBLY, No. 3450
                   with committee amendments



 STATE OF NEW JERSEY
                   DATED: DECEMBER 16, 2021

     The Senate Commerce Committee reports favorably and with
committee amendments Assembly Bill No. 3450 (3R).
     As amended, this bill creates certain requirements for earned
income access service providers and establishes within the Division of
Banking in the Department of Banking and Insurance an Office of
Earned Income Access Services to regulate earned income access
services for a 24-month initial period pursuant to the provisions of the
bill.
     Under the bill, “earned income access services” means the delivery
of funds to a consumer that represent earned but unpaid income and
which should not be considered a loan. “Obligor” means an
employer or another person who is contractually obligated to pay
the consumer any sum of money on an hourly, project-based,
piecework, or other basis for labor or services provided by the
consumer.
     The bill requires an earned income access service provider to offer
earned income access services through a contractual arrangement
with an obligor or a service provider to an obligor or consumer, in
which the provider:
    (1) reasonably verifies a consumer’s earned income; and
    (2) delivers earned income to the consumer prior to the date on
which the obligor is scheduled to pay the consumer and the amount
of the earned income delivered by the provider to the consumer is
reduced or withheld from the consumer’s next payment.
    The bill prohibits an obligor from sharing information with an
earned income access service provider pertaining to the obligor’s
accrued and expected obligations to the consumer unless:
    (1) the obligor or service provider to the obligor has entered into
a contractual arrangement for earned income access services with
the earned income access service provider; or
    (2) the consumer consents to sharing that information.
    The imposition of a fee on a consumer who opts to use the
services of an earned income access service provider, and the
reduction or withholding from a consumer’s payment, does not
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violate certain provisions of current law, provided that the
consumer is informed in writing of the right to receive the full
amount of the consumer’s wages, without discount or expense, if
the consumer waits until the regular payment due date.
   The bill provides that any earned income access services that fail
to comply with the provisions of the bill are subject to:
   (1) the provisions of the civil usury law, R.S.31:1-1, and the
criminal usury law, N.J.S. 2C:21-19;
   (2) any provisions of Titles 17 or 56 of the Revised Statutes that
would otherwise apply to a loan or credit transaction; and
   (3) the federal "Truth in Lending Act," 15 U.S.C. s.1601 et seq.
and the regulations implementing that act, 12 C.F.R. s.226 et seq.,
to provide any disclosures required for closed-end loans.
   The bill provides that an earned income access service provider is
to, at the time earned income access services are offered, provide a
consumer with a statement, the language of which is to be determined
by the commissioner, explaining that the office oversees the regulation
of earned income access services providers and including the number
and purpose of the telephone hotline established pursuant the bill.
   Under the bill, if an earned income access service provider makes a
withdrawal on a consumer’s account, prior to the next regularly
scheduled payday, that results in the imposition of fees on the
consumer, including an overdraft or non-sufficient funds fee, the
provider shall refund the fees to the consumer upon adequate notice
and proof by the customer.
   In addition, an earned income access service provider is not to
charge a consumer for earned income access services more than two
times in any week except there is to be no limit on earned income
access services when the consumer is given an option for funds to be
delivered without a fee.
   Earned income access services that do not comply with section 3
of the bill are to be considered a loan, even if those services are
provided without recourse, and any fees or other contributions of
those services 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 requires providers to submit to the department certain
information during the 24-month initial period. Under the bill, the
department is required to conduct a study, during the first 12 months
of the 24-month initial period, concerning industry practices, consumer
demand, benefits, and cost compared to other similarly available
products, and actors in the earned income access services industry and
to issue the report to the Governor and the Legislature. The
department is also required to review and analyze, prior to the
termination of the initial 24-month period, the benefits and risks to
consumers during the initial provider registration period.
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   As amended and reported, this bill is identical to Senate Bill No.
3611, as also amended and reported by the committee.

COMMITTEE AMENDMENTS:
    The committee amended the bill to:
    (1) establish within the Division of Banking in the Department of
Banking and Insurance an Office of Earned Income Access Services to
regulate earned income access services for a 24-month initial period
pursuant to the provisions of the bill;
    (2) establish a telephone hotline for consumers to file complaints
concerning providers of earned income access services;
   (3) require providers to provide certain information to consumers
concerning the Office of Earned Income Access Services and the
telephone hotline established pursuant to the bill;
   (4) provide that, if an earned income access service provider
makes a withdrawal on a consumer’s account, prior to the next
regularly scheduled payday, that results in the imposition of fees on
the consumer, the provider is to refund the fees to the consumer upon
adequate notice and proof by the customer;
   (5) prohibit an earned income access service provider from
charging a consumer for earned income access services more than two
times in any week and establishing that there is to be no limit on
earned income access services when the consumer is given an option
for funds to be delivered without a fee;
   (6) require the department to conduct a study, during the first 12
months of the 24-month initial period, concerning industry practices,
consumer demand, benefits, and cost compared to other similarly
available products, and actors in the earned income access services
industry and issue the report to the Governor and the Legislature;
   (7) require the department to review and analyze, prior to the
termination of the initial 24-month period, the benefits and risks to
consumers during the initial provider registration period;
   (8) require earned income access service providers to provide
certain information to the department every six months; and
   (9) change the definition of “earned income access service
provider.”


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