1 00:00:00.000 --> 00:00:02.880 Delegate Webert: In favor say aye? Aye. Aye, all those 2 00:00:02.880 --> 00:00:06.030 against? All right, the substitute is before Delegate 3 00:00:06.030 --> 00:00:09.330 Tran, please explain this bill, because this is a fascinating 4 00:00:09.360 --> 00:00:10.170 subject matter. 5 00:00:10.290 --> 00:00:15.030 Delegate Tran: Thank you. This bill came to me for soft by a 6 00:00:15.030 --> 00:00:18.600 lawyer in Northern Virginia who is working with a couple of 7 00:00:18.600 --> 00:00:22.830 small business owners that got caught up in Merchant Cash 8 00:00:22.860 --> 00:00:26.160 Advance agreement. And he reached out to me because those 9 00:00:26.160 --> 00:00:29.250 business owners were Vietnamese American, he wanted to know if I 10 00:00:29.250 --> 00:00:32.100 had heard about this practice more broadly in the community. 11 00:00:32.430 --> 00:00:35.340 So I want to take some time to explain what a merchant cash 12 00:00:35.340 --> 00:00:38.550 advances. Because quite frankly, when I initially spoke to the 13 00:00:38.550 --> 00:00:41.820 FCC and the Attorney General's office, they both had to google 14 00:00:41.820 --> 00:00:45.030 it before our meeting so that we could be on the same page. And 15 00:00:45.030 --> 00:00:47.910 then I want to talk about why they're predatory or can be 16 00:00:47.910 --> 00:00:52.080 predatory in nature. And what I'm proposing to do as an 17 00:00:52.080 --> 00:00:56.070 initial step to get our arms around this issue. So first of 18 00:00:56.070 --> 00:01:00.600 all, we know that the pandemic has created unprecedented 19 00:01:00.930 --> 00:01:04.080 economic challenges for some of our small businesses. And we've 20 00:01:04.080 --> 00:01:06.900 worked really hard to make sure that we're shoring them up 21 00:01:07.080 --> 00:01:11.490 providing grants for to help with their recovery. But 22 00:01:11.520 --> 00:01:14.790 unregulated companies are offering different lending 23 00:01:14.790 --> 00:01:18.120 schemes called merchant cash advances, to make sure that 24 00:01:18.120 --> 00:01:21.750 small businesses have quick, easy money in order to make 25 00:01:21.750 --> 00:01:26.790 payroll and pay rent. Merchant Cash Advances is a practice that 26 00:01:26.790 --> 00:01:30.990 gives money upfront to a business in exchange for either 27 00:01:31.020 --> 00:01:34.500 an estimated credit or debit card sales, a percentage of 28 00:01:34.500 --> 00:01:39.120 their estimated credit, or debit card sales, or a fixed sum of 29 00:01:39.120 --> 00:01:44.160 money based on an estimate of sales. It is not alone. It is 30 00:01:45.420 --> 00:01:49.170 kind of falls under a contract of hazard, but not as neatly. 31 00:01:49.620 --> 00:01:55.860 And it's not regulated by any regulations or law in Virginia 32 00:01:55.860 --> 00:01:59.400 code. And it's not regulated by the Federal Trade Commission 33 00:01:59.430 --> 00:02:02.880 either. So in Virginia, we actually don't know who these 34 00:02:02.880 --> 00:02:06.180 companies are, who these companies are. They don't have 35 00:02:06.180 --> 00:02:09.720 to register with the SEC as a business. We've done some 36 00:02:09.720 --> 00:02:12.780 research to identify merchant cash advances, we think we've 37 00:02:12.780 --> 00:02:17.310 identified about 12 Different companies that offer these types 38 00:02:17.310 --> 00:02:21.270 of lending opportunities in Virginia, but they're not the 39 00:02:21.270 --> 00:02:25.920 companies are not necessarily domiciled in Virginia. And these 40 00:02:25.920 --> 00:02:31.500 seem to some not all seem to engage in predatory practices. 41 00:02:31.890 --> 00:02:34.800 And so after the conversation with the lawyer who reached out 42 00:02:34.800 --> 00:02:37.620 to me, I spoke with a leader in the Vietnamese business 43 00:02:37.620 --> 00:02:40.860 community. He's an accountant. He works with hundreds of 44 00:02:40.860 --> 00:02:44.400 immigrant owned businesses in Northern Virginia. When we 45 00:02:44.400 --> 00:02:47.220 brought up MCA, as he said, I've definitely heard about him. 46 00:02:47.610 --> 00:02:50.490 Small business owners are reaching out to him because they 47 00:02:50.490 --> 00:02:54.540 are getting ads on Facebook and YouTube being targeted to them. 48 00:02:54.930 --> 00:02:58.650 And his advice is just stay away. Because if you can't pay 49 00:02:58.650 --> 00:03:02.430 up on their time, you ended up getting caught in a really deep 50 00:03:02.430 --> 00:03:06.420 hole and your business might have to go under. So he flagged 51 00:03:06.420 --> 00:03:09.690 one example company that might be an MCA, it's a little bit 52 00:03:09.690 --> 00:03:13.710 shady. So we called them my staff did and they answered in 53 00:03:13.710 --> 00:03:16.770 Vietnamese, and as soon as my staff has, do you speak English, 54 00:03:16.770 --> 00:03:19.410 can we talk about what you offer, they hung up. 55 00:03:21.120 --> 00:03:23.880 The agreements also often include a confession of 56 00:03:23.880 --> 00:03:26.910 judgment, which removes a business owners right to defend 57 00:03:26.910 --> 00:03:30.450 themselves in court. And even if they can't defend themselves. 58 00:03:31.200 --> 00:03:34.950 Often what's built in is that you have to go to the place 59 00:03:34.950 --> 00:03:38.280 where the business is Dominus, where the lender is domiciled, 60 00:03:38.520 --> 00:03:42.240 instead of where the Virginia business is domiciled. So it's 61 00:03:42.240 --> 00:03:45.810 requiring some of these already cash strapped businesses to have 62 00:03:45.810 --> 00:03:49.320 to cover travel, and then defend themselves in an arbitration 63 00:03:49.530 --> 00:03:53.880 process that is also very costly. Some MCA companies were 64 00:03:53.880 --> 00:03:57.450 basing advances in payback on pre pandemic numbers. So 65 00:03:57.450 --> 00:04:00.960 they're, they're estimating what you might be able to afford to 66 00:04:00.960 --> 00:04:04.800 pay based on your cash receipts pre pandemic, right, which were 67 00:04:04.980 --> 00:04:08.880 many types for restaurants and other mainstream businesses much 68 00:04:08.880 --> 00:04:12.450 higher than in the pandemic. So they're in this cycle where the 69 00:04:12.450 --> 00:04:15.450 idea is that well, you shouldn't be able to pay this. But there 70 00:04:15.480 --> 00:04:18.450 in reality, the cash receipts are getting in on a daily basis 71 00:04:18.480 --> 00:04:21.930 is much lower than we want to just highlight the interest 72 00:04:21.930 --> 00:04:28.590 rates and CA's have interest rates as high as 350%. Compared 73 00:04:28.590 --> 00:04:31.860 to other small business loans, which might be less than 10%, 74 00:04:32.160 --> 00:04:36.150 traditional bank loans, and even business credit cards but 75 00:04:36.180 --> 00:04:40.860 really, really high. Right now we don't regulate so MCA is 76 00:04:40.860 --> 00:04:44.910 don't have to disclose the total cost and fees. There's no way 77 00:04:44.910 --> 00:04:47.580 for a small business owner to actually make an intelligent 78 00:04:47.700 --> 00:04:51.420 comparison between the MCA and some other traditional 79 00:04:51.420 --> 00:04:55.290 financing. The Federal Trade Commission has found that MCA is 80 00:04:55.290 --> 00:04:58.740 across the country have harassed small business owners that 81 00:04:58.740 --> 00:05:02.220 aren't able to meet them equally obligation, they found that 82 00:05:02.220 --> 00:05:05.340 they've been engaging in misleading marketing practices. 83 00:05:05.730 --> 00:05:09.240 And sometimes, you know, getting owners to sign these contracts 84 00:05:09.240 --> 00:05:14.070 under different understandings. What we've proposed in Virginia, 85 00:05:14.070 --> 00:05:17.010 quite frankly, would put us at the cutting edge of trying to 86 00:05:17.010 --> 00:05:20.760 get a handle on MC A's. I want you to note, I'm not proposing 87 00:05:20.760 --> 00:05:24.600 to ban them, I recognize that there are small businesses that 88 00:05:24.810 --> 00:05:30.540 that don't have the the necessary situation to access 89 00:05:30.540 --> 00:05:34.860 traditional financing through our banks and credit unions. But 90 00:05:34.860 --> 00:05:39.420 so for them, this might be a way to go. We just want to make sure 91 00:05:39.540 --> 00:05:43.170 that there's some transparency in this process for the small 92 00:05:43.170 --> 00:05:46.380 business owner, particularly small business owners that might 93 00:05:46.380 --> 00:05:49.710 not have the wherewithal to understand the nitty gritty Enos 94 00:05:49.740 --> 00:05:53.700 of, you know, these types of contracts, we want to require 95 00:05:53.700 --> 00:05:57.990 that MCA lenders register with the SEC, that they provide the 96 00:05:57.990 --> 00:06:01.680 terms of agreement in plain language, how much you're going 97 00:06:01.680 --> 00:06:04.800 to owe, at the end of the day, what the fees are, what the 98 00:06:04.800 --> 00:06:07.410 percentages so that you have, the small business owner has a 99 00:06:07.950 --> 00:06:12.090 clearer picture of the total cost. And that if there's any 100 00:06:12.090 --> 00:06:15.960 arbitration or court actions, that those would take place in 101 00:06:15.960 --> 00:06:19.110 the locality where the small business is domiciled, so that 102 00:06:19.110 --> 00:06:22.230 our Virginia and businesses don't have to travel to New York 103 00:06:22.230 --> 00:06:26.250 or another state. And it would allow the Office of the Attorney 104 00:06:26.250 --> 00:06:29.340 General to investigate and prosecute instances of 105 00:06:29.340 --> 00:06:34.680 violations of the bill. We I think this is a small but 106 00:06:34.680 --> 00:06:38.820 significant step to starting to understand the situation of MCs. 107 00:06:39.150 --> 00:06:43.020 In Virginia, we have not, I have not kind of at that point to 108 00:06:43.890 --> 00:06:47.250 give investigative authority to the SEC, I think I'd like to 109 00:06:47.250 --> 00:06:50.490 gather some information and data, and then figure out the 110 00:06:50.520 --> 00:06:53.670 amount of regulation that we actually need are small 111 00:06:53.670 --> 00:06:57.270 businesses, especially these main street shop, mom and pop 112 00:06:57.600 --> 00:07:01.500 shops are at risk and need our support. And so I hope that 113 00:07:01.500 --> 00:07:03.780 you'll be able to support this bill, and I look forward to our 114 00:07:03.780 --> 00:07:04.920 conversation today. 115 00:07:06.090 --> 00:07:08.340 Delegate Webert: Thank you delegate Tran, questions from 116 00:07:08.340 --> 00:07:09.900 the committee Delegate Weber. 117 00:07:14.490 --> 00:07:16.050 Speaker 3: Thank you Mr. chairman, I think my questions 118 00:07:16.050 --> 00:07:19.170 are probably for the Bureau of financial institutions. I see 119 00:07:19.200 --> 00:07:22.950 the commissioners here. And I had a couple of questions 120 00:07:22.950 --> 00:07:27.180 related to regulation of financial institutions, perhaps 121 00:07:27.180 --> 00:07:28.980 of this nature, if he could. 122 00:07:32.650 --> 00:07:34.660 Speaker 5: Mr. Chairman, Joe, face Commissioner financial 123 00:07:34.660 --> 00:07:37.390 institutions, they'll be aware. 124 00:07:39.520 --> 00:07:41.440 Speaker 3: Commissioner, a couple of questions occur to me. 125 00:07:41.440 --> 00:07:48.460 One is Are you familiar with these types of outfits? And do 126 00:07:48.460 --> 00:07:54.310 they have a an affinity with other types of lending 127 00:07:54.580 --> 00:07:58.030 institutions that we already regulate in some fashion? 128 00:07:59.470 --> 00:08:02.860 Speaker 4: Well, first, if I may, Mr. Chairman, Delegate 129 00:08:02.860 --> 00:08:06.130 where Madam Chair, my apologies for not being here earlier 130 00:08:06.460 --> 00:08:11.110 today? To answer your question, so just want to say that 131 00:08:12.310 --> 00:08:17.080 delegate where this is something that is new to us. I was not 132 00:08:17.080 --> 00:08:21.700 personally aware of this type of lending. I can tell you after 42 133 00:08:21.730 --> 00:08:26.260 years of being a bank examiner, Nothing surprises me anymore. 134 00:08:26.260 --> 00:08:29.230 And I learned something new every day. The way money is 135 00:08:29.230 --> 00:08:32.650 transmitted these days, the way it's led, it changes every day. 136 00:08:32.680 --> 00:08:36.610 There's something new every week. This is something we were 137 00:08:36.610 --> 00:08:43.960 not aware of. It is not captured in any any statutes under 6.2. 138 00:08:44.860 --> 00:08:49.720 Banking, lending, so forth. So it is an unregulated business at 139 00:08:49.720 --> 00:08:50.290 this point. 140 00:08:51.940 --> 00:08:53.050 Speaker 3: Mr. Chairman, another question. 141 00:08:53.320 --> 00:08:55.540 Speaker 4: In Virginia, I should say, dog where 142 00:08:56.320 --> 00:08:59.170 Speaker 3: In testimony what from the patron was that this 143 00:08:59.200 --> 00:09:02.590 these are things discovered on Facebook or other social media 144 00:09:02.680 --> 00:09:06.310 and they're domiciled in, at least in some cases in other 145 00:09:06.310 --> 00:09:12.130 places. Excuse me, do you have regulatory authority that would 146 00:09:12.130 --> 00:09:14.080 reach to such places? 147 00:09:16.180 --> 00:09:19.150 Speaker 4: No, sir, we would not. Miss Chairman Sir Delegate 148 00:09:19.150 --> 00:09:25.060 Weber. Typically when a new industry comes under regulation, 149 00:09:25.360 --> 00:09:28.960 and most recently that would have been student loan servicers 150 00:09:28.960 --> 00:09:33.010 as you recall and debt settlement providers. We do not 151 00:09:33.010 --> 00:09:37.210 have the mechanisms to go out and beat the bushes, if you 152 00:09:37.210 --> 00:09:44.950 will. It's up to the entities to know what the law is in Virginia 153 00:09:45.250 --> 00:09:50.830 into obtain a license or be registered on their own. But we 154 00:09:50.830 --> 00:09:55.780 typically can get tips from consumers filing complaints 155 00:09:55.780 --> 00:10:00.550 about unlicensed entities and when we find that we We do check 156 00:10:00.550 --> 00:10:01.780 it out. We do go after. 157 00:10:06.250 --> 00:10:07.930 Speaker 3: Thank you. Delegate McNamara. 158 00:10:08.260 --> 00:10:10.090 Delegate McNamara: Thank you, Mr. Chairman, I had a number of 159 00:10:10.090 --> 00:10:16.360 questions if I could to the patron. So I think I heard you 160 00:10:16.360 --> 00:10:21.370 say you said these are not loans. But what describe the 161 00:10:21.370 --> 00:10:25.630 transaction. So I get something in my Facebook feed, or 162 00:10:25.660 --> 00:10:31.960 actually, I think I didn't, I confess, when we talked this 163 00:10:31.960 --> 00:10:35.620 week, I did not know, I had not heard of this terminology as 164 00:10:35.620 --> 00:10:40.780 well. But I may have gotten solicitations because I get them 165 00:10:40.780 --> 00:10:43.210 fairly often, as a business owner, you know, we have 166 00:10:43.210 --> 00:10:45.460 business cash for you. And if I just throw them in the bank, 167 00:10:45.460 --> 00:10:51.190 because because my rich uncle gives me money. So the the, 168 00:10:53.590 --> 00:10:57.760 describe the transaction, I opened up the letter, it says we 169 00:10:57.760 --> 00:11:02.830 have cash for you. I tell them what my sales are. They then 170 00:11:02.950 --> 00:11:06.820 give me money based on now to return to that money, but a 171 00:11:06.820 --> 00:11:09.490 certain percentage of my revenues going forward. 172 00:11:10.090 --> 00:11:12.370 Delegate Tran: Yes, that's my understanding. And then you give 173 00:11:12.370 --> 00:11:15.190 them I think, in some cases, you actually give them direct access 174 00:11:15.190 --> 00:11:19.540 to your your bank account to withdrawal. And so we do, I 175 00:11:19.540 --> 00:11:23.320 believe, have somebody online, who is a small business owner, a 176 00:11:23.320 --> 00:11:27.730 restaurant owner here in Richmond, who is is here to 177 00:11:27.730 --> 00:11:30.790 share her experience. And with one of these, and so she can 178 00:11:30.790 --> 00:11:33.700 probably speak specifically to how that, you know, the actual 179 00:11:34.000 --> 00:11:37.150 mechanism of how that happened. But that's what we that's our 180 00:11:37.150 --> 00:11:42.250 understanding and talking with the leaders in the music 181 00:11:42.250 --> 00:11:44.020 community and in reading online as well. 182 00:11:46.540 --> 00:11:49.510 Speaker 3: Thank you, Mr. Chairman. Delegate Sullivan. 183 00:11:50.710 --> 00:11:52.210 Delegate Sullivan: Thank you, Mr. Chairman, this may be a 184 00:11:52.210 --> 00:11:56.380 question for counsel. Since we don't have the substitute 185 00:11:56.590 --> 00:12:02.140 available. We're striking paragraph just paragraph a 186 00:12:02.140 --> 00:12:05.080 beginning on line 137, or the entire section. 187 00:12:07.580 --> 00:12:08.900 Delegate Tran: Delegate Sullivan, I would say it's just 188 00:12:08.900 --> 00:12:13.280 paragraph A. And I think the commissioner could speak a 189 00:12:13.280 --> 00:12:17.270 little bit to that. I think the SEC had some concerns. You know, 190 00:12:17.270 --> 00:12:20.720 how to what is the threshold when they would refer over to 191 00:12:20.720 --> 00:12:26.660 the AGs. Office and such and so we wanted to respect that 192 00:12:26.660 --> 00:12:31.370 because we're not quite at the point of the investigator 193 00:12:31.400 --> 00:12:35.300 vesting, get to investigate for them to investigate yet. And so 194 00:12:35.510 --> 00:12:38.300 we wanted to kind of take this baby step to gather the data 195 00:12:38.300 --> 00:12:41.930 first, but also just allow if they're really egregious cases, 196 00:12:42.290 --> 00:12:44.960 through consumer complaints in such that the AG is office would 197 00:12:44.960 --> 00:12:46.040 be able to take action. 198 00:12:46.280 --> 00:12:47.150 Delegate Sullivan: Further question Mr Chairman. 199 00:12:48.260 --> 00:12:48.890 Speaker 3: Delegate Sullivan. 200 00:12:48.890 --> 00:12:50.922 Delegate Sullivan: Thank you. This is not the Courts 201 00:12:50.922 --> 00:12:50.991 Speaker 1: I'm sorry, I think councils raising the town 202 00:12:50.991 --> 00:12:55.036 Committee. So I don't want to necessarily edit this online. 203 00:12:55.104 --> 00:12:59.287 And we could probably talk edit this during the committee, we 204 00:12:59.355 --> 00:13:03.469 could probably talk about it. But what I don't understand is 205 00:13:03.537 --> 00:13:07.720 paragraphs B, C, and D continued to talk about actions by the 206 00:13:07.788 --> 00:13:11.765 attorney general, including bringing lawsuits and such. So 207 00:13:11.833 --> 00:13:16.016 concerned that just striking a may not solve the problem that 208 00:13:16.084 --> 00:13:19.170 counsel just described. One question for,for. 209 00:13:21.450 --> 00:13:21.930 council, 210 00:13:21.960 --> 00:13:26.910 Mr. Hernandez: Mr. Mr. Chair, Delegate seven delegate trend. 211 00:13:29.250 --> 00:13:33.000 Did you want to leave in subsection A the insurance 212 00:13:33.060 --> 00:13:36.660 Attorney General is authorized to seek to enjion, violations of 213 00:13:36.660 --> 00:13:37.590 this chapter? 214 00:13:37.920 --> 00:13:39.630 Speaker 1: That would probably make sense. Thank you. 215 00:13:42.690 --> 00:13:43.770 Speaker 3: Could counsel repeat that. 216 00:13:44.460 --> 00:13:47.010 Mr. Hernandez: Yes, sir. So previously, I had described it 217 00:13:47.010 --> 00:13:51.900 as striking lines 137 through 141, I think really should be 218 00:13:51.900 --> 00:13:59.250 striking. If the commission through with or without such 219 00:13:59.250 --> 00:14:02.760 referral. So it will take out the part where the commission 220 00:14:02.760 --> 00:14:06.840 refers violations to the Ag but it will still say the Attorney 221 00:14:06.840 --> 00:14:09.570 General is authorized to seek to enjoin violations of this 222 00:14:09.570 --> 00:14:13.320 chapter, circuit court having jurist stiction may join such 223 00:14:13.320 --> 00:14:17.190 violations, notwithstanding the existence of an adequate remedy 224 00:14:17.190 --> 00:14:19.770 at law. All right, thank you. 225 00:14:20.430 --> 00:14:22.380 Delegate Sullivan: Thank you, Mr. Chairman. And one final 226 00:14:22.380 --> 00:14:27.360 question relating to wordsmithing. Delegate Train in 227 00:14:27.360 --> 00:14:29.820 your comments, you talked about how the Ag was going to have 228 00:14:29.820 --> 00:14:33.270 authority to investigate and prosecute. We're not creating a 229 00:14:33.330 --> 00:14:35.820 crime here. There's not going to be any prosecutions under this. 230 00:14:36.360 --> 00:14:38.730 Isn't that right? Or maybe this question is also for counsel. 231 00:14:44.040 --> 00:14:46.560 Mr. Hernandez: Mr. cerdo, Sullivan, sir, it's not. The 232 00:14:46.560 --> 00:14:52.770 bill doesn't create a criminal crime, a criminal violation. It 233 00:14:52.770 --> 00:14:54.900 just says that the attorney general has the authority to 234 00:14:54.930 --> 00:15:00.030 seeks to enjoin Mr. Face may help remind me if there is a gem 235 00:15:00.030 --> 00:15:06.690 rule for criminal violation statute for 6.2. There is not he 236 00:15:06.690 --> 00:15:07.110 says. 237 00:15:08.940 --> 00:15:12.000 Delegate Sullivan: Thank you, Mr. Chair. I will now be quiet. 238 00:15:13.110 --> 00:15:16.410 Speaker 8: So, I guess procedurally, if we want to make 239 00:15:16.410 --> 00:15:19.260 sure we have that sentence, do we need to reject the current 240 00:15:19.260 --> 00:15:21.750 substitute this before us and adopt the new substitute? So 241 00:15:21.750 --> 00:15:24.180 that sentence is in in before us. 242 00:15:27.120 --> 00:15:29.280 Mr. Hernandez: Mr. Chair, I think you can just adopt that 243 00:15:29.280 --> 00:15:29.790 amendment. 244 00:15:30.080 --> 00:15:32.750 Unknown: Okay. I move that amendment. Mr. Chair. 245 00:15:32.810 --> 00:15:35.750 Speaker 8: Is there a second? All those in favor of adopting 246 00:15:35.750 --> 00:15:39.920 the amendment say aye. Aye. Aye. All those against the substance 247 00:15:39.920 --> 00:15:42.830 has been amended, and probably for us. Alright, let's take 248 00:15:42.830 --> 00:15:45.650 testimony. If we can keep it brief. All those in favor of 249 00:15:45.650 --> 00:15:48.020 this piece of legislation, please come forward at or on the 250 00:15:48.020 --> 00:15:52.490 floor. If there isn't anybody, we'll go to virtual. All right. 251 00:15:53.120 --> 00:15:56.750 We do have one person I believe Mr. Hernandez. 252 00:15:58.820 --> 00:16:00.470 Mr. Hernandez: Good afternoon, Mr. Chairman. And thank you 253 00:16:00.470 --> 00:16:02.660 members of the committee. My name is Phil Hernandez with the 254 00:16:02.660 --> 00:16:05.180 Commonwealth Institute. And for the reasons that delegate Tran 255 00:16:05.180 --> 00:16:08.090 put forward we support this legislation, which will help to 256 00:16:08.090 --> 00:16:12.110 bring greater transparency around MCAs and in so doing help 257 00:16:12.110 --> 00:16:14.960 protect small and minority owned businesses across our 258 00:16:14.960 --> 00:16:16.640 Commonwealth. Thank you so much. 259 00:16:17.900 --> 00:16:20.240 Speaker 8: All right. Is there anybody here to speak against 260 00:16:20.240 --> 00:16:27.140 this piece of legislation? Okay, and I don't think there is 261 00:16:27.140 --> 00:16:30.290 anybody virtual delegate train. Would you like the last word? 262 00:16:31.760 --> 00:16:39.620 Sorry. Is that, hold on, Delegate Tran? I believe there's 263 00:16:39.620 --> 00:16:51.170 one other person virtual. And I can't see it but Amy, are you to 264 00:16:51.170 --> 00:16:51.710 speak again? 265 00:16:51.750 --> 00:16:54.660 Speaker 9: Yes, I am here. I'm here to speak in favor. 266 00:16:54.960 --> 00:16:55.920 Delegate Webert: Okay. Please. 267 00:16:56.130 --> 00:16:58.440 Unknown: Thank you. Thank you so much good day leaders. I 268 00:16:58.440 --> 00:17:01.200 represent over 40 small and minority owned restaurants in 269 00:17:01.200 --> 00:17:04.020 the Richmond Chesterfield and Henrico County's Richmond 270 00:17:04.020 --> 00:17:07.950 region. That as you can imagine it as delegate translated have 271 00:17:07.950 --> 00:17:10.650 suffered tremendously. Throughout the pandemic, it's 272 00:17:10.650 --> 00:17:12.930 been reported that much of the emergency funding through 273 00:17:12.930 --> 00:17:15.270 various federal and state grants and loan opportunities just 274 00:17:15.270 --> 00:17:18.450 didn't simply didn't reach many of the minority establishments. 275 00:17:18.450 --> 00:17:21.870 As a result, these predatory companies have, you know, kind 276 00:17:21.870 --> 00:17:24.420 of used this opportunity to enter into bargaining agreements 277 00:17:24.630 --> 00:17:27.870 with harmful terms at a very vulnerable time, we are 278 00:17:27.870 --> 00:17:31.260 requesting that you please support this bill and one of the 279 00:17:31.260 --> 00:17:35.370 delegates had to ask questions about about the process. And 280 00:17:35.370 --> 00:17:39.660 yes, you are borrowing basically from from future receipts. And 281 00:17:39.660 --> 00:17:42.180 so you're kind of predicting if you're going to have enough 282 00:17:42.180 --> 00:17:45.810 money in the future to cover and sometimes it's daily withdrawals 283 00:17:45.810 --> 00:17:49.800 out of your bank account. And so definitely need regulation 284 00:17:49.800 --> 00:17:53.490 definitely want to support this bill, we ask that you. You vote 285 00:17:53.490 --> 00:17:54.930 in favor, thank you so much. 286 00:17:56.910 --> 00:17:58.050 Alright, Delegate Webert? 287 00:17:58.410 --> 00:18:00.900 Delegate Webert: Yes, I was gonna ask the patrons since 288 00:18:02.400 --> 00:18:05.130 since it does have the fiscal impact statement does say will 289 00:18:05.130 --> 00:18:09.450 require one position for the each of the next two years and 290 00:18:09.450 --> 00:18:13.020 although it is described as non general fund money, the 291 00:18:13.020 --> 00:18:16.710 legislation does not provide a funding mechanism to allow the 292 00:18:16.710 --> 00:18:20.790 SEC to recover expenses. Did you have a budget amendment or is 293 00:18:20.790 --> 00:18:26.340 there something or whoever whoever be appropriate. 294 00:18:26.340 --> 00:18:29.940 Unknown: And Delegate Webert I think one of the one of the 295 00:18:30.180 --> 00:18:34.650 pieces in the substitute was an annual fee, registration fee of 296 00:18:34.650 --> 00:18:39.480 $1,000 and a $500 renewal fee every year for the businesses 297 00:18:39.480 --> 00:18:42.480 that engage in this practice. Does that answer your question? 298 00:18:43.230 --> 00:18:47.280 Delegate Webert: It does, if we think that there would be 300 of 299 00:18:47.280 --> 00:18:54.300 these groups out there. Yet, Commissioner. 300 00:18:54.870 --> 00:18:59.490 Mr. Chairman, Delegate Webert that fiscal impact was prepared 301 00:18:59.490 --> 00:19:04.710 on the original language in the bill. Removing the investigative 302 00:19:04.710 --> 00:19:09.570 ability requirements for us significantly reduce that 303 00:19:09.600 --> 00:19:14.970 impact. Your question is correct. We don't know how many 304 00:19:14.970 --> 00:19:18.180 are out there. It's very difficult to for us to gate to 305 00:19:18.180 --> 00:19:21.840 gauge, right. It's like that, again, with any new industry we 306 00:19:21.840 --> 00:19:24.990 bring under regulation, whether it be student loan servicers, we 307 00:19:24.990 --> 00:19:29.280 have no idea what the universe is. We do have a funding 308 00:19:29.280 --> 00:19:35.340 mechanism in here now with a registration fee. Could be next 309 00:19:35.340 --> 00:19:38.490 year. If we find out there a lot more. We'll have to come back to 310 00:19:38.490 --> 00:19:40.170 you with a with a change in that. 311 00:19:40.470 --> 00:19:41.670 Speaker 3: I thank you for that. 312 00:19:41.700 --> 00:19:45.660 Speaker 4: I might if I might just add, we have no position on 313 00:19:45.660 --> 00:19:49.740 the bill will carry out whatever the committee in the General 314 00:19:49.740 --> 00:19:55.290 Assembly require. My general counsel is on virtual if you had 315 00:19:55.290 --> 00:19:58.620 any questions, criminality and so forth, he'd probably be able 316 00:19:58.620 --> 00:19:59.700 to answer those questions. 317 00:20:00.510 --> 00:20:02.520 Delegate Webert: Thank you. Thank you, Mr. Chairman. I think 318 00:20:02.520 --> 00:20:05.550 that answered that speaks to the question I had. No, we'll get 319 00:20:05.550 --> 00:20:06.120 McNamara. 320 00:20:07.020 --> 00:20:09.060 Delegate McNamara: Thank you, Mr. Chairman. I'd like to just 321 00:20:09.060 --> 00:20:13.080 throw out from the discussion standpoint, I think I liked the 322 00:20:13.080 --> 00:20:17.400 concept of the bill. It sounds to me, it's not drastically 323 00:20:17.400 --> 00:20:20.970 different than some of the kind of the the operators that we 324 00:20:20.970 --> 00:20:25.290 outlawed in this General Assembly a couple years ago. I'm 325 00:20:25.290 --> 00:20:28.110 not sure when there's not enforcement capability. And if 326 00:20:28.110 --> 00:20:32.460 we're talking 12, or 14 different businesses, perhaps 327 00:20:32.460 --> 00:20:38.040 even at 500 or $1,000. I don't know. You know, I don't know 328 00:20:38.040 --> 00:20:40.950 that we've we're exactly where we need to be on the bill. And 329 00:20:41.190 --> 00:20:47.430 I, is there some sort of study or commission, that a bill like 330 00:20:47.430 --> 00:20:51.060 this could be referred to to try to put our put our arms around 331 00:20:51.060 --> 00:20:53.910 exactly what's occurring and what makes sense from a 332 00:20:53.910 --> 00:20:57.660 regulation standpoint. And I asked that to your experience on 333 00:20:57.660 --> 00:21:02.940 the committee, Mr. Chair, because I think the idea is very 334 00:21:02.940 --> 00:21:05.550 good. I'm not sure if it's where it needs to be. And if there's 335 00:21:05.550 --> 00:21:06.720 someone that can look at it. 336 00:21:10.440 --> 00:21:14.730 Speaker 8: To be honest, Delegate McNamara, I don't know 337 00:21:14.730 --> 00:21:17.310 if there is a commission or anything that would study this, 338 00:21:17.310 --> 00:21:21.630 but we can certainly look into that real quick. But delegates, 339 00:21:22.080 --> 00:21:27.300 Delegate McNamara: Chairman, if I may speak to the bill, please. 340 00:21:28.470 --> 00:21:31.050 And whatever. I think I'm going to be responding to delegate 341 00:21:31.050 --> 00:21:36.240 McNamara. Delegate train I, I love the bill. This is clearly 342 00:21:36.240 --> 00:21:39.690 something happening under the radar. And we shouldn't study 343 00:21:39.690 --> 00:21:42.750 it. We should we should get on top of it right away. I hope my 344 00:21:42.750 --> 00:21:46.680 earlier comments with respect to the Attorney General section, 345 00:21:47.550 --> 00:21:53.040 having made things confusing, made it worse than it was. There 346 00:21:53.040 --> 00:21:57.060 clearly now is in this bill, the ability of the Attorney General 347 00:21:57.060 --> 00:22:02.100 to enforce this. This provision that we have left in with the 348 00:22:02.130 --> 00:22:05.640 amended substitute the ability of the Attorney General to 349 00:22:05.640 --> 00:22:11.700 enjoin violations of the chapter and to ward them to seek damages 350 00:22:11.700 --> 00:22:15.180 and relief, including restitution. My question simply 351 00:22:15.180 --> 00:22:18.840 went to whether it was wordsmith properly and whether there was 352 00:22:18.840 --> 00:22:22.080 criminality involved with the Attorney General, under the laws 353 00:22:22.110 --> 00:22:25.470 under the statute, as I read it, Delegate McNamara, will clearly 354 00:22:25.470 --> 00:22:31.500 have authority to enforce this, this legislation, and it's 355 00:22:31.500 --> 00:22:36.090 pretty strong enforcement. I hope, I hope, I hope the 356 00:22:36.090 --> 00:22:38.850 committee will report this bill. It's great bill. 357 00:22:43.020 --> 00:22:45.420 Speaker 8: I delegate Tran after we've gone through that, would 358 00:22:45.420 --> 00:22:46.230 you like the last word? 359 00:22:46.500 --> 00:22:49.950 Delegate Tran: I think I would leave you with, you know, we, we 360 00:22:49.950 --> 00:22:52.950 need to get a handle on what the problem is. And that this, this 361 00:22:52.950 --> 00:22:55.470 bill, I think, starts that process by requiring the 362 00:22:55.470 --> 00:22:58.800 registration by starting to gather that data. And I may come 363 00:22:58.800 --> 00:23:01.260 to you next year or the year after once we have a fuller 364 00:23:01.260 --> 00:23:05.400 picture of exactly what role this SEC needs to play and what 365 00:23:05.400 --> 00:23:08.280 other things we need to put in to protect our small businesses. 366 00:23:08.520 --> 00:23:11.310 But I think this is a first step that's incredibly important, 367 00:23:11.580 --> 00:23:14.640 particularly as small businesses are trying to emerge from this 368 00:23:14.640 --> 00:23:17.670 pandemic, that we're protecting them from predatory practices. 369 00:23:17.700 --> 00:23:18.120 Thank you. 370 00:23:20.130 --> 00:23:23.160 Speaker 8: Thank you Delegate Tran. This committee operate, 371 00:23:23.400 --> 00:23:24.120 Delegate Webert? 372 00:23:26.100 --> 00:23:28.050 Delegate Webert: Thank you, Mr. Chairman, I am going to support 373 00:23:28.050 --> 00:23:30.990 this bill. I think it's testimony to the fact however, 374 00:23:31.200 --> 00:23:36.360 that lending entities have amazing ability to transform. 375 00:23:36.750 --> 00:23:40.500 And once we whack this mole, I suspect there may be another 376 00:23:40.500 --> 00:23:46.320 mole pops up. But I do think it at least based on on the patrons 377 00:23:46.320 --> 00:23:49.080 testimony does seem to be a problem. There does at least 378 00:23:49.080 --> 00:23:51.990 provisionally seem to be a way of beginning to identify the 379 00:23:51.990 --> 00:23:59.040 nature and extent of it, and the ability to regulate if as 380 00:23:59.040 --> 00:24:01.290 needed. So I will support the Mayor. 381 00:24:03.990 --> 00:24:05.910 Unknown: Thank you, Delegate Webert this committee operates 382 00:24:05.910 --> 00:24:06.540 by motion, 383 00:24:06.690 --> 00:24:07.470 Speaker 10: Mr. Chair. 384 00:24:08.130 --> 00:24:09.120 Unknown: Delegate Bagby. 385 00:24:09.120 --> 00:24:13.833 I was gonna make the motion, but I feel the need to thank the 386 00:24:13.910 --> 00:24:18.468 patron first because I had constituents call me about about 387 00:24:18.546 --> 00:24:22.486 some of the challenges associated with this sort of 388 00:24:22.563 --> 00:24:27.508 lending. And I asked her to call our friends at poverty law. And 389 00:24:27.585 --> 00:24:31.835 they say the delegate train was already working on that 390 00:24:31.912 --> 00:24:36.625 legislation. So I want to thank them for working hard to make 391 00:24:36.703 --> 00:24:41.725 sure that we get the right piece of legislation before us and and 392 00:24:41.802 --> 00:24:46.747 I think this is going to help a lot of small businesses. Stay in 393 00:24:46.824 --> 00:24:47.520 business. 394 00:24:47.550 --> 00:24:51.446 Speaker 8: Thank you. Mr. Chairman. I'd moved to report. 395 00:24:51.532 --> 00:24:56.727 Alright, there's been a amended. Substitute as amended. Yes. 396 00:24:56.814 --> 00:25:01.749 Okay. There has been a motion to report the substitute as 397 00:25:01.836 --> 00:25:06.858 amended. Is there a second? Okay the Motion to report. The 398 00:25:06.944 --> 00:25:12.139 substitute as amended has been made improperly seconded. All 399 00:25:12.226 --> 00:25:17.421 those in favor, please record your vote on the voting board. 400 00:25:17.507 --> 00:25:22.356 Clerk will open the roll. Clerk will close roll. HB 1027 401 00:25:22.443 --> 00:25:25.560 reports. Nine zero. Congratulations. 402 00:25:25.590 --> 00:25:26.760 Unknown: Thank you very much. 403 00:25:26.760 --> 00:25:27.330 Thank you.