Last Week, This Morning

March 17, 2025

Below you will find several key developments in the financial services industry, including related developments in information privacy and data security, from the past week. We add an "Amicus Brief(ly)¹" comment to each item, where we briefly (see what we did there?) note for friends (and again?) of CounselorLibrary the important takeaways from the developments outlined in the email. Our legal reporters - CARLAW, HouseLaw, InstallmentLaw, PrivacyLaw, and BizFinLaw - provide more comprehensive, real-time updates of federal and state laws, regulations, litigation, and other industry items of interest. For a personal guided tour and free trial of any of these legal reporters, please contact Michael Willer at 614-855-0505 or mwiller@counselorlibrary.com.

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The Utah legislature recently passed House Bill 279, the Earned Wage Access Services Act. If signed by Governor Spencer Cox, the bill will take effect on May 7, 2025. The bill defines the term "earned wage access services" as the payment of funds to a consumer determined by: (1) (a) a consumer's representation; and (b) the provider's reasonable determination of earned but unpaid income; or (2) employment, income, and attendance data obtained directly or indirectly by a provider from an employer or an employer's payroll service provider.

The bill requires providers of earned wage access services to register with the Utah Department of Commerce, Division of Consumer Protection. An application for registration must include a copy of the provider's earned wage access services agreement, and the provider's principal must submit fingerprints and agree to a criminal background check. A provider must renew its registration annually. Existing providers have until October 6, 2025, to apply for registration.

The bill also imposes substantive requirements on earned wage access services agreements. An earned wage access services provider must disclose, before execution of an earned wage access services agreement, the consumer's rights under the agreement, all fees, and any voluntary tip, gratuity, or donation opportunities. A provider must allow at least one no-fee option for a consumer to receive funds and clearly and conspicuously disclose how to select that option. An earned wage access services agreement must be cancellable by the consumer at any time and without penalty. When a consumer requests funds, the provider must disclose certain information, including when the funds are expected to arrive, what fee the provider will charge, and what account will receive the funds. The provider must reimburse the consumer for any insufficient funds or overdraft fees incurred due to the provider's error in the disclosed or actual payment amount or date. The provider must disclose the voluntary nature of any tip, gratuity, or donation and may not condition the availability or terms of the earned wage access services on the payment of any tip, gratuity, or donation. A provider may not compel a consumer to repay funds by suing, hiring third-party debt collectors, reporting nonpayment to consumer reporting agencies, charging interest, fees, or penalties, or threatening to do any of those things.

A provider is subject to a penalty of up to $2,500 for each violation of the law. The maximum penalty increases to $5,000 if the provider violates a court or administrative order issued for a previous violation of the law. Additionally, the Division of Consumer Protection may suspend or revoke a registration or deny an original or renewal application for registration as a penalty for violating the law.

Amicus Brief(ly): Utah includes an uncharacteristically detailed (for Utah) bill to regulate earned wage access transactions in this law that industry supports and the Utah governor is likely to sign. The bill is viewed as pro-EWA, and the detail in the bill gives providers a clear understanding of how to roll out an EWA product that, at least in Utah, is expressly not a "loan." Utah joins just a small handful of other states in specifically regulating the product, though legislators in other states have also introduced EWA bills with varying degrees of detail.

The Texas Finance Commission adopted a final rule, effective March 13, 2025, requiring residential mortgage loan originators regulated by the Texas Office of Consumer Credit Commissioner to register with the Nationwide Multistate Licensing System. The final rule provides procedures for an individual to register with the NMLS as a residential mortgage loan originator. Prior to the final rule, 7 TAC Section 2.102 stated: "Entities licensed or applying for a license with the OCCC to make, transact, or negotiate residential mortgage loans are not required to register with NMLS." The final rule removes current subsection (b), a change that supports the OCCC's efforts to begin migrating license groups to the NMLS. The final rule, which was adopted without changes to the proposed rule, was published in the March 7, 2025, Texas Register.

Amicus Brief(ly): And that's a wrap. With this Texas rule, all states now license mortgage loan originators through the NMLS. It feels like it has been a long time coming. When states started passing the Secure and Fair Enforcement for Mortgage Licensing Act following the mortgage lending and foreclosure crisis, the current state was the goal: centralize licensing at least in the mortgage lending space, and make sure that individual mortgage loan originators have unique identifiers (whether they work for non-bank brokers and lenders, banks, or credit unions). A number of states have added all of the consumer finance licenses to the NMLS, which can simplify the licensing and renewal process considerably.

The Oregon Department of Consumer and Business Services, Division of Financial Regulation, recently released a bulletin notifying providers of private education loans and income share agreements (i.e., agreements requiring student borrowers to share a portion of future earnings to repay the loan) making loans of $50,000 or less with periodic payments and terms longer than 60 days that the consumer finance licensing requirements contained in Oregon Revised Statutes Chapter 725 apply to them. The consumer finance licensing requirements also apply to any person acting as an agent, broker, or facilitator for a person making such private education loans or offering income share agreements. ORS 725.010(2) defines a "consumer finance loan" as "a loan or line of credit that is unsecured or secured by personal or real property and that has periodic payments and terms longer than 60 days." The bulletin also states that, "[u]nder ORS 725.045, consumer finance loans made by private [education] lenders and persons offering income share agreements of $50,000 or less with periodic payments and terms longer than 60 days are void if, at the time the person made the loan, the person did not have a license issued under ORS chapter 725. Neither the person making the loan or offering the income share agreement, [n]or the person's successor, assignee[,] or affiliate[,] may collect, receive[,] or retain principal, interest, a fee[,] or a charge related to or in connection with the consumer finance loan."

Amicus Brief(ly): Oregon does not often lead with regulation of specific but alternative credit products like shared income education financing agreements, but it does pay attention to what other states are doing, and when it decides that a product is regulated (or not regulated), that's typically the end of the story. In the bulletin, the Division includes a declaration that "[a]n income share agreement meets the definition of 'loan' under Oregon law because it is an 'obligation to repay' a debt." The citations from the Consumer Finance Act the Division provides in support of the bulletin's position do not, however, include a definition of the term "loan." Nor does the Interest and Usury statute. But there is a definition of "loan" in the CFA regulations (wait for it...): "Loan" means a loan that is subject to the Oregon CFA (see Or. Admin. Code § 441-730-0010(13)). The use of quotation marks in the guidance is misleading, but it gets the Division what the Division was looking for - a way to tell licensees that their shared income education financing agreements are "loans" subject to the CFA.

The California Department of Financial Protection and Innovation recently amended its Debt Collection Licensing Act rules to define the term "net proceeds generated by California debtor accounts" for purposes of determining the amount each debt collector licensee must pay annually as its pro rata share of all costs and expenses incurred in the administration of the Act and to specify the formula to be used in calculating the amount depending on the type of business model. The final rule also specifies the information required to be included in the annual report that each debt collector licensee must file. The effective date of the final rule is July 1, 2025.

Amicus Brief(ly): Annual reports for licensees can vary in content and complexity. California's DFPI came up with a complex net revenue-based formula for debt collectors in this rule. The purpose of the calculation is clear - the amount a licensee collects from California residents as a percentage of the overall collections revenue in California dictates how much the licensee has to pay toward the cost of administering the laws, ostensibly because the bigger the debt collector, the more resources the DFPI will have to expend in regulating the collector. Of course, that is not always true - large, careful debt collectors with good compliance management systems can be easier to examine than smaller debt collectors with no written policies and procedures and big complaint volumes. Nevertheless, the rule is final, and licensees will have to program their accounting systems to calculate the annual fees as described.

The Oklahoma Department of Consumer Credit recently published changes to certain dollar amounts in the Uniform Consumer Credit Code. Designated dollar amounts in the UCCC are subject to change July 1st of every year based on changes in the Consumer Price Index. The following changes, among others, will take effect on July 1, 2025:

• the maximum permissible delinquency charge for consumer credit sales, revolving charge accounts, and consumer loans will increase from $32 to $33;
• the lender closing fee for "A" loans will be raised from $184.64 to $190.41; and
• the dollar amount for the restriction on post-repossession deficiencies in consumer credit sales will be raised from an original cash sale price of $6,400 to $6,600.

Additional dollar amount adjustments impact taking a security interest in sales or leases, attorney's fees, "B" loan ranges, restrictions on taking an interest in land as security, and requirements for a regular schedule of payments on certain loan amounts.

Amicus Brief(ly): Oklahoma is one of several states that adjusts its credit code dollar thresholds every year or every other year for late fees and other fees, transaction amounts that define the scope of the credit code (not in Oklahoma, but in some of those other states, like Iowa and Maine), and deficiency balance rules. The "Uniform" Consumer Credit Code states are not uniform when it comes to these matters (or several others - it might have been better called the "Similar" Consumer Credit Code). For that reason, compliance professionals have to watch for the states to announce their adjustments and then update systems of record, template credit agreements, customer communications, and policies and procedures to reflect the new dollar amounts. The scheduled fee adjustments tend to be modest, but it is important for servicers to note changes to the anti-deficiency rules to make sure that collectors correctly program repossession communications with respect to whether a consumer will owe a deficiency after sale based on the amount of the original cash sale price.

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¹ For the unfamiliar, an “Amicus Brief” is a legal brief submitted by an amicus curiae (friend of the court) in a case where the person or organization (the “friend”) submitting the brief is not a party to the case, but is allowed by the court to file the brief to share information or expertise that bears on the issues in the case.