1 00:00:00.400 --> 00:00:03.400 First topic today is regarding the state 2 00:00:03.400 --> 00:00:06.500 of California and the sbfa so very interesting 3 00:00:06.500 --> 00:00:09.100 situation going on right there Shawna let you take it away from here. 4 00:00:09.900 --> 00:00:12.500 Okay. Sure. So for those who aren't aware 5 00:00:12.500 --> 00:00:15.700 of the sbfa is the small business finance Association, 6 00:00:15.700 --> 00:00:19.200 which is the trade group representing very many 7 00:00:18.200 --> 00:00:21.300 small business finance organizations. They follow 8 00:00:21.300 --> 00:00:24.400 the lawsuit against the state of California. I guess I should say the 9 00:00:24.400 --> 00:00:27.700 commissioner of the dfpi Department of 10 00:00:27.700 --> 00:00:31.400 Financial Protection and Innovation alleging that 11 00:00:31.400 --> 00:00:34.500 the disclosure law they put into 12 00:00:34.500 --> 00:00:39.100 place is unlawful that so 13 00:00:37.100 --> 00:00:40.500 you've talked 14 00:00:40.500 --> 00:00:43.300 about disclosure law. So this is something to pay attention 15 00:00:43.300 --> 00:00:44.800 to obviously and 16 00:00:46.900 --> 00:00:49.400 So in this specific situation, 17 00:00:49.400 --> 00:00:52.300 why don't we talk a little bit more get into details about 18 00:00:52.300 --> 00:00:55.400 did they say the whole disclosure law 19 00:00:55.400 --> 00:00:58.200 was unlawful part of the disclosure law was unlawful. But 20 00:00:58.200 --> 00:01:01.700 let's unpack that part of it. Yeah, so, you know and I'm only giving my non 21 00:01:01.700 --> 00:01:04.600 lawyer understanding of it current just 22 00:01:04.600 --> 00:01:07.200 a piece of non lawyer understanding right? This is 23 00:01:07.200 --> 00:01:10.600 the Layman's version of what's taking place here in California. 24 00:01:10.600 --> 00:01:13.400 Obviously, if you're interested in learning more 25 00:01:13.400 --> 00:01:16.600 usage contact the appropriate people. In 26 00:01:16.600 --> 00:01:19.300 fact, we do have a story about this up on our site we do about 27 00:01:19.300 --> 00:01:22.300 this particular law student in California, and there's contact information 28 00:01:22.300 --> 00:01:25.600 at the bottom for an individual named Steve Dennis. He's the 29 00:01:25.600 --> 00:01:28.600 executive director of the spfa. You can contact him 30 00:01:28.600 --> 00:01:31.300 if you have more questions about what we're talking about, 31 00:01:31.300 --> 00:01:35.200 but it's my understanding is that it's not the whole 32 00:01:34.200 --> 00:01:37.200 law. That's at stake here. It's more of 33 00:01:37.200 --> 00:01:40.300 certain portions of it particularly those 34 00:01:40.300 --> 00:01:43.700 that have to do with an APR disclosure. 35 00:01:43.700 --> 00:01:46.800 Yeah. So in regards to the APR disclos 36 00:01:46.900 --> 00:01:49.000 or that's something we've talked about in the past. 37 00:01:49.400 --> 00:01:53.000 So what exactly in regards to how do 38 00:01:52.100 --> 00:01:55.600 they think that this is being presented unlawful? 39 00:01:56.300 --> 00:01:59.400 Okay, so there's there's two components to the argument here 40 00:01:59.400 --> 00:02:03.000 one is that the APR requirement violates 41 00:02:02.100 --> 00:02:05.800 the First Amendment because it compels them 42 00:02:05.800 --> 00:02:08.800 to provide an inaccurate number 43 00:02:08.800 --> 00:02:11.400 to their customers. So they're being 44 00:02:11.400 --> 00:02:14.600 forced by state law to provide misleading information 45 00:02:14.600 --> 00:02:17.100 to their customer and this is 46 00:02:17.100 --> 00:02:20.400 a violation of free speech, you know, so they say 47 00:02:20.400 --> 00:02:24.300 and that number two that the federal 48 00:02:24.300 --> 00:02:27.300 truth and lending act preempts the state law. 49 00:02:27.300 --> 00:02:30.400 So here's here's the argument that's being made 50 00:02:30.400 --> 00:02:33.300 is that that Federal truth and lending act which 51 00:02:33.300 --> 00:02:38.700 many people understand the consumer law nevertheless defines. 52 00:02:37.700 --> 00:02:40.500 What an APR is correct. So 53 00:02:40.500 --> 00:02:43.900 if you get a mortgage or you get a credit card or that April 54 00:02:43.900 --> 00:02:46.600 is right there on the whatever contract 55 00:02:46.600 --> 00:02:49.200 in the agreed we've all heard of APR by now 56 00:02:49.200 --> 00:02:52.500 whether or not people understand it the whole different question, but APR is 57 00:02:52.500 --> 00:02:55.600 defined in Tila the federal truth and lending act and 58 00:02:56.300 --> 00:02:57.000 that's all finding good. 59 00:02:57.800 --> 00:03:00.100 Most people understand it or they know of it right 60 00:03:00.100 --> 00:03:04.400 California has its own APR formula 61 00:03:03.400 --> 00:03:06.800 that applies to commercial Finance 62 00:03:06.800 --> 00:03:09.100 transactions, and that's where it gets a little 63 00:03:09.100 --> 00:03:12.500 confusing potentially because if you understand APR your 64 00:03:12.500 --> 00:03:15.200 business owner, you've applied for a credit card you've applied for 65 00:03:15.200 --> 00:03:15.700 a mortgage. 66 00:03:16.400 --> 00:03:20.100 You know what APR means? Yeah, but in California, it 67 00:03:19.100 --> 00:03:22.700 means something a little bit different that number 68 00:03:22.700 --> 00:03:26.000 might not represent what you think it means right. 69 00:03:26.800 --> 00:03:30.700 So the question as my non-lawyer interpretation 70 00:03:29.700 --> 00:03:32.200 of things go is that 71 00:03:32.200 --> 00:03:35.500 it really should be determined how the federal truth 72 00:03:35.500 --> 00:03:38.600 and lending act calculates it because that 73 00:03:38.600 --> 00:03:41.800 is the standard by which everyone understands APR right? 74 00:03:41.800 --> 00:03:45.100 So there's two things that Taylor preamps the 75 00:03:44.100 --> 00:03:48.200 state law and that it violates the 76 00:03:48.200 --> 00:03:51.500 First Amendment. Those are the two claims of the spfa made 77 00:03:51.500 --> 00:03:53.000 when they follow the lawsuit. 78 00:03:53.600 --> 00:03:56.200 The state of course disagreed. Yeah, 79 00:03:56.200 --> 00:04:00.300 right. So they followed a motion to dismiss saying we 80 00:03:59.300 --> 00:04:02.900 don't think there's anything to debate here. We're right 81 00:04:02.900 --> 00:04:05.300 on the law because there's nothing you know, 82 00:04:05.300 --> 00:04:08.300 there's nothing to even argue here, but the court 83 00:04:08.300 --> 00:04:10.800 disagreed and the court dismissed. 84 00:04:12.300 --> 00:04:15.100 Their emotion and so now the case is going 85 00:04:15.100 --> 00:04:18.700 to proceed in the svfa will have the opportunity to prove 86 00:04:18.700 --> 00:04:21.200 its claims. That's all that it means 87 00:04:21.200 --> 00:04:24.800 at this stage. Okay. So obviously, you 88 00:04:24.800 --> 00:04:27.500 know, there's still a lot of moving Parts after 89 00:04:27.500 --> 00:04:30.500 this but for other states or 90 00:04:30.500 --> 00:04:33.900 for people wondering like how does this impact another state that has 91 00:04:33.900 --> 00:04:36.000 a disclosure law something like a 92 00:04:36.300 --> 00:04:39.200 New York for example, so is this 93 00:04:39.200 --> 00:04:42.800 something that people should be hopeful and 94 00:04:42.800 --> 00:04:45.400 that this will change the disclosure or is this something 95 00:04:45.400 --> 00:04:46.400 that's a little bit more of 96 00:04:48.800 --> 00:04:52.200 a blueprint of what may happen in New York? Yeah. Well, 97 00:04:51.200 --> 00:04:54.500 you know, I think it kind of getting like two steps 98 00:04:54.500 --> 00:04:58.000 ahead. How does this impact other states or something 99 00:04:57.200 --> 00:05:00.400 that people should just be on the lookout for yes this band 100 00:05:00.400 --> 00:05:00.600 of 101 00:05:01.100 --> 00:05:02.600 impact. Um, yeah, so 102 00:05:03.700 --> 00:05:06.900 could it have impact depending on the outcome? It 103 00:05:06.900 --> 00:05:09.500 could impact laws that have 104 00:05:09.500 --> 00:05:12.600 already been passed and other states that already have a similar 105 00:05:12.600 --> 00:05:15.300 requirement, right? So, you know, I don't think we should get 106 00:05:15.300 --> 00:05:18.100 ahead of ourselves and say this is what the outcome is going 107 00:05:18.100 --> 00:05:21.500 to be. Yeah be because we don't know. Yeah, but 108 00:05:21.500 --> 00:05:24.300 the court did find that the 109 00:05:24.300 --> 00:05:28.300 argument itself has Merit. It's worth debating. 110 00:05:27.300 --> 00:05:30.500 It's worth being argued in 111 00:05:30.500 --> 00:05:31.000 front of the court. 112 00:05:32.100 --> 00:05:35.600 That may give other states pause if they 113 00:05:35.600 --> 00:05:38.600 are thinking about including an APR disclosure in their own 114 00:05:38.600 --> 00:05:41.600 law and APR specific not just 115 00:05:41.600 --> 00:05:44.900 disclosures in general but this APR requirement, right? It 116 00:05:44.900 --> 00:05:47.000 may give them pause. Do we want to 117 00:05:47.400 --> 00:05:50.600 include it only to risk potentially having to roll 118 00:05:50.600 --> 00:05:53.200 that back or change that part later, right? So 119 00:05:53.200 --> 00:05:56.300 it may cause some hesitation in the states 120 00:05:56.300 --> 00:05:59.400 who are thinking about an APR component in their 121 00:05:59.400 --> 00:06:02.400 disclosure laws. And of course, let's say there is an 122 00:06:02.400 --> 00:06:05.300 outcome where say the APR is an invalidated or 123 00:06:05.300 --> 00:06:08.700 something as part of the disclosure in California, that could 124 00:06:08.700 --> 00:06:11.400 have ramifications in New York. Again, this is Sean Murray 125 00:06:11.400 --> 00:06:14.400 talking at the non lawyer. Yeah, you know just having fun talking about 126 00:06:14.400 --> 00:06:17.400 it. This is just my you know, Layman's understanding of the 127 00:06:17.400 --> 00:06:20.200 of what's taking place and you should definitely contact those who 128 00:06:20.200 --> 00:06:23.700 are actually knowledgeable and responsible for what's happening. 129 00:06:23.700 --> 00:06:26.500 But if you are wondering hey, what is all this? 130 00:06:26.500 --> 00:06:29.400 Right? That's basically the gist of what has taken 131 00:06:29.400 --> 00:06:31.900 place the court in, California. 132 00:06:32.400 --> 00:06:35.500 It has given this trade Association the opportunity to prove 133 00:06:35.500 --> 00:06:38.600 what it has said it felt like 134 00:06:38.600 --> 00:06:41.900 there was Merit to the claims that were made. Yeah from 135 00:06:41.900 --> 00:06:44.600 my own reading. I felt like it has Merit too. I do 136 00:06:44.600 --> 00:06:47.300 personally feel like the APR the way that it's 137 00:06:47.300 --> 00:06:50.600 worded intimately to the 138 00:06:50.600 --> 00:06:53.100 to the customer for sure. But this is 139 00:06:53.100 --> 00:06:56.300 something we will find out. Yeah, no definitely obviously stay 140 00:06:56.300 --> 00:06:59.500 on top of the story and like Shawn said 141 00:06:59.500 --> 00:07:02.600 earlier if you're interested to be a little bit more about it. You can 142 00:07:02.600 --> 00:07:05.100 check that out on our website and if you 143 00:07:05.100 --> 00:07:09.500 have questions, we have contact information for us. 144 00:07:10.700 --> 00:07:11.500 as BF