Missouri Becomes Latest State to Establish Regulatory Framework for Earned Wage Access Products

On July 7, Missouri Governor Mike Parson signed SB 103 into law, which prohibits any person from offering earned wage access (EWA) services without registering with the Division of Finance and paying an annual $1,000 fee. The law also requires EWA providers to develop procedures for dealing with consumer questions and complaints, specifies notices required to be given to consumers, and regulates the types of fees that may be charged and the manner in which repayments may be pursued. The law further specifies requirements should the EWA provider solicit, charge, or receive tips or gratuities from consumers. Like Nevada, discussed here, the law specifies that EWA products are not loans or money transmissions under Missouri law. 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, except for those offered by employers.

The law applies to both consumer-directed wage access services and employer-integrated wage access services, but in either case the amount being provided to the consumer must be earned by the consumer at the time of the advance. Notably, the law does not apply to FDIC-insured banks or savings and loan associations, credit unions, or any person authorized to make loans or extensions of credit.

A provider is required to:

• Disclose to the consumer all fees associated with the EWA product.
• Comply with applicable provisions of the federal Electronic Funds Transfer Act.
• Reimburse the consumer for any overdraft or nonsufficient 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 consumer.
• Disclose that tips and gratuities are voluntary and that the offering of EWA services is not contingent on a tip or gratuity.

Providers are prohibited from:

• Sharing with a consumer’s employer any fees or tips received from or charged to a user.
• Reporting a consumer’s nonpayment to a consumer reporting agency or debt collector.
• Using credit reports or credit scores to determine a consumer’s eligibility for EWA services.
• Accepting payment from a consumer via credit card.
• Compelling a consumer to repay by filing a suit against the consumer, using a third-party collection agency, or selling outstanding amounts to a third-party collector.

The law requires EWA providers to submit the following information with their registration form:

• Name, business address, and telephone number.
• Name and business address of corporate officers and directors, principals, or partners.
• A sworn statement by an officer, principal, or partner that:
  • The provider is financially capable of engaging in the business; and
  • If a corporation, that the corporation is authorized to transact business in Missouri.

The law goes into effect on August 28, 2023.