Mass. bill would require state license, consumer protections for earned-wage access providers

A bill filed Jan. 16, 2025, would require companies that provide earned-wage access to Massachusetts workers to hold a license from the state’s commissioner of banks and meet new consumer-protection and operational rules. Rep. Mark J. Cusack (D-Braintree) presented the measure, House Bill No. 1119, to create a new Chapter 140F in the Massachusetts General Laws. The legislation matters because it would formalize state oversight of earned-wage access — services that let workers request pay they have already earned but not yet been paid — and would prohibit a range of practices advocates and regulators have criticized, including certain collection tactics and undisclosed fees. Under the bill’s definitions, “earned wage access services” include both consumer-directed offerings based on a worker’s representation of earned but unpaid income and employer-integrated services that use employer-provided attendance or payroll data. The bill would make it unlawful to operate as an earned-wage access services provider in Massachusetts without a license from the commissioner of banks. Exemptions are explicit for depository institutions and federally chartered banks, credit unions, savings banks and certain affiliates. License applicants would submit information about company headquarters, principals and managers and could be subject to state and federal criminal-history checks via fingerprinting through the Department of Criminal Justice Information Services and the Federal Bureau of Investigation. The commissioner may require participation in a multi-state licensing system and may adopt rules including capitalization requirements, annual license expiration, and posting or web publication of the license. The bill sets multiple consumer protections and requirements. Providers must: develop procedures to address questions and complaints; offer at least one reasonable no-cost option whenever a fee option is offered and clearly explain how to choose it; disclose all fees and inform consumers of any material changes to terms before they are implemented; allow consumers to cancel services without a provider-imposed cancellation fee; comply with applicable privacy and information-security laws; and, if seeking repayment from a consumer’s bank account, comply with the federal Electronic Funds Transfer Act (15 U.S.C. §1693 et seq.) and reimburse consumers for any overdraft or nonsufficient-funds fees caused by the provider attempting collection earlier than or for an amount different than disclosed. The bill also lists express prohibitions: a licensed provider may not share with an employer any portion of fees or voluntary tips received from a consumer; may not require a consumer’s credit report or score to determine eligibility; may not accept payment by credit card or charge card; may not charge late fees, deferral fees or interest on outstanding proceeds; may not report inability to repay to consumer reporting agencies or debt collectors; and may not compel payment from a consumer through unsolicited outbound telephone calls, lawsuits, third-party collectors, or sale of debt — except when amounts arise from fraudulent or unlawful conduct or when pursuing an employer for breach of contract. Regulatory enforcement tools in the bill include the commissioner’s authority to deny, suspend or revoke licenses for cause, to issue temporary cease-and-desist orders when delay would harm the public interest, to inspect records and offices, and to require annual reports. The commissioner must state reasons for license denials in a written decision; applicants may appeal denials to the Superior Court for Suffolk County. The bill provides civil-enforcement authority for the commissioner and civil penalties: up to $1,000 plus investigation costs for violations of the license requirement and up to $500 per violation plus investigation costs for other violations. The text clarifies that earned-wage access offered in compliance with Chapter 140F would not be treated as a loan, credit, debt, money transmission, or interest/finance charge under state law, and that the chapter controls in any conflict with other state statutes. It also contains a transition provision allowing providers who operated in Massachusetts as of Jan. 1, 2025, to continue until July 1, 2026, provided they file a license application before Jan. 1, 2026, and comply with the chapter’s requirements. The bill notes a similar matter filed in the previous legislative session (House No. 4456, 2023–2024). As introduced, H.1119 establishes licensing criteria and consumer protections but does not record any committee action, hearing testimony, or votes in the text presented.