1 00:00:00.500 --> 00:00:03.500 California announced last week that the Department 2 00:00:03.500 --> 00:00:06.500 of Financial Protection and Innovation the rules 3 00:00:06.500 --> 00:00:10.100 were approved and published. Now. This is after four 4 00:00:09.100 --> 00:00:12.800 years that California passed the 5 00:00:12.800 --> 00:00:15.100 actual disclosure law. So it took them four years 6 00:00:15.100 --> 00:00:19.000 for them to actually realize and see like what rules we're 7 00:00:18.100 --> 00:00:21.600 gonna put into place the delay was, 8 00:00:21.600 --> 00:00:24.000 you know, four years in the making which is 9 00:00:25.100 --> 00:00:28.300 that's a long time. It's a long time and so it we've 10 00:00:28.300 --> 00:00:32.100 finally got some we've finally got a conclusion to all 11 00:00:31.100 --> 00:00:35.200 of it. I think what is difficult 12 00:00:34.200 --> 00:00:37.500 for some people when we talk about new 13 00:00:37.500 --> 00:00:40.600 disclosed new disclosure laws new disclosure bills. Is 14 00:00:40.600 --> 00:00:43.200 that even when the bills get passed it seems like they never 15 00:00:43.200 --> 00:00:46.800 actually get implemented. Yeah, so you can you can understand why 16 00:00:46.800 --> 00:00:48.600 some people would be skeptical. 17 00:00:49.800 --> 00:00:53.100 That when we go on here and say there's going to be a new disclosure blah 18 00:00:52.100 --> 00:00:55.500 people like yeah, but one does 19 00:00:55.500 --> 00:00:58.300 it ever actually go into effect? Yes. None of them have actually ever 20 00:00:58.300 --> 00:01:01.400 gone into effect California passed their 21 00:01:01.400 --> 00:01:05.200 disclosure law. They were the first ones ever passed one back in 2018. 22 00:01:04.200 --> 00:01:07.200 Yeah, here we are four years 23 00:01:07.200 --> 00:01:10.900 later and they finally said, okay, we've got it. That's the 24 00:01:10.900 --> 00:01:13.400 end of the conversation. It's going into effect 25 00:01:13.400 --> 00:01:16.500 on December 9th. Yeah, what has 26 00:01:16.500 --> 00:01:19.300 happened in between here. Let me just talk about what's happening 27 00:01:19.300 --> 00:01:23.100 between California passed the law that basically 28 00:01:22.100 --> 00:01:25.900 said that a government agency a 29 00:01:25.900 --> 00:01:29.200 state agency was going to decide the rules 30 00:01:28.200 --> 00:01:31.500 for how to carry it out. Okay, 31 00:01:31.500 --> 00:01:34.300 right. So the legislature kind of left 32 00:01:34.300 --> 00:01:38.100 some of the process up to the state Regulators to 33 00:01:37.100 --> 00:01:40.500 handle the details. These details 34 00:01:40.500 --> 00:01:43.200 are kind of big details. You're like little minor things. 35 00:01:43.200 --> 00:01:46.600 Yeah, it was really big things. And so that is their 36 00:01:46.600 --> 00:01:49.200 cause of the delay, is that you 37 00:01:49.800 --> 00:01:53.100 Had to work out what certain terms meant things 38 00:01:52.100 --> 00:01:55.300 like annual percentage rate, right? 39 00:01:55.300 --> 00:01:58.200 Can you even have one for certain products you have been 40 00:01:58.200 --> 00:02:01.500 in debate as to whether you can or you can't does this 41 00:02:01.500 --> 00:02:04.300 apply to factoring does it does it apply to equipment leasing does 42 00:02:04.300 --> 00:02:05.100 it apply to this, right? 43 00:02:05.800 --> 00:02:08.600 And so you have all these questions that we're 44 00:02:08.600 --> 00:02:11.100 not really formalized in the law itself, 45 00:02:11.100 --> 00:02:14.800 but then had to be talked about between The Regulators 46 00:02:14.800 --> 00:02:17.400 the public the people that are going 47 00:02:17.400 --> 00:02:21.100 to be affected and it's been a long time four 48 00:02:20.100 --> 00:02:23.500 years. Yeah, and they finally said enough 49 00:02:23.500 --> 00:02:26.200 is enough. We have a handle on it. 50 00:02:26.200 --> 00:02:29.500 We think we have it right this time the state 51 00:02:29.500 --> 00:02:32.400 published the final version of the rules. That means 52 00:02:32.400 --> 00:02:35.900 there's no more comment period at all. They said 53 00:02:35.900 --> 00:02:38.200 this is what it is deal with it and it goes 54 00:02:38.200 --> 00:02:42.000 into effect on December 9th. And I think what's funny is that 55 00:02:41.500 --> 00:02:44.500 before we went live. I 56 00:02:44.500 --> 00:02:47.200 think you asked me like, yeah, that's what they say. 57 00:02:47.200 --> 00:02:50.800 Could it be delayed again? Right? I guess potentially 58 00:02:50.800 --> 00:02:53.400 it could be delayed but they're done with 59 00:02:53.400 --> 00:02:56.200 the the conversation before there was all 60 00:02:56.200 --> 00:02:59.500 this commentary. Yeah and back and forth that part has 61 00:02:59.500 --> 00:03:02.500 ended for California is said these are the final rules. 62 00:03:02.500 --> 00:03:04.600 That's the end of the conversation. 63 00:03:05.700 --> 00:03:08.300 Going to go into effect on December 9th. I suppose 64 00:03:08.300 --> 00:03:11.700 theoretically it could be delayed. Yeah, but as 65 00:03:11.700 --> 00:03:14.900 far as hoping to get things changed that part 66 00:03:14.900 --> 00:03:17.900 of it is over. Yeah, so I want 67 00:03:17.900 --> 00:03:20.400 to ask you something. We're just to 68 00:03:20.400 --> 00:03:24.400 clarify. We are not lawyers. We have not gone to law school, but 69 00:03:23.400 --> 00:03:27.000 for States like California, Utah, Maryland, 70 00:03:26.600 --> 00:03:29.400 New York, Virginia, New Jersey that I've 71 00:03:29.400 --> 00:03:32.800 tried to play with, you know passing around a 72 00:03:32.800 --> 00:03:35.800 law passing our passing rules to pretty 73 00:03:35.800 --> 00:03:39.200 much put some type of disclosure. What does 74 00:03:38.200 --> 00:03:41.500 that mean? You know to see 75 00:03:41.500 --> 00:03:44.400 like a state like California pass a law like like 76 00:03:44.400 --> 00:03:47.700 past everything, you know and pretty much give end 77 00:03:47.700 --> 00:03:50.500 date. What does it mean do you think the lawmakers in 78 00:03:50.500 --> 00:03:53.400 other states will look at California and say okay we're gonna 79 00:03:53.400 --> 00:03:57.000 take some tips off of them to implement it into our rules 80 00:03:56.200 --> 00:03:59.100 and regulations. Yeah. Well that's kind of 81 00:03:59.100 --> 00:04:02.800 already been happening to an extent. They've been looking at other bills that 82 00:04:02.800 --> 00:04:05.500 have either been drafted or even been 83 00:04:05.700 --> 00:04:08.300 Past and they've been using it as a framework to introduce their 84 00:04:08.300 --> 00:04:08.700 own bill. 85 00:04:09.400 --> 00:04:12.200 The trouble is that no state has ever actually 86 00:04:12.200 --> 00:04:15.400 implemented a disclosure law, even if it's been passed 87 00:04:15.400 --> 00:04:18.700 so you can't really draw a conclusion as to how 88 00:04:18.700 --> 00:04:21.500 might this play out in our own state if it's 89 00:04:21.500 --> 00:04:24.800 never played out in any other state. Yeah, I think California is 90 00:04:24.800 --> 00:04:27.500 going to be one of those and they're not the only ones by 91 00:04:27.500 --> 00:04:30.500 the way. I think I think it's Virginia who's also putting 92 00:04:30.500 --> 00:04:33.600 in their disclosure law in place this year as well. So 93 00:04:33.600 --> 00:04:36.900 we're going to have two states that are actually going to enact and 94 00:04:36.900 --> 00:04:39.500 enforce their disclosure laws from what I 95 00:04:39.500 --> 00:04:42.700 understand this particularly year and 96 00:04:42.700 --> 00:04:45.400 I think what you out there need to 97 00:04:45.400 --> 00:04:45.400 know. 98 00:04:46.400 --> 00:04:49.600 And because I hear this a lot is that yes disclosure is 99 00:04:49.600 --> 00:04:52.500 good and I often hear from Brokers that who wouldn't 100 00:04:52.500 --> 00:04:55.400 want more disclosure. It sounds like an easy 101 00:04:55.400 --> 00:04:58.100 thing to comply with. Yeah, Merchants will have 102 00:04:58.100 --> 00:05:01.400 more things. You know, I mean, they'll be a better informed blah 103 00:05:01.400 --> 00:05:01.800 blah blah. 104 00:05:03.100 --> 00:05:06.400 Nobody's really arguing that side of it. Everyone is really 105 00:05:06.400 --> 00:05:09.300 basically in favor of disclosing and transparency. 106 00:05:10.200 --> 00:05:11.700 It just gets tricky that. 107 00:05:12.400 --> 00:05:15.500 The requirements may ask A lender 108 00:05:15.500 --> 00:05:18.700 or fund or broker to provide information for which 109 00:05:18.700 --> 00:05:21.800 it is actually mathematically impossible 110 00:05:21.800 --> 00:05:22.900 to provide. 111 00:05:23.800 --> 00:05:26.600 Too costly to provide something of 112 00:05:26.600 --> 00:05:29.500 that nature. It might say you are required to provide 113 00:05:29.500 --> 00:05:32.800 this information to say I wouldn't actually 114 00:05:32.800 --> 00:05:35.100 have access to it. Yeah, so that's going to 115 00:05:35.100 --> 00:05:36.100 need to change. Yeah. 116 00:05:37.800 --> 00:05:40.200 The law of the law of the law the rules the rules the rule. 117 00:05:40.200 --> 00:05:43.200 Yeah. Well then if you don't provide it, you just can't you then you're 118 00:05:43.200 --> 00:05:46.900 not able to provide your service anymore. Right? They 119 00:05:46.900 --> 00:05:49.500 have to think about things like that. There are 120 00:05:49.500 --> 00:05:52.400 certain rules that say you need to disclose your 121 00:05:52.400 --> 00:05:55.700 APR and these type of transactions and you say okay. Well, how 122 00:05:55.700 --> 00:05:58.100 do you calculate an APR? Okay. Well, you know 123 00:05:58.100 --> 00:06:01.400 the length of the term is it important factor over there's no term 124 00:06:01.400 --> 00:06:04.200 in my product, but I'm required to disclose the term 125 00:06:04.200 --> 00:06:07.200 and calculate it in this formula. But if I don't have it 126 00:06:07.200 --> 00:06:10.100 then how do I calculate it? And the rule says 127 00:06:10.100 --> 00:06:10.500 too bad. 128 00:06:11.400 --> 00:06:14.600 Aha, gotcha. Yeah the trick is that if you 129 00:06:14.600 --> 00:06:17.300 can't calculate it. Well, then I guess you can't provide your service. 130 00:06:18.100 --> 00:06:21.800 I don't know if that was the intent that was the fear in some 131 00:06:21.800 --> 00:06:24.400 of these disclosure laws that there are things that 132 00:06:24.400 --> 00:06:27.200 are that may be required that can't be 133 00:06:27.200 --> 00:06:30.400 provided. Yes. And that here we are saying yes, we're 134 00:06:30.400 --> 00:06:34.400 in favor of disclosure but you indirectly and inadvertently regulated 135 00:06:33.400 --> 00:06:36.400 yourself out of being able to provide your 136 00:06:36.400 --> 00:06:39.800 service because of the disclosure laws requirement. Yeah. 137 00:06:39.800 --> 00:06:43.200 Well and I think obviously the we're 138 00:06:42.200 --> 00:06:45.700 going to speak I'm speaking specifically regarding California 139 00:06:45.700 --> 00:06:48.700 and what they passed that actual, 140 00:06:48.700 --> 00:06:52.000 you know, the documents are online 141 00:06:51.300 --> 00:06:54.400 are on tobank.com. It is a lengthy document. 142 00:06:54.400 --> 00:06:57.400 It's like 48 pages. Yeah, and like and 143 00:06:57.400 --> 00:07:00.200 we even advise down there. If you have questions regarding and contact 144 00:07:00.200 --> 00:07:03.200 an attorney that can walk you through what it means the language of 145 00:07:03.200 --> 00:07:06.000 it because obviously we're not going to 146 00:07:06.700 --> 00:07:09.300 speculate and we'll leave that to the hands of the professionals. Yeah. 147 00:07:09.300 --> 00:07:12.100 I mean look anyone can read through it and draw their own 148 00:07:12.100 --> 00:07:15.400 conclusions. I think for something of this significance because 149 00:07:15.400 --> 00:07:17.600 it's been every every line 150 00:07:18.100 --> 00:07:21.600 And dotted I has been debated at length for 151 00:07:21.600 --> 00:07:23.500 four years. Yeah, I think the best. 152 00:07:24.500 --> 00:07:27.400 People to give you the proper guidance for what 153 00:07:27.400 --> 00:07:28.100 does it all mean? 154 00:07:28.900 --> 00:07:32.100 Is an attorney at this point obviously once 155 00:07:31.100 --> 00:07:35.100 we've kind of felt out the market and gotten 156 00:07:34.100 --> 00:07:38.100 a lot of feedback, we'll communicate basically what 157 00:07:37.100 --> 00:07:40.700 we know. Yeah, you know what I mean, but until 158 00:07:40.700 --> 00:07:43.200 we've had that opportunity and to all the law firms about the 159 00:07:43.200 --> 00:07:46.500 opportunity to say here's how it's essentially going to work. I think 160 00:07:46.500 --> 00:07:49.300 it's just best if we don't communicate what we think is 161 00:07:49.300 --> 00:07:52.400 going to happen and give any type of incorrect information. 162 00:07:52.400 --> 00:07:56.000 Yeah, but it does include things like merchant cash 163 00:07:55.200 --> 00:07:58.700 advance factoring lending. These 164 00:07:58.700 --> 00:08:01.200 are terms that are used to out. So if you're thinking this doesn't 165 00:08:01.200 --> 00:08:04.600 apply to me I do this type of financing it may 166 00:08:04.600 --> 00:08:07.200 very well apply to you and it's something you should be thinking about 167 00:08:07.200 --> 00:08:10.700 and you should definitely use legal counsel 168 00:08:10.700 --> 00:08:13.500 to guide your path forward. That's actually 169 00:08:13.500 --> 00:08:16.300 we're going to be putting a link up 170 00:08:16.300 --> 00:08:19.500 on our site. I think by the end of the day, it's you 171 00:08:19.500 --> 00:08:20.700 can actually buy a guide. 172 00:08:21.800 --> 00:08:24.100 From counselor Library, they're selling like a 173 00:08:24.100 --> 00:08:27.400 guide at California disclosure guide. Yeah. 174 00:08:28.100 --> 00:08:31.100 I don't know if it's already available to download but they're already 175 00:08:31.100 --> 00:08:34.600 advertising it meaning you'll have some type of comprehensive material 176 00:08:34.600 --> 00:08:37.200 that you can purchase to help. 177 00:08:37.200 --> 00:08:40.300 You understand the slot which I think is awesome. No, 178 00:08:40.300 --> 00:08:43.700 I think that's great because these you know documents and 179 00:08:43.700 --> 00:08:47.500 rules and regulations and law that pass the 180 00:08:46.500 --> 00:08:49.600 the language itself is complex 181 00:08:49.600 --> 00:08:52.300 and it's not a one-size-fits all 182 00:08:52.300 --> 00:08:55.300 type of situation because you know, I can say certain 183 00:08:55.300 --> 00:08:58.800 things and and you know people have questions about it. So yeah, I 184 00:08:58.800 --> 00:09:01.400 think it's it's always good to, you know, see other 185 00:09:01.400 --> 00:09:04.400 resources and advice and opinions from professionals.