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Nevada approves regulation on earned wage access
On June 20, the Nevada Secretary of State approved Regulation NAC 604D, LCB File No. R096-23 (the Regulation), issued by the Nevada Department of Business and Industry, Financial Institutions Division, which established provisions to implement SB 290 (the Act) relating to earned wage access (covered by InfoBytes here).
The Regulation established the commissioner’s interpretation of the term “indirectly” as used in the definition of “employer-integrated earned wage access services” in the Act. As the Legislative Counsel’s Digest for the Regulation explained, “S.B. 290 defines employer-integrated earned wage access services to mean the delivery to a user of access to earned but unpaid income determined based on employment, income or attendance data obtained directly or indirectly from an employer.” In this context, the Regulation provided that data obtained “indirectly” from an employer means “verified data of the employment, income, or attendance of the user that is:” (i) “Obtained from an integrated system”; (ii) “Not directly obtained from the system of an employer”; and (iii) “Not directly obtained from the user.” The Regulation further provides that an “owner” was “a person who holds an ownership interest of at least 10 percent or more in an applicant for the issuance of a license as a provider that is a business entity.” The Regulation also clarified that providers are prohibited from charging cancellation fees of any kind.
The Regulation set forth $1,000 fees each for (i) the initial application for a license; (ii) the initial issuance of a license as a provider; (iii) the annual renewal of such a license; and (iv) the reinstatement of an expired license. Furthermore, the Regulation provided that each application for licensure by a provider that is a business entity must be accompanied by a list consisting of each person who holds an ownership interest in the applicant.
Pursuant to the Regulation, licensees will be required to report specific activity-based information to the state, including, non-exhaustively, the (i) total number and value of fees and expedited delivery fees paid by users within the prior year; (ii) the number of users with outstanding proceeds at the time of reporting and the value of such outstanding proceeds; (iii) the total number of requests for reimbursement of overdraft or NSF fees in the prior year; and (iv) voluntary tips received. Licensees will also be required to submit audited financial statements by April 15 each year (or, if not available, unaudited financial statements by April 15, followed by audited financial statements by June 30 of that same year). Licensees must retain records for at least six years and must not engage in misleading advertising. With respect to supervision, the Regulation establishes an hourly fee of $75 that the commissioner will charge for any supervision, examination, audit, investigation or hearing conducted pursuant to the provisions of the Act and provided that the commissioner can revoke or suspend licenses for any violations and has broad authority to request information during examinations or investigations.
This Regulation will go into effect on July 1.
DFPI proposes amendments to regulations under the California Debt Collection Licensing Act
On June 17, the California DFPI proposed to amend the California Code of Regulations relating to requirements under the Debt Collection Licensing Act (DCLA) and will be accepting comments through July 3. The proposed amendments would define the phrase "net proceeds generated by California debtor accounts" and also clarify annual reporting requirements for DCLA licensees.
Specifically, “net proceeds generated by California debtor accounts” will mean the amount retained by a debt collector from its California debt collection activity, and depending on the business activities of the licensee, will be further defined as follows: (i) for debt buyers, net proceeds are the amount collected minus the prorated purchase price paid for the debt, before deducting costs and expenses; (ii) for purchasers of non-charged-off or non-defaulted debt, net proceeds are calculated in the same fashion as debt buyers; and (iii) for all other debt collectors, net proceeds are the amount the collector receives from its clients, before deducting costs and expenses (where “client” means the company on whose behalf the debt collector has been contracted to collect on an account).
The proposed regulations also clarified annual reporting requirements and defined terms used within the report for DCLA licensees. Specifically, the regulations confirmed that licensees must submit an annual report, signed by a principal officer attesting to its accuracy and completeness, and that the report must be submitted electronically. Additionally, when completing the data requested in the report, licensees must count each California debtor account separately and the number of California debtor accounts collected in the preceding year (which is defined as the calendar year – January 1 through December 31) shall be the sum of (i) the total number of accounts collected in full; (ii) the total number of accounts resolved for less than the full amount; and (iii) the total number of accounts where partial payments were made but a balance remains due. The report must also include the total number and dollar amount of accounts for which collection was attempted but no payments were collected or resolved within the year.
The “total dollar amount of California debtor accounts purchased in the preceding year” and the “face value dollar amount of California debtor accounts in the licensee’s portfolio in the preceding year” were defined and must also be reported, excluding any added fees or charges. Additional information required includes the number of California debtor accounts and the number of California debtors in the licensee's portfolio as of the end of the year.
Nebraska notifies entities of background check and notification requirement changes
On June 17, the Nebraska Department of Banking and Finance issued a letter identifying two updates to Nebraska’s consumer financial services licensing laws that apply to entities with either the Nebraska Delayed Deposit Services License, the Nebraska Installment Loan License, the Nebraska Installment Sales License, the Nebraska Money Transmitter License, or the Nebraska Mortgage Banker License. The first change will require consumer financial licensees to utilize NMLS-based background checks to ensure greater uniformity for all consumer financial services licensees. Second, the state will now require a licensed company to notify the state’s Department within three business days of becoming aware that a data breach involving Nebraska residents had occurred. As previously covered by InfoBytes, these changes were included in Nebraska LB 1074 – a 2024 bill that established new consumer data privacy laws. The changes described in the letter will become effective on July 19.
Colorado extends its money transmitter regulations
On June 3, Colorado enacted HB 1328, (the “Act”), which will extend the state’s regulation of money transmitters until September 2030. The law had previously been scheduled to sunset on September 1. The Act will implement the recommendations of the Department of Regulatory Agencies, as specified in the Department's sunset review of the regulation of money transmitters. Specifically, the Act will (i) authorize the State Banking Board to suspend a money transmitter’s license and issue cease and desist orders; (ii) expand the requirement to furnish surety bond coverage to include all money transmission, rather than any exchange; (iii) increase the maximum penalty for failure to allow an examination from $100 to $1,000 per day the refusal continues and for failure to report up to $750 per day; and (iv) expand the licensing exemption to cover out-of-state banks. The Act will go into effect 90 days following the adjournment of the General Assembly, assuming a referendum petition will not be filed.
CSBS seeks comments on its 2025 NMLS fee increases proposals
On May 20, CSBS requested public feedback on a proposal to raise NMLS fees for the first time since the registry’s launch in 2008. This proposed fee increase will ensure NMLS remains functional and up to date while balancing the need for cost-effectiveness for its 600,000 users. The proposed fee hikes will impact companies, individual licensees, and branches, across industries like mortgage, debt, consumer finance, and money services. For example, the annual processing fee for state licensure would increase from $100 to $120 for companies, from $20 to $25 for branches, and from $30 to $35 for individuals. NMLS fees for federal registration will experience similar price hikes. The proposed fee structure will also include adjustments for initial set-up fees, annual processing fees, and fees associated with changes in sponsorship or employment.
Maryland banking regulators release settlement agreement with bank
On May 16, the Maryland Office of Financial Regulation (OFR) publicized an April 30 settlement agreement pursuant to which the Maryland banking agencies will withdraw its four counts against the bank and dismiss the case with prejudice. The OFR alleged the bank violated certain of the state’s credit provisions by making loans without a license, and that its fintech partners allegedly violating the Maryland Collection Agency Licensing Act (MCALA) and the Maryland Credit Services Business Act (MCSBA). Under the settlement agreement, the respondents agreed to clearly and conspicuously provide the bank’s name and contact information in all advertisements and other communications related to credit issuance to Maryland consumers, and the fintech company agreed to get licensed as a debt collection agency under MCALA and otherwise comply with the MCSBA (without explicitly agreeing to obtain a license or not); the fintech will pay the OFR a $50,000 investigative fee and a $225,000 administrative payment.
Maine enacts new money transmission law in line with the Money Transmission Modernization Act
On April 22, the Governor of Maine signed into law LD 2112 (the “Act”) which will codify a new law titled the “Maine Money Transmission Modernization Act.” The Act will amend and repeal many parts of the state’s money transmission laws and brought the law more in alignment with the Money Transmission Modernization Act, the model law drafted with a goal of creating a single set of nationwide standards and requirements. The stated purpose of the Act will be to coordinate with states to reduce the regulatory burden, protect the public from financial crimes, and standardize licensing activities allowed and exempted by Maine.
Among many other new provisions, the Act will require any person which engages in the business of money transmission or advertises, solicits, or holds itself out as providing money transmission to obtain a license. The Act will define “money transmission” as “(i) [s]elling or issuing payment instruments to a person located in [Maine]; (ii) [s]elling or issuing stored value to a person located in [Maine]; or (iii) [r]eceiving money for transmission from a person located in [Maine].” However, the Act will exempt, an agent of the payee to collect and process a payment from a payor to the payee for goods or services, other than money transmission services, provided certain criteria are met. Additionally, the Act will exempt certain persons acting as intermediaries, persons expressly appointed as third-party service providers to an exempt entity, payroll processors, registered futures commission merchants and securities broker-dealers, among others. Anyone claiming to be exempt from licensing may be required to provide information and documentation demonstrating their qualification for the claimed exemption.
The Act also will include a section on virtual currency, which will be defined as “a digital representation of value that: (i) [i]s used as a medium of exchange, unit of account or store of value, and (ii) [i]s not money, whether or not denominated in money.” The Act will specify that “virtual currency business activity” will include, among other activities, exchanging, transferring, storing, or engaging in virtual currency administration, whereas “virtual currency administration” will be defined as issuing virtual currency with the authority to redeem the currency for money, bank credit or other virtual currency.
The Act will require certain reporting, including about the licensee’s condition, financial information, and money transmission transactions from every jurisdiction, among other types of information. The amendments will also outline numerous licensing application and renewal procedures including net worth, surety bond, and permissible investment requirements. Maine will now join several other states that adopted the model law. The Act takes effect on July 16 of this year.
Oklahoma amends SAFE Act licensing provisions
On April 29, Oklahoma enacted SB 1492 (the “Act”) which amends the Oklahoma Secure and Fair Enforcement for Mortgage Licensing Act by, among other things, expanding the definition of “mortgage broker” to include servicing a residential mortgage, defining “servicing” to include holding servicing rights, as well as significantly adjusting fees and annual assessments for licensees. With respect to mortgage servicing, the law defines servicing as “the administration of a resident mortgage loan following the closing of such loan” and further states that an entity will be serviced if it “either holds the servicing rights, or engages in any activities determined to be servicing, including: (a) the collection of monthly mortgage payments; (b) the administration of escrow accounts; (c) the processing of borrower inquiries and requests; and (d) default management.” The definition of “mortgage lender” already includes an entity that “makes a residential mortgage loan or services a residential mortgage loan” and will be approved by HUD, Fannie Mae, Freddie Mac, or Ginnie Mae. The Act adds a new section allowing licensees to permit their employees and independent contractors to work at remote locations, subject to certain conditions regarding policies and procedures for customer contact information and data, maintenance of physical records, and prohibitions on in-person customer interactions, among other things. Finally, the Act will add or amend certain fees and their annual assessment determinations, including assessments based on loan volumes for originated loans and others for serviced loans during the assessment period. The Act will go into effect on November 1.
Virginia enacts new prohibitions against certain electronic fund transfer fees
On April 17, the Virginia legislature enrolled HB 1519 into law, which amended provisions of the Virginia Code related to fees for electronic fund transfers. The legislation amended the Residential Landlord and Tenant Act to prohibit landlords from charging a tenant a processing fee for using an electronic fund transfer for the payment of either a security deposit, rent, or “any other amounts payable.” The legislation also amended the Virginia Consumer Protection Act to prohibit a supplier from charging a fee to a consumer for using an electronic fund transfer to purchase a good or service. However, this prohibition explicitly does not apply to ATM withdrawals or expedited service on an electronic fund transfer. The Act went into effect immediately upon enactment.
Iowa enacts new money transmission provisions
On April 10, Iowa’s governor signed into law HF 2262 (the “Act”) relating to money transmission services. The Act will exempt a person appointed as an agent of a payor for purposes of providing payroll processing services from licensure, provided that their agreement and services meet certain conditions. The Act will also allow the superintendent to suspend or revoke a licensee’s license, should they, among other things: (i) violate the Act; (ii) fail to cooperate with an examination or investigation conducted by the superintendent; (iii) engage in willful misconduct or blindness and, which leads to a conviction of an authorized delegate for violating a state or federal anti-money laundering statute, or violates the Act, a rule adopted under the Act, or an order issued under the Act; or (iv) engage in an unsafe or unsound practice. Further, the Act will detail different scenarios in which the superintendent may pursue an enforcement action. For instance, if the superintendent determined any violations were “likely to cause immediate and irreparable harm to the licensee, the licensee’s customers, or the public, or cause insolvency” the superintendent may issue a cease and desist order. Finally, the Act will provide guidelines for investigations, civil penalties, criminal penalties, and administrative proceedings. The Act became effective upon enactment and will apply retroactively to July 1, 2023.