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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
AMENDED
earned wage access; license
Purpose
Establishes, beginning January 1, 2026, requirements for earned wage access services providers (providers), including licensure with the Department of Insurance and Financial Institutions (DIFI).
Background
DIFI is responsible for regulating the insurance industry, financial institutions, financial service professionals and business entities. DIFI registers and certifies state-chartered banks and credit unions and licenses financial and insurance professionals, including collection agencies, mortgage brokers, loan originators, premium finance companies and sales finance companies. DIFI conducts examinations on licensees and businesses and investigates fraud, deceptive practices, unprofessional conduct, claim delays and unfair claim settlement practices (A.R.S. Title 6).
The Consumer Fraud Act protects consumer from unlawful practices in
merchant-consumer transactions and is enforced by the Attorney General (AG) and
by county attorneys with enforcement authority granted by the AG. The act, use
or employment by any person of any deception, deceptive or unfair act or
practice, fraud, false pretense, false promise, misrepresentation, or
concealment, suppression or omission of any material fact with intent that
others rely on such concealment, suppression or omission, in connection with
the sale or advertisement of any merchandise whether or not any person has in
fact been misled, deceived or damaged is declared to be an unlawful practice
under the Consumer Fraud Act. Enforcement of the Consumer Fraud Act is
accomplished through the investigation of complaints filed by consumers,
enforcement actions against persons who have violated the Consumer Fraud Act
and public education. If a court finds that a person has willfully violated
consumer protection laws, the AG, upon petition to the court, may recover up to
$10,000 in civil penalties for each violation (A.R.S. Title 44, Chapter 10,
Article 7).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
Provider Licensure
1. Prohibits a provider, beginning January 1, 2026, and whether located in Arizona or in another state, from providing earned wage access services in Arizona unless the provider has been issued a license by DIFI.
2. Requires a provider to apply for a license on a form and in a manner as prescribed by DIFI.
3. Requires the application to include all of the following:
a) the name of the provider;
b) the name under which the provider transacts business, if different;
c) the address of all of the provider's principal offices which may be outside of Arizona;
d) the addresses of all of the provider's offices or retail stores, if any located in Arizona;
e) a description of the manner in which the provider provides earned wage access services and the provider's website uniform resource locator if the provider provides services at a location that is not an office or retail store in Arizona;
f) the address of the provider's designated agent on whom service and process may be made in Arizona;
g) the provider's federal employer identification number;
h) a fee schedule that includes a complete description of all the fees that the provider charges or may charge to provide access to earned wages;
i) documentation or other information that demonstrates the character, general fitness and other financial responsibility of the following, as applicable:
i. the applicant;
ii. the applicant's partners, if the provider is a partnership;
iii. the applicant's manager's and members, if the provider is a limited liability company or association; and
iv. the applicant's officers and directors, if the provider is a corporation; and
j) any other information DIFI may require to administer the licensure of providers.
4. Requires each licensee, in addition to the application, to register with and maintain a valid unique identifier issued by the national mortgage licensing system and registry.
5. Requires each provider to update any information provided in its license application within 15 business days after any material change in that information.
6. Requires a provider that submits an application for a license to pay an application fee in an amount to be determined by DIFI.
7. Requires a provider to file with DIFI and maintain in force a surety bond that is issued by a surety company admitted to do business in Arizona and that meets all of the following:
a) is in an amount equal to $50,000;
b) is in favor of the state for the benefit of any person that is damaged by a violation of provider requirements; and
c) is in favor of any person that is damaged by a violation of provider requirements.
8. Allows a person that claims against a bond for a violation of provider requirements to maintain an action at law against the provider that obtained the surety that is issued the bond.
9. States that the surety is liable only for actual damages and not for punitive damages.
10. Limits the aggregate liability of the surety to all persons damaged by a provider's violation of provider requirements to the amount of the bond.
11. Requires DIFI, once the applicant submits an application, to conduct a character and general fitness and financial responsibility investigation of the following:
a) the applicant;
b) the applicant's partners if the provider is a partnership;
c) the applicant's managers and members if the provider is a limited liability company or association; and
d) the applicant's officers and directors in if the provider is a corporation.
12. Requires DIFI, if the investigation finds relevant facts that warrant the belief that the applicant's business will be operated in compliance with provider requirements, to issue a license.
13. Requires DIFI, if the investigation finds relevant facts that does not warrant the belief that the applicant's business will be operated in compliance with provider requirements, to deny the application for a license.
14. Prohibits DIFI from issuing a license to an applicant if any of the following apply:
a) the applicant fails to provide any required information; or
b) the Arizona Department of Revenue certifies that the applicant is liable for delinquent taxes.
15. States that the provider's license remains in force and effect until:
a) DIFI suspends or revokes the license in accordance with provider requirements; or
b) the provider surrenders the license.
16. Requires a licensee to apply for renewal no later than December 31 of each year.
17. Requires the applicant, for each day after December 31 that the renewal application is not received by DIFI, to pay a $25 late fee.
18. Prohibits the licensee, if DIFI does not receive the licensee's renewal application by December 31, from acting as a provider until the license is renewed or a new license is issued.
19. States that, if DIFI does not receive the licensee's renewal application and fee by January 31, the license automatically expires.
20. Prohibits the holder of an expired license from being issued a renewal license.
21. Allows the holder of an expired license to be issued a new license.
22. Requires a provider to conspicuously post its license at its physical place of business, on the provider's website and on any official consumer-facing document, agreement or correspondence.
23. Allows an applicant to appeal a denial of an application in accordance with the statutory administrative hearing procedures.
Provider Requirements
24. Requires a provider to do all of the following:
a) develop and implement policies and procedures to respond to questions raised by consumers and address complaints from consumers in an expedited manner, including reimbursing a consumer for overdraft or nonsufficient fund fees imposed on the consumer by their depository institution cause at the fault of the provider;
b) offer at least one reasonable option to a consumer to obtain proceeds at no cost and clearly explain to the consumer how to elect that no cost option;
c) before entering into an agreement with a consumer earned wage access services:
i. inform the consumer of the consumer's rights under the agreement in writing;
ii. fully and clearly disclose all fees associated with the earned wage access services and the difference between the services and the no fee option; and
iii. explain the procedures the provider will follow if the provider's first attempt to collect outstanding proceeds and any associated fees, tips, gratuities and other donations is unsuccessful;
d) obtain the consent of the consumer for any material change to the terms and conditions of the earned wage access services before implementing that change for the consumer;
e) provide at least 30 days' advance written notice to a consumer for any material change to the terms and conditions of an earned wage access product that includes the customer's assent to a voluntary preauthorized automated electric fund transfer which may be provided through email or another conspicuous electronic method;
f) allow the consumer to cancel use of the provider's earned wage access services at any time without incurring a cancellation fee or inhibiting access to consumer funds that are in process;
g) comply with all local, state and federal privacy and information security laws;
h) if a provider solicits, charges or receives a tip, gratuity or other donation from a consumer to:
i. clearly and conspicuously disclose to the consumer in prominently displayed writing immediately before each transaction that any tip, gratuity or other donation amount may be zero and is voluntary;
ii. clearly and conspicuously disclose in its service contract with the consumer and elsewhere that any tip, gratuity or donation is voluntary and that offering earned access wage services, including the amount of proceeds a consumer is eligible to request and the frequency with which proceeds are provided to a consumer is not contingent on any tip, gratuity or other donation; and
iii. set at zero dollars any suggested recommended or prefilled amount for any tip, gratuity or donation.
i) provide proceeds to a consumer by any means mutually agreed on by the consumer and the licensee; and
j) if the provider seeks repayment of outstanding proceeds or payment of fees or other amounts owed, including voluntary tips, gratuity or other donations in connection with services from a consumer's account at a depository institution by means of electronic fund transfer to:
i. comply with applicable provisions of the federal Electronic Fund Transfer Act; and
ii. reimburse, within 10 business days after the consumer's request, the consumer for the full amount of any overdraft or nonsufficient fund fees imposed on that consumer by the consumer's depository institution that were caused by the provider attempting to seek payment of any outstanding proceeds, fees or other payments in connection with services including voluntary tips, gratuity or other donations on a date before, or in an incorrect amount from, the date or amount disclosed to the consumer.
25. States that a voluntary preauthorized automated electronic funds transfer does not include a onetime transaction for proceeds authorized by the consumer.
26. States that a provider is not subject to requirements with respect to payments of outstanding amounts or fees incurred by a consumer through fraudulent or other unlawful means that the provider, using reasonably good-faith efforts to determine, reasonably believes are the result of the consumer's conduct.
27. Prohibits a provider from doing the following:
a) sharing with an employer a portion of any fees, voluntary tips, gratuities or other donations that were received from or charged to a consumer for earned wage access services;
b) requiring a consumer's credit report or a credit score provided or issued by a consumer reporting agency to determine a consumer's eligibility for earned wage access services;
c) accepting payment of outstanding proceeds, fees, voluntary tips, gratuities or other donations form a consumer by means of a credit card or charge card;
d) charging a late fee or deferral fee, interest or any other penalty or charge for failure to pay outstanding proceeds, fees, voluntary tips, gratuities or other donations;
e) reporting to a consumer reporting agency or debt collector any information about the consumer regarding the inability of the provider to be repaid outstanding proceeds, fees, voluntary tips, gratuities or other donations;
f) compelling or attempting to compel payment by a consumer of outstanding proceeds, fees, voluntary tips, gratuities or other donations of the provider through:
i. a suit against the consumer in a court of competent jurisdiction;
ii. use of outbound telephone calls;
iii. use of a third party to pursue collection from the consumer on the provider's behalf;
iv. sale of outstanding amounts to a third-party collector or debt buyer for collection from the consumer; or
v. acting as a collection agency;
g) misleading or deceiving consumers about the voluntary nature of tips, gratuities or other donations or making representations that tips, gratuities or other donations will benefit any individual, including the consumer, or are necessary to offer earned wage access services, including the amount of proceeds the consumer is eligible to request and the frequency with which proceeds are provided to the consumer, if the provider solicits or receives any tips, gratuities or other donations from consumers;
h) advertising, printing, displaying, publishing, distributing or broadcasting or causing, in any manner, any statement or representation with regard to the earned wage access services that are offered by the provider that is false, misleading or deceptive, or that omits or states material information that is necessary to make the statements false, misleading or deceptive;
i) requiring that a consumer's sole means of accessing monies be through a provider paycard, digital wallet or similar payment process;
j) charging fees for delivery or expedited delivery of proceeds that exceed $5 for any advance that is equal to or less than $75 or $7.50 for any advance that is more than $75; or
k) offering earned wage access services, including the amount of proceeds a consumer is eligible to request and the frequency with which proceeds are provided to a consumer, that is contingent on whether the consumer pays any tip, gratuity other donation or on the size of the tip, gratuity or other donation.
28. Allows a provider to solicit or receive tips, gratuities or other donations only one time per transaction and confirm the final transaction on the completion screen.
29. States that the limits on compelling or attempting to compel payment does not apply to a provider that is:
a) seeking payment of any outstanding amount or fee that was incurred by a consumer through fraud or other unlawful means that the provider, using reasonably good-faith efforts to determine, reasonably believes are the result of the consumer's conduct; or
b) suing an employer for the employer's breach of the employer's contract with the provider.
30. Allows a provider to use the mailing address provided by a consumer to determine the consumer's state of residence for the purposes of earned wage access services.
Interpretations and Applicability
31. States that earned wage access services offered and provided by a licensee in compliance with statutory requirements are not considered:
a) a violation of or noncompliance with statutes governing a sale, assignment or order for earned but unpaid income or other wages;
b) a loan or other form of credit or debt; or
c) money transmissions.
32. Excludes, from the consumer lending and money transmitter statutes, earned wage access services transaction.
33. States that fees paid to a licensee in accordance with earned wage access services requirements are not considered interest or finance charges.
34. States that the earned wage access services requirements control if there is a conflict with any other statute.
35. States that the collection agencies statutes do not apply to proceeds a provider provides to a consumer in accordance with the earned wage access services requirements.
36. States that a voluntary tip, gratuity or other donation paid by a consumer to a licensee in accordance with the earned wage access services requirements is not considered a finance charge under state law.
Books, Records and Reports
37. Requires a provider, by July 1 of each year, to submit an annual report to DIFI that includes all of the following information related to earned wage access services that the provider provided in Arizona during the prior year:
a) gross revenue that is attributed to earned wage access services;
b) the total number of transactions in which the provider provided proceeds to consumers and the total number of transactions in which:
i. the provider received a fee from the consumer;
ii. the provider received a voluntary tip, gratuity or other donation from the consumer; and
iii. the consumer obtained proceeds at no cost.
c) the total number of unique consumers to whom the provider provided proceeds;
d) the total dollar amount of proceeds the provider provided to consumers;
e) the total dollar amount of fees the provider received from consumers, voluntary tips, gratuities or other donations the provider received from consumers;
f) the total number of transactions in which the provider provided and the total number of reimbursements to a consumer for overdraft or nonsufficient fund fees that were imposed on that consumer; and
g) the total number of claims made by the provider against a consumer for fraud or unlawful acts, including the dollar amount of any claim.
h) investigation documentation;
i) evidence that supports fraud or unlawful conduct; and
j) information as to whether a court of competent jurisdiction adjudicated the matter.
38. Allows DIFI to extend the deadline for the annual report for good cause.
39. Allows DIFI to take disciplinary action against a provider if the provider fails to submit a timely annual report.
40. Requires providers to keep such books and records that, in the opinion of DIFI, will enable the department to determine whether the provider is in compliance with the earned wage access services requirements for at least five years.
Enforcement
41. Allows DIFI to deny renewal of a license or suspend or revoke a license if it finds that a licensee:
a) is insolvent;
b) has failed to file an annual report by the due date or within an extended time frame granted by DIFI for good cause.
c) has failed to have or maintain the surety bond required by statute;
d) has violated a rule, order or any other provision of the earned wage access services requirements; or
e) has failed to operate the business of offering or providing earned wage access services in Arizona for a continuous period of 12 months or more, except if extended by DIFI for no more than 12 additional months for a single fixed period on good cause shown.
42. Allows DIFI to also deny renewal of a license or suspend or revoke a license if DIFI finds that any fact or condition exists that, if it had existed at the time of the original application for the license, would have clearly warranted the refusal to issue the license.
43. Prohibits a licensed provider from merging with, acquire control over or agree to be acquired by another entity without the approval of DIFI.
44. States that a licensee or another person is not prohibited from negotiating or entering into agreements subject to the condition that the merger or acquisition of control becomes effective on the approval of DIFI.
45. States that failure to comply with the earned wage access services requirements is an unlawful practice enforceable under the Consumer Fraud Act.
Miscellaneous
46. Requires DIFI to adopt rules to implement to the earned wage access services requirements.
47. Defines consumer as an individual who resides in Arizona.
48. Defines earned wage access services as providing consumer-directed wage access services or employer-integrated wage access services, or both.
49. Defines fee as a fee imposed by a provider for delivery or expedited delivery of proceeds to a consumer or a subscription or membership fee imposed by a provider for a bona fide group of services that includes earned wage access services.
50. Excludes, from the definition of fee, voluntary tips, gratuities and other donations.
51. Defines proceeds as a payment in U.S. dollars to a consumer by a provider that is based on earned but unpaid income.
52. Defines outstanding proceeds as proceeds that were remitted to a consumer by a provider and have not yet been repaid to that provider.
53. Defines earned but unpaid income as salary, wages, compensation or other income that a consumer or an employer has represented and that a provider has reasonably determined has been earned or accrued to the benefit of the consumer in exchange for the consumer's services to the employer or on behalf of the employer including:
a) on an hourly, project-based piecework or other basis;
b) circumstance in which the consumer is acting as an independent contractor of the employer, but has not, at the time of the payment of proceeds, been paid to the consumer by the employer.
54. Defines provider as a business entity that provides earned wage access services to consumers.
55. Excludes, from the definition of provider, the following:
a) a service provider, such as a payroll service provider, whose role may include verifying the available earnings but that is not contractually obligated to fund proceeds delivered as part of an earned wage access service; or
b) an employer that offers a portion of salary, wages or compensation directly to its employees or independent contractors before the normally scheduled pay date.
56. Defines terms.
57. Makes a technical change.
58. Becomes effective on the general effective date.
Amendments Adopted by Committee
1. Sets the application fee for a provider at $250, rather than in an amount determined by DIFI.
2. Sets the licensing fee for a provider at an amount established by DIFI in rule.
3. Sets the fee for the annual assessment and renewal for a provider at an amount established by DIFI in rule, rather than at $1,000.
4. Prohibits a provider, whether located in Arizona or another state, from providing earned wage access services in Arizona unless licensed by DIFI beginning January 1, 2026.
5. Specifies that a provider must pay the applicable application fees when applying for licensure with DIFI.
6. Adds that the application for licensure as a provider must include documentation or other information that demonstrates the character, general fitness and other financial responsibility of the following, as applicable:
a) the applicant;
b) the applicant's partners, if the provider is a partnership;
c) the applicant's manager's and members, if the provider is a limited liability company or association; and
d) the applicant's officers and directors, if the provider is a corporation.
7. Removes the prohibition on a provider from assigning a license unless it is approved by DIFI or by operation of law in connection with a merger or conversion that results in substantially the same ownership and control of the resulting entity.
8. Requires a provider to conspicuously post its license on its website whether or not the provider conducts business a website.
9. Requires a provider to conspicuously posit its license on any official consumer-facing document, agreement or correspondence.
10. Allows an applicant to appeal a denial of an application in accordance with the statutory administrative hearing procedures.
11. Removes the requirement for DIFI to keep confidential the information contained in an application for a license and any information obtained during DIFI's character, general fitness and financial responsibility investigation, including not being subject to public copying or inspection under statutory requirements for the inspection of public records.
12. Requires the developed and implemented policies and procedures of a provider to include addressing reimbursement of a consumer for overdraft or nonsufficient fund fees imposed on the consumer by their depository institution cause at the fault of the provider.
13. Requires a provider, before entering into an agreement with a consumer for earned wage access service, to explain the procedures the provider will follow if the provider's first attempt to collect outstanding proceeds and any associated fees, tips, gratuities and other donations is unsuccessful.
14. Specifies that a provider must, before entering into an agreement with a consumer for earned wage access service, obtain consent, rather than inform, the consumer for any material change to the terms and conditions of the earned wage access services or make material changes available for at least 30 days before implementing the change for the consumer.
15. Specifies that a provider to reimburse a consumer for any overdraft or nonsufficient fund fees imposed on the consumer by their depository institution cause at the fault of the provider within 10 business days after the consumer's request.
16. Prohibits a provider from compelling or attempting to compel payment by a consumer of outstanding proceeds, fees, voluntary tips, gratuities or other donations to the provider by:
a) use of outbound telephone calls; or
b) acting as a collection agency.
17. Specifies that a provider may not make representations that voluntary tips, gratuity or other donations will benefit any individual, rather than specific individuals, including the consumer, or are necessary to offer earned wage access services, including the amount of proceeds the consumer is eligible to request and the frequency with which proceeds are provided to the consumer.
18. Prohibits a provider from charging fees for delivery or expedited delivery of proceeds that exceed $5, rather charging fees of more the $5, for any advance that is equal to $75 or less.
21. Allows a provider to request that the consumer confirm the consumer's selected tip, gratuity or other donation one time per transaction and confirm the final transaction on the completion screen.
22. Specifies that a voluntary tip, gratuity or other donation paid by a consumer to a licensee is not considered a finance charge under state law.
23. Adds, to the annual report, a requirement for a provider to submit to DIFI:
a) the total number of transactions in which the provider received a fee from the consumer;
b) the total number of transactions the provider received a voluntary tip, gratuity or other donation from the consumer; and
c) the total number of transactions the consumer obtained proceeds at no cost.
24. Specifies that a provider’s annual report to DIFI must include:
a) the total amount of fees the provider received from consumers;
b) the total number of transactions the provider provided and the total amount of reimbursement to a consumer for overdraft or nonsufficient fund fees that were imposed on that consumer; and
c) the total number, rather than amount, of claims made by the provider against a consumer for fraud or unlawful acts.
25. Removes the requirement for DIFI to keep confidential the information contained in the annual report including not being subject to public copying or inspection under statutory requirements for the inspection of public records.
26. Removes the authorization for DIFI to prepare and make publicly available an aggregate and anonymized analysis of the information submitted by all providers in the annual reports.
27. Specifies that a provider must keep such books and records that will enable DIF to determine statutory compliance for at least 5 years.
28. Allows DIFI to deny renewal of a provider license or suspend or revoke a provider license if it finds that the licensee has violated a rule, order or other provision of the earned wage access services requirements, rather than knowingly or without the exercise of due care violated a rule, order or other provision of the earned wage access services requirements.
29. Modifies the definition of employer to include circumstances in which the consumer is acting as an independent contractor, rather than acting as an independent contractor with respect to the employer.
30. Removes the Proposition 108 clause.
31. Makes technical and conforming changes.
Amendments Adopted by Committee of the Whole
1. Eliminates the establishment of application and renewal fees for a provider license.
2. Requires a provider to provide at least 30 days advance written notice to a consumer for any material change to the terms and conditions of an earned wage access product that includes the consumer’s assent to a voluntary preauthorization automated electronic funds transfer.
3. Allows the notice to be provided through email or another conspicuous electronic method if the consumer consents to receiving communications through electronic means.
4. States that a voluntary preauthorized automated electronic funds transfer does not include a onetime transaction for proceeds authorized by the consumer.
5. Removes the authorization for a provider to request that the consumer confirm the consumer’s selected tip, gratuity or other donation one time per transaction.
6. Makes technical and conforming changes.
Senate Action
RAGE 2/20/25 DPA 4-3-0
Prepared by Senate Research
March 6, 2025
JT/ci