On June 15, Nevada Governor Joe Lombardo signed SB 290 into law, which imposes licensing, reporting, examination, and other substantive requirements on providers of earned wage access (EWA) products. Specifically, the legislation applies to businesses that deliver money to a person that represents income that the person has earned but has not yet been paid. The law requires providers of EWA products to obtain a license from the Nevada Commissioner of Financial Institutions. Notably, the law specifies that EWA products are not loans or money transmissions under Nevada law and are not subject to Nevada’s existing laws governing those products. In March 2023, the California Department of Financial Protection and Innovation took the opposite position with respect to EWA products and proposed new regulations under the California Financing Law that would update the definition of loan to include EWA products.
EWA products can provide an alternative to high-cost payday loans. The Nevada licensing legislation applies to providers of both “employer-integrated” and “direct-to-consumer” products. In “employer-integrated” services, the provider delivers the unpaid wages based on data received either directly from the employer or from the employer’s payroll service. In “direct-to-consumer” services, the provider delivers the unpaid wages based on data that is not received from the employer or from the employer’s payroll service.
The legislation requires that EWA providers submit the following information with their license application:
- Terms of service;
- Fee schedule;
- Surety bond;
- Compliance statement with the federal Electronic Fund Transfer Act;
- Information for each owner, officer, director and responsible person; and
- Audited financial statements.
Fees for the application, initial license, and license renewal will be set by the commissioner, but may not exceed $1,000.
Licensed providers will be required to submit annual reports to the commissioner by April 15 of each year, including:
- Audited financial statements for the most recent fiscal year;
- Copies of complaints filed against the provider;
- The total amount of charges users paid for EWA services in the preceding year; and
- The total number of users who received 12 or more EWA transfers in the preceding year.
Notably, providers are prohibited from:
- Using credit reports or credit scores to determine a user’s eligibility for EWA services;
- Imposing late fees or other penalties for a user’s nonpayment;
- Sharing with a user’s employer any fees or tips received from or charged to a user;
- Reporting a user’s nonpayment to a consumer reporting agency or debt collector;
- Using a third party to pursue collection from a user; and
- Compelling a user to pay in a civil action.
A provider is required to:
- Implement policies and procedures to expeditiously respond to questions raised by users and address complaints from users;
- Prior to entering an agreement with a user, inform the user of his or her rights under the agreement and disclose all fees related to the services;
- Allow the user to cancel the agreement at any time without incurring a fee;
- Comply with all local, state and federal privacy and information security laws;
- Conspicuously disclose that any tip (if a tip is solicited or received) paid by the user does not inure to the direct benefit of any specific employee of the provider or any other person and provide an option for the user to select zero as an amount for such tip; and
- Comply with the Electronic Fund Transfer Act and corresponding regulations when the provider seeks payment of outstanding proceeds, fees, or other payments from a user’s depository account; and
- Reimburse the user for any overdraft or non-sufficient funds fees caused by the provider attempting to seek payment on a date before, or in an incorrect amount from, the date or amount disclosed to the user.
The legislation requires the commissioner to prescribe the application requirements for the license by Sept. 30, 2023. Under the law, a provider that was offering EWA services as of Jan. 1, 2023 will be grandfathered in and may continue to provide services until Dec. 31, 2024, as long as it submits a license application by Jan. 1, 2024, and otherwise complies with the law.