Kansas has taken a significant step in the area of financial regulation by enacting comprehensive legislation on earned wages access (EWA).
The new law, which mirrors recent developments in Wisconsin, is poised to bring significant changes to the landscape of EWA services in the state.
Set to take effect immediately upon publication, the law introduces several key provisions aimed at ensuring transparency, consumer protection, and fair practices within the EWA industry.
Among the notable aspects of the legislation are:
Annual Registration Requirement: EWA providers operating in Kansas will now be required to register annually with the Kansas State Bank Commissioner, the state’s financial services regulator.
Non-Recourse Payment Obligations: All proceeds and fees associated with EWA services are treated as non-recourse payment obligations, providing added financial security for consumers.
Fee Disclosures: EWA providers must fully and clearly disclose all fees associated with their services, ensuring transparency for consumers. Additionally, providers must describe how consumers can obtain proceeds at no cost.
Tipping Disclosures and No Tip Sharing: Providers must disclose that tipping is voluntary and refrain from sharing tips or fees with consumers’ employers. Misleading or deceptive representations about tipping are prohibited.
No Debt Collection and Reporting: EWA providers are barred from engaging in debt collection practices, including lawsuits, phone calls, or reporting nonpayment to credit agencies.
No Credit Payments or Late Fees: Providers cannot accept credit payments or charge late fees, deferral fees, or interest for outstanding proceeds.
No Credit Scores Required: EWA providers cannot use credit scores to determine consumer eligibility, ensuring access for all individuals regardless of credit history.
This legislative development reflects a broader trend of state-level action on EWA regulation, as the Consumer Financial Protection Bureau (CFPB) continues to develop federal guidelines.
With several states already enacting similar laws and others considering similar measures, EWA providers must promptly assess their compliance procedures and prepare to navigate the evolving regulatory landscape.
As Kansas joins the ranks of states implementing EWA legislation, the industry faces new challenges and opportunities to prioritize consumer protection and fair practices in the delivery of financial services.
