Regulation

Congress Introduces New Restrictive Small Business Financing Bill

A new bill introduced by Rep. Nydia M. Velázquez, the Chairwoman of the House Small Business Committee, and Senator Robert Menendez (D-NJ), hopes to “stop predatory small business loans” by applying broad consumer protections to small business borrowers nationwide.

This would be done by including small businesses as a covered party under the already existing Truth in Lending Act (TILA).

The proposal, if successful, would arguably become more restrictive than New York’s recently passed commercial financing disclosure law.

Among the supporters of the bill are LendingClub and Funding Circle. No republican members of congress are listed among the sponsors in the official announcement.

The bill is similar to one introduced last year that failed to advance, the Small Business Lending Disclosure and Broker Regulation Act of 2020. That bill never made it out of the House Financial Services Committee. The makeup of Congress now, however, is different than it was last year.

How to Comment on New York’s Commercial Finance Disclosure Law

With New York’s commercial financing disclosure law on the horizon for Jan 1, the state’s Department of Financial Services is seeking input on how the law should officially be rolled out. Their draft was published on September 21st. Directions for how to submit a comment were said to be forthcoming, but the when and how to do that, were not easily discernible.

The DFS website says that comments should be submitted via email to George Bogdan, but that the time to do that has already expired, the deadline having been October 1st.

A spokesperson for DFS on social media, however, said that comments on the law can be sent to: Comments@dfs.ny.gov.

This process of emailing comments contrasts with processes at the federal level which typically employ formal portals. While it may apparently be too late, anyone that had hoped to contribute their feedback but didn’t get to, could try the above contacts.

More TCPA Lawsuits Could be Inbound

Despite a significant drop in TCPA cases since 2018, a flurry of new TCPA cases could be on the horizon as TCPA plaintiff attorneys had been telling clients to hold off — pending the reaction of Facebook’s recent Supreme Court case, according to Michael O’Hare, Chairman of Colorado-based Cashyew and operator of the TCPA Litigator List. The Court ultimately narrowed the definition of an autodialer.

O’Hare heads a service that provides names of individuals and their attorneys who have sued under the TCPA law, protecting his clients from what has become an industry in and of itself.

“It’s a fight between free speech and privacy,” said O’Hare, when asked what the hardest part about leading an organization that protects businesses from falling victim to these kinds of suits is. He worries that his clients will be preyed upon by serial litigators that go after businesses searching for some type of settlement. According to O’Hare, some of these cases can cost tens of thousands of dollars to fight in court.

“The government has empowered citizens to become the enforcer,” said O’Hare. The law allows citizens to privately sue unsolicited callers who disrupt their daily lives, subsequently creating an entire industry out of these kinds of suits alone.

“People are making a 6-figure living,” he said.

Since deBanked covered this minefield back in 2016, the TCPA has not changed. Some states like Florida and California have adopted their own versions of the law, but the federal law has gone unchanged for thirty years.

The robocallers have also adapted to the lack of upkeep of the TCPA, as the concept of “spoofing” has become a weird ethical gray area in the telemarketing industry. By showing the area code that’s identical to the number being dialed on that number’s caller ID, the user is believed to be more likely to answer. Not covered by the TCPA, organizations like the FCC have begun to step in and put a stop to the tactic.

This “decentralization of enforcement,” as O’Hare called it, may do more harm than good, giving these serial litigators and their clients more avenues of reason to sue.

The ambiguity of what defines a work phone versus a personal phone is much more prevalent now than it was in 1991. With cell phones, smart watches, and the elimination of the home phone for millions of Americans, the TCPA has become antiquated.

“Do they want us to go back to a rotary phone?” O’Hare sarcastically asked.

O’Hare stressed that lenders respect their clients and abide by basic ethics. “Always be scrubbing,” he said. “Prevention is not expensive, litigation is”.

Besides using services like his, O’Hare suggests using basic ethics and understanding to protect merchants that don’t want their calls. “If someone asks, take them off the list,” he said, “avoid trouble and respect the Do-Not-Call list.”