ALL RIGHT, ALL RIGHT. THE SENATE
COMMITTEE ON BANKING AND
FINANCIAL INSTITUTIONS WILL COME
TO ORDER. WE DO HAVE SIX BILLS
ON THE AGENDA. WE DO NOT HAVE
QUORUM NOW, SO WE WILL BEGIN AS
A SUBCOMMITTEE. AND THEN ONCE WE
HAVE QUORUM, WE WILL GO AHEAD
AND OFFICIALLY OPEN UP. WE HAVE
FIRST HERE AND ON THE AGENDA,
SENATE BILL 91919 WITH AUTHOR
SENATOR UMBERG. SENATOR UMBERG,
YOU MAY BEGIN WHEN YOU'RE READY.
THANK YOU, MADAM CHAIR. I WANT
TO THANK YOU AND YOUR STAFF,
PARTICULARLY MICHAEL BURDICK,
FOR THEIR HARD WORK ON THIS
BILL. WE APPRECIATE IT. I
PRESENT SB 919, WHICH WILL
INCREASE TRANSPARENCY IN THE
FRANCHISE SALES PROCESS FOR
PROSPECTIVE FRANCHISEE BY
PROVIDING INFORMATION THAT
ENSURES A PROSPECTIVE FRANCHISE
UNDERSTANDS THE ROLE OF THE
THIRD PARTY FRANCHISE SELLER AND
THE INCENTIVES THAT THEY MAY
RECEIVE FOR REFERRING THE
PROSPECTIVE FRANCHISEE TO ONE
FRANCHISE OPPORTUNITY OVER
ANOTHER. WHAT THIS BILL DOES IS
IT PROVIDES NOTICE TO THE
COMMISSIONER OF THE THIRD PARTY
FRANCHISE, SELLERS, ACTIVELY
SELLING FRANCHISES, FRANCHISES
AND DISCLOSES TO A PROSPECTIVE
FRANCHISEE ABOUT THE THIRD PARTY
FRANCHISE SELLERS PROFESSIONAL
EXPERIENCE AND CREDENTIALS.
LISTING OF FRANCHISOR CLIENTS BY
INDUSTRY AND THE NUMBER OF
CLIENTS WITHIN EACH INDUSTRY.
SERVICES PERFORM FOR THEIR
CLIENTS AND COMPENSATION RECEIVE
THEIR LITIGATION HISTORY, AND
THE NAMES OF FRANCHISEES TO WHOM
FRANCHISE FRANCHISES WERE SOLD.
DURING THE PAST YEAR.
PROSPECTIVE FRANCHISEES WILL
ALSO RECEIVE A FORM PROVIDING A
GENERAL DESCRIPTION OF THE ROLE
OF THIRD PARTY FRANCHISE SELLERS
IN THE FRANCHISE SALES PROCESS,
AND SUGGESTED QUESTIONS TO ASK
THEIR THIRD PARTY FRANCHISE
SELLER TO FACILITATE DUE
DILIGENCE OF THE THIRD PARTY
FRANCHISE SELLER. IN ADDITION TO
THE FRANCHISE OPPORTUNITIES
BEING CONSIDERED, REQUIRES
ANNUAL NOTICE OF FILING WITH THE
COMMISSIONER AND PAYMENT OF A
REGISTRATION FEE. I URGE YOU,
AND I VOTE. I HAVE WITH ME MR.
MATTHEW KEGEL, WHO HAS COME FROM
THE EAST COAST HERE, WITH THE
INTERNATIONAL FRANCHISE
ASSOCIATION AS THE PRIMARY
WITNESS. GREAT. THANK YOU,
SENATOR UMBERG, MR. CABLE,
PLEASE, BEGIN YOUR TESTIMONY AND
SUPPORT. YES. THANK YOU, THANK
YOU, MADAM CHAIR. MEMBERS OF THE
COMMITTEE, AND, THANK YOU FOR
THE OPPORTUNITY TO TESTIFY HERE
IN SUPPORT OF SENATE BILL 919.
MY NAME IS MATTHEW KEGEL. I AM
THE DIRECTOR OF STATE AND LOCAL
GOVERNMENT RELATIONS AT THE
INTERNATIONAL FRANCHISE
ASSOCIATION, THE WORLD'S OLDEST
AND LARGEST TRADE ASSOCIATION
FOR FRANCHISING. IF WORKS TO
PROMOTE, ENHANCE AND PROTECT
FRANCHISING ON BEHALF OF ITS
FRANCHISEE, FRANCHISOR AND
SUPPLIER MEMBERS, MANY OF WHOM
RESIDE AND DO BUSINESS HERE IN
THE STATE OF CALIFORNIA, THE
REGISTRATION AND DISCLOSURE
REQUIREMENTS OUTLINED IN SENATE
BILL 919 FURTHER IFA'S MISSION
CRITICAL PRIORITY ADVANCING
RESPONSIBLE FRANCHISING AND IFA
INITIATIVE THAT CALLS FOR ALL
KEY STAKEHOLDERS IN FRANCHISING,
INCLUDING FRANCHISORS,
FRANCHISEES, AND SUPPLIERS TO
PLAY A PROACTIVE ROLE IN THE
PROTECTION OF THE FRANCHISING
MODEL. SUPPLIERS TO THE
FRANCHISE SYSTEM INCLUDE THE
GROWING BODY OF THIRD PARTY
FRANCHISE SELLERS, INCLUDING
INDIVIDUAL BROKERS, BROKER
NETWORKS, LEAD GENERATORS,
FRANCHISE SALES, ORGANIZATION,
AND FRANCHISE CONSULTANTS. ALL
WHO PLAY A PIVOTAL ROLE IN THE
EARLY EARLIEST STAGE OF THE
FRANCHISE RELATIONSHIP, WHICH IS
THE FRANCHISE SALES PROCESS.
MANY THIRD PARTY FRANCHISE
SELLERS PLAY AN INVALUABLE ROLE
IN THE STRATEGIC GROWTH OF
FRANCHISE SYSTEMS, PROVIDING
MENTORSHIP AND SUSTAINABLE
EXPANSION THAT ALIGN WITH AN
EMERGING FRANCHISORS,
INFRASTRUCTURE AND FINANCIAL
RESOURCES AND GUIDANCE TO
PROSPECTIVE FRANCHISEES IN
SELECTING THE FRANCHISE
OPPORTUNITY THAT ALIGNS WITH
EXPERIENCE AND EXPECTATIONS. YET
SOME THIRD PARTY FRANCHISE
SELLERS PERPETUATE IRRESPONSIBLE
FRANCHISING MOTIVATED BY THEIR
OWN COMPENSATION GENERATED FROM
HIGH VOLUME FRANCHISE SALES AND
INCENTIVIZED USHER PROSPECTIVE
FRANCHISEES THROUGH THE SALES
PROCESS AS QUICKLY AS POSSIBLE.
REGARDLESS OF WHETHER A
FRANCHISE OPPORTUNITY IS A GOOD
FIT FOR EITHER THE PROSPECTIVE
FRANCHISEE OR THE FRANCHISOR, BY
THE TIME THE MISALIGNMENT IS
RECOGNIZED, THE THIRD PARTY
FRANCHISE SELLER HAS BEEN PAID
THEIR COMMISSION, BUT THE
FRANCHISE BUYER IS UNAWARE THE
FRANCHISOR DOES NOT HAVE THE
INFRASTRUCTURE OR FINANCIAL
STABILITY TO PROVIDE ONGOING
OPERATIONAL SUPPORT TO THEIR NEW
FRANCHISE, AND BASICALLY WHAT
THIS DOES IS, AS IT STANDS,
THESE THIRD PARTY FRANCHISE
SELLERS OPERATE WITHOUT ANY
NECESSARY OVERSIGHT, LEAVING
PROSPECTIVE FRANCHISEES AND
FRANCHISORS VULNERABLE TO THE
MISINFORMED ACTION LEFT IN THE
DARK ABOUT CRITICAL INFORMATION
AND TO MAKING A SOUND
INVESTMENT, SB 909 ADDRESSES
THIS ISSUE BY MANDATING MINIMAL
YET EFFECTIVE DISCLOSURES FROM
THIRD PARTY FRANCHISE SELLERS TO
PROSPECTIVE FRANCHISEES AND
REGISTRATION WITH THE DEPARTMENT
OF FINANCIAL PROTECTION AND
INNOVATION TO PROVIDE VISIBILITY
TO THE FRANCHISE SALES ACTIVITY
CONDUCTED BY THE STATE AND I
WILL SAY, NOTABLY, THE CALL FOR
GREATER TRANSPARENCY IN THE
FRANCHISE SALES PROCESS THROUGH
THE REGISTRATION AND DISCLOSURE
BY THIRD PARTY FRANCHISE SELLERS
IS SHARED BY FRANCHISORS,
FRANCHISEES AND SUPPLIERS WITH
THE COALITION OF FRANCHISEE
ASSOCIATIONS AND AMERICAN
ASSOCIATION OF FRANCHISEES AND
DEALERS JOINING IFA IN SUPPORT
OF THIS BILL. THIS CALL OF
GREATER TRANSPARENCY IS NOT NEW,
PARTICULARLY DURING A FEDERAL
TRADE COMMISSION'S 2020 PUBLIC
WORKSHOP ON PRE-SALE
DISCLOSURES. UNDER THE FRANCHISE
RULE, FRANCHISE ATTORNEY
REGULATOR AND FRANCHISEE
CONSULTANT PARTICIPANTS CITED A
NEED FOR THE EXAMINATION OF THE
ROLE OF THIRD PARTY FRANCHISE
SELLERS IN THE SALES PROCESS.
AND I THINK THIS UNIFIED
SUPPORT, CONTINUES TO SHOW AND
DEMONSTRATES THE GREATER NEED
FOR TRANSPARENCY, TRANSPARENCY
AND THE ROLE OF THIRD PARTY
FRANCHISE SELLERS, AND SO, IN
CLOSING, YOU KNOW, SB 919 IS A
CRITICAL PIECE OF LEGISLATION
DESIGNED TO ENHANCE TRANSPARENCY
FOR PROSPECTIVE FRANCHISEES AND
ACCOUNTABILITY OF THIRD PARTY
FRANCHISE SELLERS THROUGHOUT THE
SALE OF FRANCHISE SALES PROCESS.
AND I THANK SENATOR UMBERG FOR
HIS LEADERSHIP ON THIS BILL.
AND, YOU KNOW, WE ARE WE ARE
COMMITTED TO WORKING WITH THE
COMMITTEE ON ON MAKING THIS A
GOOD BILL AND URGE YOUR SUPPORT
OF IT TO HELP PROMOTE THE
RESPONSIBLE FRANCHISING IN THE
STATE OF CALIFORNIA, AND JUST
THANK YOU FOR YOUR TIME TODAY
AND HAPPY TO TAKE ANY QUESTIONS.
GREAT. THANK YOU. AND WE DO HAVE
A QUORUM. SO I'M GOING TO ASK,
THAT THE ROLE BE CALLED SO WE
CAN ESTABLISH QUORUM PLEASE.
SENATOR LIMÓN HERE LIMON HERE.
NILO HERE. NILO HERE BRADFORD.
BRADFORD HERE. CABALLERO MEN.
HERE. MEN! HERE. NGUYEN
PORTANTINO. GREAT. THANK YOU.
WE'VE ESTABLISHED QUORUM. ANY
ADDITIONAL WITNESSES IN SUPPORT
IN THE ROOM? PLEASE FEEL FREE TO
COME UP TO THE PODIUM SEEING
NONE. WE HAVE NO OFFICIAL
OPPOSITION, BUT ANY WITNESS, ANY
WITNESSES OR FOLKS IN THE ROOM
IN OPPOSITION. PLEASE FEEL FREE
TO COME TO THE PODIUM. ALL
RIGHT. SEEING NONE MEMBERS,
WE'RE GOING TO GO AHEAD AND TURN
IT TO ANY MEMBERS. COMMENTS,
FEEDBACK. ALL RIGHT. WE HAVE A
MOTION BY SENATOR MINH. ALL
RIGHT. SEEING NO NO OTHER. YEAH.
YOU WANT ME TO DO THAT AGAIN?
YEAH. YEAH. OKAY FRANCHISEE.
FRANCHISOR FRANCHISEES, RIGHT?
YEAH RIGHT. THERE WE GO. WELL
DONE. RIGHT. THANK YOU, THE ONLY
THING THAT I'D LIKE TO POINT
OUT, AS THE ANALYSIS SAYS, IS,
WE DON'T HAVE ANY OPPOSITION TO
THIS BILL, BUT THERE ARE SEVERAL
ITEMS LISTED FOR YOUR
CONSIDERATION. SENATOR UMBERG,
YOU KNOW, JUST THINGS RELATED TO
DEFINITIONS, REFINING
DEFINITIONS, TO, YOU KNOW,
AFFECTING A SALE. BEALL, JUST
SPECIFICITY, THIRD PARTY
REQUIREMENTS. I YOU KNOW, IN THE
FUTURE, YOU MAY WANT TO CONSIDER
THAT, BUT WE WOULD LIKE TO ASK
AS A COMMITTEE THAT AS THIS BILL
MOVES, MOVES FORWARD, YOU ENGAGE
WITH THE COMMITTEE SIMPLY
BECAUSE WE DON'T KNOW IF AT SOME
POINT THERE WILL BE SOME
OPPOSITION OR NOT. AND WE WOULD
LOVE TO BE HELPFUL IN TRYING TO,
YOU KNOW, FIGURE THIS OUT. I
HAVE PERSONALLY RUN BILLS
RELATED ON BROKERS AND KNOW A
LOT ABOUT LEAD GENERATORS, AND
THEY'RE NOT EASY TO FIGURE OUT.
SO HAPPY TO BE SUPPORTIVE AND
WANT TO BE SUPPORTIVE. BUT WE
ALSO JUST WANT TO RECOGNIZE THAT
THERE'S RECOMMENDATIONS IN HERE
TO CONSIDER, AND AS THIS BILL
MOVES FORWARD, IF THERE IS ANY
OFFICIAL OPPOSITION AT ANY
POINT, WE DEFINITELY WOULD LOVE
TO BE OF HELP, IN HOW THIS BILL
MOVES FORWARD. SO WITH THAT,
I'LL LET YOU CLOSE. WELL, THANK
YOU, MADAM CHAIR, AND WE WILL
KEEP YOU INFORMED AS TO THE
PERMUTATIONS OF THE BILL. NUMBER
ONE. NUMBER TWO, IT IF IT SHOULD
PASS FROM THIS COMMITTEE, IT
WILL HEAD TO JUDICIARY. I KNOW
PEOPLE ON THAT COMMITTEE, NUMBER
THREE IS THAT I SHARE YOUR
CONCERN TO MAKE SURE THAT THAT
WHEN A PIECE OF LEGISLATION
PASSES OUT OF LEGISLATURE, THAT
THE TERMS ARE DEFINED WELL
ENOUGH FOR PEOPLE IN THE
MARKETPLACE TO BE ABLE TO
UNDERSTAND THEM AND FOLLOW THEM,
AND THAT WE'RE CONSISTENT AMONG
VARIOUS PIECES OF VARIOUS PIECES
OF LEGISLATION AS WELL AS LAW.
SO WITH THAT, I URGE AND I VOTE.
THANK YOU VERY MUCH, SENATOR
UMBERG, THE MOTION IS DUE PASS
AND REFER TO THE COMMITTEE ON
JUDICIARY, WHO YOU MAY KNOW, WE
WILL GO AHEAD. A RELATIONSHIP
WITH THE VICE CHAIR, SO. OH,
THERE YOU GO. RIGHT, RIGHT. ALL
RIGHT. WE'LL GO AHEAD AND HAVE
AND CALL THE ROLL ON THAT MOTION
IS DUE. PASS TO THE COMMITTEE ON
JUDICIARY. SENATOR LIMÓN, I
LIMÓN I NILO I NILO I BRADFORD.
BRADFORD I CABALLERO. MINH MINH
I NGUYEN PORTANTINO. ALL RIGHT.
SO WE'RE GOING TO GO AHEAD AND
LEAVE THE ROLL OPEN. PUT THE
BILL ON CALL. THANK YOU, THANK
YOU. THANKS ALL RIGHT. THANK
YOU. STEVE. THANK YOU. ALL RIGHT
. WE'LL GO AHEAD AND TAKE UP
CONSENT AS WE WAIT FOR AUTHORS
TO COME TO THE BANKING AND
FINANCIAL SERVICES FINANCIAL
INSTITUTIONS HEARING. SO WE'LL
GO AHEAD AND TAKE CONSENT.
SENATOR LIMÓN, SO WE NEED A
MOTION FOR CONSENT. THANK YOU.
SENATOR MINH. MOVE THE MOTION
FOR CONSENT. ALL RIGHT. SENATOR
LIMÓN, I LIMÓN I L I NHIÀU I
BRADFORD I BRADFORD I CABALLERO
OKAY. MEN MEN I NGUYEN
PORTANTINO Ó MEN I THANK YOU Ó
NGUYEN MEN. OKAY. GOT YOU BOTH.
THANK YOU REALLY FAST. THANK YOU
. OKAY THANK YOU. SO THOSE TWO
BILLS, I JUST WENT ON CONSENT
AND NOW WE WILL WAIT FOR Þ THE
BILLS. LET ME READ TO YOU THE
BILLS. SENATE BILL 1146 AND
SENATE BILL 1521 IS WHAT WE JUST
VOTED FOR ON CONSENT. THANK YOU
FOR THE REMINDER. ALL RIGHT. WE
DO HAVE SENATOR DURAZZO HERE,
AND WE ARE READY FOR YOU. THANK
YOU. OKAY. THANK YOU, MADAM
CHAIR AND MEMBERS, SB 1201
REQUIRES KHÓ OPERATIONS AND
LIMITED LIABILITY COMPANIES TO
REPORT INFORMATION ABOUT THEIR
BENEFICIAL OWNERS. WHEN THOSE
BUSINESS ENTITIES FILE WITH THE
SECRETARY OF STATE'S OFFICE.
EXISTING LAW ALLOWS FOR THE
CREATION OF LLCS AND SIMILAR
ENTITIES TO PROVIDE LEGAL
PROTECTION FOR ASSETS NOT OWNED
BY THE LLC. THIS IS VERY
IMPORTANT. IT CAN PROTECT AN
OWNER'S FAMILY'S OWNERS, FAMILY
HOME FROM LIQUIDATION DURING A
BUSINESS BANKRUPTCY, FOR
EXAMPLE. HOWEVER, SOME OWNERS
CAN ABUSE LLCS TO SHIELD NOT
ONLY THEIR ASSETS BUT ALSO THEIR
IDENTITIES. LLCS MANY LLCS ARE
OWNED IN THE NAME OF ANOTHER LLC
, WHICH CREATES ADDITIONAL
LAYERS OF ANONYMITY. NONE OF
THIS IS NECESSARY TO ACHIEVE THE
LEGAL AND THE FINANCIAL
PROTECTIONS AFFORDED BY FORMING
AN LLC IN THE FIRST PLACE.
ADDITIONALLY THERE IS NO
REQUIRED PUBLIC DISCLOSURE OF
WHO THE REAL OWNERS OF AN LLC OR
CORPORATION ARE. THE ABILITY FOR
LLCS TO ABUSE THE STRUCTURE TO
REMAIN ANONYMOUS ENDS UP
PRESENTING NUMEROUS ISSUES, AND
EVEN ENABLES DISHONESTY IN SOME
CASES, AND IN SOME CASES,
ILLEGAL PRACTICES TAKE, FOR
INSTANCE, HOW ANONYMOUS LLCS ARE
PERVASIVE AMONG EMPLOYERS THAT
SKIRT LAWS MEANT TO PROTECT
WORKERS, BY THE TIME OF BUSINESS
IS FOUND, ARE RESPONSIBLE FOR
VIOLATIONS. THE OWNERS OFTEN
HAVE DISSOLVED THE LLC AND
CREATED A NEW ONE, LEAVING
NOBODY TO PAY BACK WAGES OR
ADDRESS SAFETY ISSUES. IN FACT,
FEW WORKERS WHO WIN WAGE
JUDGMENTS ARE ABLE TO COLLECT
THEIR MONEY, THREE QUARTERS OF
WORKERS WERE RECORDED AS
RECEIVING NO PAYMENT AFTER THE
LABOR COMMISSION REVEALED, $32
MILLION WORTH OF WAGE JUDGMENTS
TO 1800 EMPLOYERS. IT CAN TAKE
YEARS FOR JUSTICE DEPARTMENTS
AND LABOR REPRESENTATIVES TO
CONNECT THE DOTS, TO SHOW THAT A
SINGLE PERSON IS RESPONSIBLE FOR
REPEATED VIOLATIONS. THIS ALLOWS
ABUSE. THIS ALLOWS ABUSES TO
CONTINUE UNIMPEDED, WHICH OFTEN
HAPPEN AMONG THE LOWEST WAGED
INDUSTRIES. THE LACK OF
TRANSPARENCY. TRANSPARENCY ALSO
PROVIDES AN AVENUE TO SKIRT
RESPONSIBILITY FOR SUBSTANDARD
HOUSING. SB 1201 IS A GOOD
GOVERNANCE BILL. IT SIMPLY
REQUIRES THE DISCLOSURE OF THEIR
BENEFICIAL OWNER. THE SAME
INFORMATION THAT WE ASK FROM
CEOS, DIRECTORS, MANAGERS AND
MEMBERS WITHOUT OWNER
TRANSPARENCY. WE AS POLICYMAKERS
AND ENFORCEMENT AGENCIES AND THE
PUBLIC LACK CRITICAL INFORMATION
TO MAKE INFORMED POLICY
DECISIONS. SB 1201 WILL MAKE IT
EASIER TO ENFORCE EXISTING LAWS
TO PROTECT THE PEOPLE WHO LIVE
AND WORK IN OUR COMMUNITIES
TODAY, I HAVE WITH ME TWO
WITNESSES IN SUPPORT OF THIS
BILL SUZANNE DERSHOWITZ, SENIOR
STAFF ATTORNEY AT PUBLIC
ADVOCATES, ONE OF THE SPONSORS
OF THE BILL AND SHARI R CðC CðC
CðC G, EXECUTIVE DIRECTOR OF
WAREHOUSE WORKER RESOURCE
CENTER. THANK YOU. AND I
RESPECTFULLY ASK FOR YOUR VOTE.
THANK YOU, SENATOR DURAZZO. WE
WELCOME, THE WITNESSES IN
SUPPORT. YES. YOU'RE WELCOME TO
SIT HERE. IF YOU'D LIKE. GOOD
AFTERNOON, CHAIR AND MEMBERS. MY
NAME IS SUZANNE DERSHOWITZ. I'M
A SENIOR STAFF ATTORNEY AT
PUBLIC ADVOCATES, A NONPROFIT
LAW FIRM AND ADVOCACY
ORGANIZATION, AND PROUD
CO-SPONSOR OF SB 1201. ANONYMITY
IS NOT NECESSARY TO ACHIEVE THE
LEGAL AND FINANCIAL PROTECTIONS
AFFORDED BY FORMING AN LLC AND
OFTEN FRUSTRATES ENFORCEMENT
EFFORTS. PROPERTY OWNERS HIDE
BEHIND LLCS TO AVOID
ACCOUNTABILITY. IT CAN TAKE
YEARS TO IDENTIFY AND PROVE A
SINGLE PERSON IS RESPONSIBLE FOR
REPEATED VIOLATIONS ACROSS
MULTIPLE BUSINESSES, DELAYING
JUSTICE, WASTING PUBLIC
RESOURCES, AND DRIVING UP COSTS
TO THE DETRIMENT OF ALL
CALIFORNIANS. WHEN I WAS A
LAWYER IN THE OAKLAND CITY
ATTORNEY'S OFFICE, IT WAS MY JOB
TO ADDRESS PUBLIC HEALTH AND
SAFETY ISSUES FACING OAKLAND'S
NEIGHBORHOODS. IN 2018, A CODE
INSPECTOR WALKED INTO MY OFFICE
TO DISCUSS A CASE THAT KEPT HIM
UP AT NIGHT. FAMILIES WITH YOUNG
CHILDREN, PREGNANT WOMEN, AND
LOW INCOME IMMIGRANTS WERE
RENTING DANGEROUS UNITS IN A
CONVERTED WAREHOUSE NEAR THE
AIRPORT WITH NO HEAT, NO HOT
WATER. MAJOR LEAKS AND SERIOUS
FIRE HAZARDS. IT TOOK OVER A
YEAR TO UNCOVER THE SCOPE OF THE
PROBLEM. THIS LANDLORD OWNED 130
PROPERTIES IN OAKLAND, INCLUDING
NUMEROUS UNSAFE PROPERTIES.
THROUGH A WEB OF DIFFERENT LLCS
AND CORPORATE ENTITIES. OUR
INVESTIGATION ULTIMATELY LED TO
A 2019 LAWSUIT TO HOLD THIS
LANDLORD ACCOUNTABLE FOR
SUBJECTING DOZENS OF WORKING
FAMILIES TO GRAVE HEALTH AND
SAFETY RISKS AT SIX DIFFERENT
RENTAL PROPERTIES. INVESTIGATING
THE INTERRELATED OWNERSHIP OF
THESE PROPERTIES WAS
UNNECESSARILY TIME CONSUMING AND
RESOURCE INTENSIVE. WE WERE ONLY
ABLE TO LINK ALL THE COMPANIES
CONTROLLED BY THIS LOCAL REAL
ESTATE EMPIRE. AFTER STUDYING
HUNDREDS OF CITY CODE
ENFORCEMENT RECORDS AND
CONNECTING THE DOTS, IT WAS A
MONUMENTAL TASK. AS A LOCAL
GOVERNMENT LAWYER FUNDED BY
TAXPAYER DOLLARS. I ALONE SPENT
HUNDREDS OF HOURS INVESTIGATING
THIS CASE. IF THERE HAD BEEN
OWNER TRANSPARENCY LIKE THAT
PROPOSED IN SB 1201, THIS
MONUMENTAL TASK WOULD HAVE TAKEN
HALF A DAY AT MOST. SB 1201
WOULD MAKE IT EASIER TO ENFORCE
EXISTING LAWS TO PROTECT THE
PEOPLE WHO LIVE AND WORK IN OUR
COMMUNITIES ACROSS THE STATE,
INCREASE GOVERNMENT EFFICIENCY,
AND ULTIMATELY SAVE TAXPAYER
DOLLARS. THIS BILL WILL ALSO
GIVE EVERYONE THE INFORMATION
THEY NEED TO ENFORCE THEIR
RIGHTS. WHILE ONLY THE MOST
EGREGIOUS CASES RISE TO THE
LEVEL OF ENFORCEMENT BY LOCAL
AND STATE GOVERNMENTS, SHINING A
LIGHT ON THE PEOPLE DOING
BUSINESS IN CALIFORNIA IS GOOD
FOR EVERYONE WHO CALLS THE STATE
HOME. I RESPECTFULLY ASK FOR
YOUR SUPPORT. THANK YOU. NEXT
WITNESS IN SUPPORT, PLEASE. GOOD
AFTERNOON. MY NAME IS SHARI
AUSTIN. I'M THE EXECUTIVE
DIRECTOR OF THE WAREHOUSE WORKER
RESOURCE CENTER. WE'RE AN
ORGANIZATION BASED IN THE INLAND
EMPIRE, SAN BERNARDINO,
RIVERSIDE COUNTIES, AND WE
ORGANIZE WORKERS IN THE GOODS
MOVEMENT INDUSTRY AND ALSO
SUPPORT A VARIETY OF WORKERS
ACROSS SOUTHERN CALIFORNIA,
LEGAL AND ADMINISTRATIVE CLAIMS
ON ISSUES, HEALTH AND SAFETY AND
WAGE THEFT, ISSUES THAT ARE
REALLY RAMPANT IN THAT INDUSTRY.
UNFORTUNATELY WE ALSO ORGANIZE
COMMUNITIES THAT ARE BEGINNING
TO FACE DISPLACEMENT, ESPECIALLY
AROUND WAREHOUSE DEVELOPMENT,
INCLUDING TENANTS WHO ARE WHO
ARE FACING DISPLACEMENT FOR THE
DEVELOPMENT OF WAREHOUSES IN
COMMUNITIES LIKE SAN BERNARDINO,
ALL THE COMMUNITIES WE SUPPORT
ARE AFFECTED BY PEOPLE USING THE
LLC STRUCTURE TO MASK THEIR
IDENTITIES, AS THE WAREHOUSE
INDUSTRY INCLUDES BIG EMPLOYERS
AND PLAYERS LIKE AMAZON AND
WALMART, BUT ALSO A HUGE NUMBER
OF SMALL PLAYERS, STAFFING
AGENCIES AND WAREHOUSE OPERATORS
THAT THAT UTILIZE THIS STRUCTURE
TO MASK THEIR OWNERSHIP AND THE
RELATIONSHIP BETWEEN THEIR
CORPORATIONS. AS SOMEBODY WHO'S
HAD TO DO THE RESEARCH ON THESE,
A LOT OF THE TIME, WE COME
ACROSS A WORKER WHO'S FACING
WAGE THEFT, THEIR EMPLOYER SHUT
DOWN, THEY'RE MISSING THEIR
CHECKS, AND I HAVE TO FIGURE OUT
WHO OWNS THE COMPANY. DOES THAT
COMPANY ACTUALLY HAVE A PERSON I
CAN FIND WHO ACTUALLY OWES THOSE
FOLKS MONEY? WHEN WE'RE FILING
WAGE CLAIMS WITH THE STATE, WHEN
WE'RE BRINGING THOSE CLAIMS TO,
YOU KNOW, TO THE LABOR
COMMISSIONER OR PRIVATE CLAIMS,
IT'S OFTEN VERY DIFFICULT FOR US
TO UNDERSTAND WHETHER THERE'S
POTENTIAL CASE THERE, WHO WE
ACTUALLY ARE FILING AGAINST, WE
HAVE TO DO A LOT OF THAT LEGWORK
TO FIGURE IT OUT. SOMETIMES WE
CAN, SOMETIMES WE CAN'T. OFTEN
IT'S JUST THE AGENT FOR
SERVICES. ALL WE CAN REALLY
FIND, THE LABOR COMMISSIONER AND
OTHER AGENCIES HAVE THAT SAME
SITUATION, RIGHT? THEY CAN'T
FIND OUT WHO'S WHO'S
RESPONSIBLE. WHEN WORKERS ARE
OFTEN LOSING THOUSANDS OF
DOLLARS IN WAGE THEFT OR FACING
REALLY SERIOUS HEALTH AND SAFETY
ISSUES, AND WE CAN'T FIGURE OUT
WHO IS RESPONSIBLE. THESE LEGAL
STRUCTURES ALSO FRUSTRATE,
FRUSTRATE EFFORTS BY THE
COMMUNITIES WE WORK WITH TO HELP
SHAPE THE FUTURE OF THE
NEIGHBORHOODS AND PROTECT THE
WELL-BEING OF OUR FAMILIES. IN
RECENT YEARS, WE'VE BEEN
ORGANIZING RESIDENTS IN THE SAN
BERNARDINO HIGHLAND AIRPORT
AREA, CALLING FOR A COMMUNITY
BENEFITS AGREEMENT IN A
NEIGHBORHOOD OF WORKING CLASS
AND POOR RESIDENTS, TENANTS WHO
ARE FACING DISPLACEMENT AGAIN
FOR WAREHOUSE DEVELOPMENT. THE
RESIDENTS ARE FACING
DISPLACEMENT BY DEVELOPERS WHO
ARE ASSEMBLING PARCELS UNDER
LLCS THAT WE CANNOT TRACE,
BUYING UP PROPERTIES, EVICTING
TENANTS, CREATING SITUATIONS
THAT ARE DISABLING OUR
COMMUNITIES AND WE CAN'T FIGURE
OUT WHO'S RESPONSIBLE. WE CAN'T
FIGURE OUT WHO IS ACTUALLY
LIABLE FOR WHAT'S GOING ON, THE
LACK OF TRANSPARENCY MAKES IT
IMPOSSIBLE FOR THESE RESIDENTS
TO KNOW WHO'S MAKING THESE DEALS
, AND FOR US TO BE ABLE TO
ORGANIZE, TO CALL FOR COMMUNITY
BENEFITS AGREEMENTS, TO CALL FOR
ANY KIND OF BASIC KIND OF
SUPPORT FOR THOSE WHO ARE FACING
THIS DISPLACEMENT ONLY ONCE A
PROJECT IS A APPLYING FOR A
PERMIT OR REZONE, MAYBE YEARS
DOWN THE ROAD. WHAT WE ACTUALLY
KNOW WHO'S BEHIND THESE
PROJECTS, WE'RE THESE ARE BASIC
REASONS WHY IT'S IMPORTANT FOR
OUR COMMUNITIES, ESPECIALLY THE
WORKING CLASS COMMUNITIES OF THE
INLAND EMPIRE, TO HAVE SB 1201,
WE BELIEVE IT WOULD BE GREAT
BENEFIT TO OUR COMMUNITIES AND
TO ADVOCATES WHO WORK FOR THEM
AS WELL AS THE ENFORCEMENT
AGENCIES WHO HAVE THE
RESPONSIBLE RESPONSIBILITY TO
PROTECT THEM. THANK YOU, THANK
YOU. ANY OTHER WITNESSES IN THE
ROOM IN SUPPORT? PLEASE COME
FORWARD. JUST STATE YOUR NAME,
AND, ORGANIZER AND POSITION.
THANK YOU. THANK YOU. CHAIR
MEMBERS. ELMER LOZADA, ON BEHALF
OF THE CALIFORNIA LABOR
FEDERATION IN SUPPORT. THANK YOU
. BRIAN AUGUSTA, ON BEHALF OF
THE CALIFORNIA RURAL LEGAL
ASSISTANCE FOUNDATION, THE
NATIONAL HOUSING LAW PROJECT,
AND PUBLIC INTEREST LAW PROJECT
IN SUPPORT. NATALIE SPIVAK WITH
HOUSING CALIFORNIA IN SUPPORT.
ANDREW DODSON WITH THE
CALIFORNIA HOUSING PARTNERSHIP
IN SUPPORT. GOOD AFTERNOON,
ROBERT HAROLD WITH THE CONSUMER
FEDERATION OF CALIFORNIA IN
SUPPORT. HI, CAROL GONZALEZ HERE
ON BEHALF OF INCLUSIVE ACTION
FOR THE CITY AND SUPPORT. THANK
YOU. HEIDI PICKMAN WITH THE
CAMEO NETWORK CALIFORNIA
ASSOCIATION FOR MICROENTERPRISE
OPPORTUNITY IN SUPPORT. GOOD
AFTERNOON, GEORGE RUBERWA WITH
REYES ECONOMY PROUD CO-SPONSOR
SUPPORT. THANK YOU. AND NOW ANY
WITNESS LEAD WITNESSES IN
OPPOSITION. FEEL FREE TO COME UP
TO THE IF WHEREVER YOU'D LIKE.
IF YOU'D WANT TO BE THERE.
YOU'RE WELCOME TO HØI AT THE
TABLE. THAT'S COOL. ALL RIGHT.
THANK YOU VERY MUCH. DEBORAH
CARLTON WITH THE CALIFORNIA
APARTMENT ASSOCIATION.
CORPORATIONS AND LIMITED
LIABILITY COMPANIES ALREADY FILE
AN EXTENSIVE AMOUNT OF
INFORMATION. IN FACT, YOUR
BENEFICIAL OWNER INFORMATION IS
FILED WITH THE FEDERAL
GOVERNMENT. AND THE SECRETARY OF
STATE, OF COURSE, HAS EXTENSIVE
AMOUNT OF INFORMATION, INCLUDING
YOUR AGENT FOR SERVICE OF
PROCESS. IF YOU WISH TO SUE OUR
ORGANIZATION AND OUR MEMBERS ARE
SUED ALL THE TIME, SO IT'S
UNCLEAR TO US WHY THIS BILL IS
NECESSARY, YOU CAN FIND
INFORMATION WITH THE LOCAL ON
LOCAL DEEDS IF YOU WANT TO LOOK
FOR INFORMATION OF WHO OWNS THE
PROPERTY, LAST YEAR, IN THE PAST
, IDENTICAL BILLS WERE SLATED TO
COST THE STATE OF CALIFORNIA $9
MILLION. THE FIRST YEAR OUT OF
APPROPRIATIONS, AND THEN ANOTHER
3 MILLION TO CONTINUE THIS
CHANGE TO THE LAW. SO FOR THOSE
REASONS, WE WILL RESPECTFULLY
ASK FOR YOUR NO VOTE. THANK YOU,
THANK YOU. ANY OTHER WITNESSES
IN OPPOSITION? ALL RIGHT. SEEING
NONE, MEMBERS WILL TAKE IT BACK
FOR QUESTIONS OR COMMENTS. NONE
ALL RIGHT. SO WE DON'T HAVE ANY
QUESTIONS OR COMMENTS, AND
SENATOR MINH MOVES THE BILL, AND
THE ONLY THING THAT I WANT TO
ADD IS, THAT I THINK THAT, THE
ANALYSIS ALSO RAISES SOME
FURTHER CONSIDERATIONS,
PARTICULARLY AS IT RELATES TO
THE SECRETARY OF STATE AND THEIR
ABILITY, TO BE ABLE TO DO THIS,
HAVING JUST GONE THROUGH A
TECHNOLOGY SYSTEM AND SO THAT
WILL BE SOMETHING THAT AS THE
BILL MOVES FORWARD, WILL BE, OF
COURSE, YOU KNOW, CONSIDERED IN
THIS PROCESS. I HOPE, AND
CERTAINLY, YOU KNOW, INTERESTING
TO SEE HOW NEW YORK, WAS ABLE TO
GET A SIGNATURE ON A BILL LIKE
THIS, LAST YEAR, 2023. AND, YOU
KNOW, SEEING KIND OF WHAT COMES
OUT OF THERE AND WHAT KINDS OF
INFORMATION, THEY'RE ABLE TO
SECURE, BUT ALSO THE BENEFIT FOR
THE PUBLIC GOOD. SO WITH THAT,
WOULD YOU LIKE TO, CLOSE? YEAH.
THANK YOU VERY MUCH. I JUST ONE
SMALL THING THAT WAS RAISED BY
THE OPPOSITION WITH REGARDS TO
FEDERAL, THAT INFORMATION IS NOT
PUBLICLY AVAILABLE, AND SO EVEN
THOUGH THE FEDERAL GOVERNMENT
GATHERS THAT INFORMATION, IT'S
NOT PUBLICLY AVAILABLE BECAUSE
IT'S MEANT FOR OTHER PURPOSES.
TERRORISTS AND OTHER THINGS THAT
GO ON AT THE FEDERAL LEVEL, BUT
I JUST WANT TO THANK YOU ALL.
AND, ALSO WITH REGARDS TO THE
SECRETARY OF STATE, WE ARE IN
CONVERSATIONS WITH THE
SECRETARY, AND JUST AS AS A
REMINDER THAT THIS IS NOT SIMPLY
ADDING ONE LINE ON THE FORMS
THAT ANYBODY FILLS OUT FOR THE
LLC AND IT'S NOT ASKING FOR ANY
ANY MORE, YOU KNOW,
VERIFICATION, NOTHING. IT'S JUST
ADDING THE INFORMATION AND
MAKING IT AVAILABLE. OKAY. WITH
THAT, THANK YOU ALL VERY MUCH.
AND I URGE AN AYE VOTE. THANK
YOU, SENATE BILL 1201. THE
MOTION IS Dð PASS AND REFERRED
TO THE COMMITTEE ON
APPROPRIATIONS. WE'LL GO AHEAD
AND CALL THE ROLL, PLEASE.
MOTION IS DUE. PASS TO COMMITTEE
ON APPROPRIATIONS. ÓRDENES.
SENATOR. LIMÓN Ã LIMON Ã. NILO
NÓ. NILO NØ. BRADFORD. BRADFORD
AYE. CABALLERO. CABALLERO. AYE.
MINH MINH. AYE. NGUYEN NGUYEN.
NÓ. PORTANTINO ALL RIGHT. THANK
YOU. AND WE WILL LEAVE. THE
ROLL. PUT THE BILL ON CALL.
OKAY. THANK YOU, THANK YOU.
MEMBERS. THANK YOU, MADAM CHAIR.
THANK YOU. THANK YOU. ALL RIGHT.
AND WE HAVE SENATOR GLAZER HERE.
OKAY I KNOW I NEVER READ THAT
PART. SORRY. GOOD MORNING, MADAM
CHAIR. HOW'S YOUR DAY GOING? IT
IS GOING OKAY, SENATOR GLAZER.
HOW ARE YOU DOING? FANTASTIC. SO
GOOD TO BE HERE WITH YOU ALL.
OKAY FOR THOSE WHO ARE WATCHING
AND DON'T KNOW, THIS IS LIKE ONE
OF THE BUSIEST DAYS OF OUR LIVES
HERE IN THE LEGISLATURE. LET'S
JUST TAKE A BREATH, OKAY? TAKE A
BREATH AND FEEL FREE TO BEGIN
WHEN YOU'RE READY, THANK YOU,
MADAM CHAIR AND THE COMMITTEE
FOR HEARING THIS BILL. I JUST
WANT TO REFRESH YOUR MEMORY THAT
IT WAS ONLY TWO MONTHS AGO THAT
WE WERE HERE HEARING A BILL
ALMOST IDENTICAL TO THIS. AND I
WANT TO THANK THE COMMITTEE FOR
PASSING OUT THAT BILL ON A 6 TO
0 VOTE. IT MATERIALLY IS THE
SAME BILL THAT THERE'S SOME
TECHNICAL CHANGES WE'VE MADE IN
A, ONE CHANGE IN RESPONSE TO
CONCERNS FROM THE OPPOSITION,
WHICH I'LL GO THROUGH. BUT IT IS
MATERIALLY THE SAME BILL THAT
YOU HEARD IN JANUARY, AS SMALL
BUSINESS BORROWERS HAVE
INCREASINGLY STRUGGLED TO ACCESS
TRADITIONAL BANK LOANS, THEY'VE
RESORTED TO ALTERNATIVE FORMS OF
FINANCING TO START, MAINTAIN AND
GROW THEIR BUSINESSES.
ALTERNATIVE FINANCING PRODUCTS
INCLUDE SALES BASED FINANCING
LIKE MERCHANT ADVANCES,
FACTORING AND LEASE FINANCING,
ALL OF WHICH ARE STRUCTURED IN
WAYS THAT DO NOT MAKE THEM LOOK
LIKE REGULAR LOANS.
UNFORTUNATELY, GAPS IN
CALIFORNIA'S COMMERCIAL
FINANCING LAW HAVE ALLOWED SOME
BAD ACTORS. JUST SOME. BUT
THEY'RE THERE TO TAKE ADVANTAGE
OF SMALL BUSINESS BORROWERS.
OFTEN UNSCRUPULOUS ACTORS STEER
BUSINESS SMALL BUSINESS
BORROWERS INTO HIGHER COST
FINANCING SO THEY CAN GET A
BETTER COMMISSION ON. BORROWERS
ARE ALSO ENCOURAGED TO SIGN
FINANCING CONTRACTS WITH CLAUSES
THAT WAIVE THEIR RIGHT TO LEGAL
REPRESENTATION AND PROPER COURT
PROCEDURE. SB 1482 REGULATES
PREDATORY PRACTICES SUCH AS SOME
BROKERS ACTING AS MERCHANT CASH.
ADVANCE MILLS THAT FOCUS ON
PLACING APPLICANTS INTO HIGH
RATE FINANCING. MY BILL ALSO
CLOSES LOOPHOLES IN OUR CURRENT
LAW BY PROHIBITING ANY ACTION
THAT CAN BE CONSTRUED AS A,
QUOTE, CONFESSION OF JUDGMENT,
UNQUOTE, CONFESSIONS OF
JUDGMENT. PROHIBIT BORROWERS
FROM LEGAL REPRESENTATION IF
THEY DEFAULT ON A LOAN, I MADE
AN AMENDMENT RECENTLY THAT I
MENTIONED AT THE START THAT
RESOLVED A PENDING ISSUE WITH
OPPOSITION. IT REMOVED THE
REQUIREMENTS THAT BROKERS
DISCLOSE THE LOWEST APPROXIMATE
APR, A BORROWER COULD
POTENTIALLY QUALIFY FOR. WITH ME
TODAY I HAVE BIANCA BLOOMQUIST
WITH THE SMALL BUSINESS MAJORITY
AND AT THE APPROPRIATE TIME, WE
RESPECTFULLY REQUEST AN AYE VOTE
. THANK YOU AND WE'LL GO AHEAD
AND BEGIN. YOU MAY BEGIN.
ACTUALLY, IT'S HEIDI PICKMAN
WITH CAMEO NETWORK, THANK YOU,
CHAIRMAN LEE, CHAIRMAN LEMON,
VICE CHAIR, NIELLO. MEMBERS OF
THE COMMITTEE. I'M HEIDI
PICKMAN, VICE PRESIDENT OF
ENGAGEMENT AND EXTERNAL
RELATIONS FOR THE CAMEO NETWORK,
OUR STATEWIDE NETWORK OF 400
PLUS BUSINESS SERVICE PROVIDERS
AND C¯ COMMUNITY LENDERS, WE ARE
A STRONG SUPPORTER OF SB 1482.
AND I'LL REFRESH YOU ON WHY, AS
WE WERE HERE TWO MONTHS AGO, WE
COMMEND SENATOR GLAZER, THIS
COMMITTEE, THE CALIFORNIA
LEGISLATURE, GOVERNOR NEWSOM,
FOR LEADING THE COUNTRY IN
RESPONSIBLE SMALL BUSINESS
LENDING PRACTICES, SAYS THAT SB
1482 CONTINUES THAT LEADERSHIP,
AS YOU MAY RECALL FROM A FEW
MONTHS AGO, IT DOES THREE THINGS
REGULATES PREDATORY PRACTICES BY
BROKERS, LEVELS THE PLAYING
FIELD FOR LOAN AND NON LOAN
PRODUCTS, AND CLOSES LOOPHOLES
REPORTING LOOPHOLES IN OUR
CURRENT LAW. WORKING BACKWARDS.
CALIFORNIA'S UNANIMOUSLY PASSED
PRICE DISCLOSURE REGULATIONS
CONTAIN LOOPHOLES THAT ENABLE
BAD ACTORS TO POLICE THEMSELVES.
DF DEPARTMENT OF FINANCIAL
PROTECTION AND INNOVATION
ACKNOWLEDGED THE NEED TO CORRECT
THIS IN THEIR RULEMAKING PROCESS
. SB 1482 DIRECTLY ADDRESSES
THIS NEED AND FIXED CLOSES
SEVERAL OTHER LOOPHOLES THAT NEW
YORK STATE CLOSED WHEN IT PASSED
ITS DISCLOSURE LAW THAT WAS
INSPIRED BY OUR LAW. HERE IN
CALIFORNIA, SMALL BUSINESSES
NEED ACCESS TO CAPITAL, BE IT A
LOAN OR A NON LOAN PRODUCT. THEY
THEY NEED MONEY. THEY DON'T
REALLY DISTINGUISH IT. MOST MOST
OF THE CLIENTS THAT MOST OF THE
CLIENTS THAT OUR MEMBERS WORK
WITH, THE REGULATORY FRAMEWORK
SHOULDN'T DISTINGUISH THE
DIFFERENT DIFFERENCE AND SHOULD
TREAT NON LOAN PRODUCTS THE SAME
AS LOANS. SB 1482 TAKES AWAY THE
UNFAIR ADVANTAGE THAT
UNREGULATED NON LOAN FINANCING
COMPANIES HAVE OVER REGULATED
LENDERS BY PROVIDING ALL TYPES
OF SMALL BUSINESS FINANCING
COMPANIES WITH THE SAME RULES TO
PLAY BY A HALLMARK OF MARKET
COMPETITION. ADDITIONALLY, THE
BILL PRESENTS SEVERAL OTHER
PREDATORY PRACTICES THAT TAKE
ADVANTAGE OF SMALL BUSINESSES
PRACTICES THAT SKIRT AROUND
CONFESSIONS OF JUDGMENT THAT
SENATOR GLAZER MENTIONED AND THE
CONFIDENTIALITY CLAUSES THAT
STOP SMALL BUSINESSES FROM
SPEAKING OUT IF THEY'RE
VICTIMIZED, CLOSING LOOPHOLES
AND CREATING A COMPETITIVE
MARKET FOR SMALL BUSINESS
FINANCE WILL CATALYZE GOOD
LENDING TO SMALL BUSINESSES. THE
OPPOSITION WANTS TO NARROW THE
BILL SO LOOPHOLES REMAIN AND
THEY REMAIN UNREGULATED. THEY
ARE THE SAME OPPOSITION WHO
UNSUCCESSFULLY SUED CALIFORNIA
TO OVERTURN TRANSPARENT PRICE
DISCLOSURE. THANK YOU. AND I
RESPECTFULLY ASK FOR THE SECOND
TIME YOUR AYE VOTE. THANK YOU.
ANY OTHER WITNESSES IN SUPPORT
OF THE BILL? PLEASE COME
FORWARD. STATE YOUR NAME,
ORGANIZATION AND POSITION. BRIAN
AUGUSTO, ON BEHALF OF THE
CALIFORNIA COALITION FOR
COMMUNITY INVESTMENT AND
SUPPORT. DANNY KENDALL KAISER,
ON BEHALF OF THE CALIFORNIA LOW
INCOME CONSUMER COALITION IN
SUPPORT. DESIREE NGUYEN AUTH ON
BEHALF OF EBCLC EAST BAY
COMMUNITY LAW CENTER IN STRONG
SUPPORT. THANK YOU. WE'RE NOT
REFLECTED IN THE ANALYSIS, BUT
ROBERT HARRELL WITH THE CONSUMER
FEDERATION OF CALIFORNIA IN
SUPPORT. THANK YOU, THANK YOU,
THANK YOU. ALL RIGHT. ANY
WITNESSES IN OPPOSITION PLEASE
COME FORWARD. YOU'RE WELCOME TO
TAKE A SEAT UP HERE OR AT THE
PODIUM, WHATEVER YOU PREFER
.
GOOD AFTERNOON, MADAM CHAIR.
COMMITTEE MEMBERS. PAT JOYCE, ON
BEHALF OF FORD FINANCING SALES
BASED FINANCING COMPANY THAT
SERVES THOUSANDS OF SMALL
BUSINESSES IN CALIFORNIA. AS THE
SENATOR FROM ORINDA MENTIONED,
IT FEELS LIKE DEJA VU. WE WERE
JUST HERE A COUPLE OF MONTHS
AGO, WE HAVEN'T OPPOSED UNLESS
AMENDED POSITION ON 1482 AND
WANT TO ACKNOWLEDGE THE WORK OF
THE COMMITTEE AND THE AUTHOR. TO
APPROVE THIS BILL UP TO THIS
POINT, INCLUDING AMENDMENTS TO
STRIKE THE REQUIREMENT FOR
BROKERS TO DISCLOSE THEIR BEST
LOWEST APR ESTIMATE TO POTENTIAL
CUSTOMERS. SO APPRECIATE THAT,
FOUR DEGREES WITH THE AUTHOR'S
GOAL OF CREATING TRANSPARENCY IN
THE MARKET SO SMALL BUSINESSES
CAN MAKE INFORMED DECISIONS AND
ACCOUNTABILITY FOR BROKERS AND
PROVIDERS WHO ARE NOT DOING WHAT
THEY'RE SUPPOSED TO DO. OUR MAIN
POINT OF DISAGREEMENT AT THIS
POINT IS OVERLAYING THE PROPOSED
COMMERCIAL FINANCING LICENSING
FRAMEWORK ON TOP OF THE
CALIFORNIA FINANCING LAW,
ESPECIALLY GIVEN THE
DEPARTMENT'S CURRENT WORKLOAD
AND FISCAL ISSUES. INSTEAD OF
EXPANDING THE CFL TO INCLUDE
COMMERCIAL FINANCING PROVIDERS
AND BROKERS, OUR PREFERENCE
WOULD BE TO EXPLORE ALTERNATIVE
LICENSING FRAMEWORKS SEPARATE
FROM THE CFL THAT ARE
STRAIGHTFORWARD AND LESS
COMPLICATED. AND I'LL NOTE ON
PAGE SIX OF THE ANALYSIS
COMMITTEE STAFF MAKES A SIMILAR
RECOMMENDATION THÀNH. WE'RE
HAPPY TO PARTICIPATE IN
CONVERSATIONS WITH THE AUTHOR
AND THE DEPARTMENT TO DISCUSS
ALTERNATIVE APPROACHES, A
SIMPLER LICENSING FRAMEWORK FOR
COMMERCIAL FINANCING PROVIDERS
AND BROKERS. PAIRED WITH THE
RECENT DISCLOSURE REGULATIONS
UNDER SB 1235, THE EXPANSION OF
UDAP ENFORCEMENT TO APPLY TO
COMMERCIAL FINANCING UNDER AB
1864 AND THE PROHIBITION OF JUNK
FEES UNDER SB 666, WILL CREATE
ROBUST PROTECTIONS IN THE MARKET
FOR SMALL BUSINESSES IN
CALIFORNIA. THE THREE LAWS I
JUST MENTIONED JUST WENT INTO
EFFECT THE PAST YEAR, SO WE'D
LIKE TO ENCOURAGE THE
LEGISLATURE TO LET THE MARKET
ADJUST TO THESE NEW RULES AND
REGULATIONS BECAUSE THEY ARE
SIGNIFICANT BEFORE PILING ON NEW
RULES AND REGULATIONS THAT ARE
COMPLICATED AND DIFFICULT TO
IMPLEMENT UNDER THE CFL. FOR
THESE REASONS, WE'RE OPPOSED AND
ENCOURAGE THE AUTHOR TO WORK
WITH DFP, THE ADVOCATES IN THE
COMMERCIAL FINANCE INDUSTRY, TO
LOOK AT ALTERNATIVE LICENSING
FRAMEWORKS TO THE CFL. THANK YOU
, THANK YOU. ANY ADDITIONAL
WITNESSES IN OPPOSITION? GOOD
AFTERNOON. CHRIS ROSE, ON BEHALF
OF RAPID FINANCE AND CAPETUS, WE
ECHO THE COMMENTS JUST MADE. WE
ARE NOT OPPOSED TO LICENSURE. WE
JUST WANT TO MAKE SURE IT WORKS
WELL. THEREFORE WE HAVE AN
OPPOSED UNLESS AMENDED POSITION.
THANK YOU. HI KATE FISHER FROM
THE REVENUE BASED FINANCE
COALITION. WE OPPOSE THE BILL IN
THE IN ITS CURRENT FORM. WE HAD
A MEETING WITH THE BILL AUTHOR
STAFF YESTERDAY AND WE
APPRECIATE THE STEPS THAT THE
BILL AUTHORS MADE TO, IMPROVE
THE LEGISLATION. AND WE LOOK
FORWARD TO CONTINUING TO WORK
WITH THEM. THANK YOU. THANK YOU.
ANY OTHER WITNESSES IN
OPPOSITION? ALL RIGHT, MEMBERS,
WE WILL TAKE IT BACK FOR ANY
COMMENTS OR QUESTIONS. SENATOR
CAVALETTO, I WANT TO THANK
SENATOR GLAZER FOR WORKING SO
HARD ON THIS SUBJECT, I THINK
THE THERE'S DEFINITELY A NEED
FOR REGULATIONS AND I HOPE
YOU'LL CONTINUE TO WORK WITH THE
OPPOSITION TO SEE IF THERE'S A
SWEET SPOT THERE, THIS IS THIS
IS REALLY IMPORTANT, AND SO I
WANT TO I'M GOING TO SUPPORT THE
BILL TODAY AND, LOOK FORWARD TO
HAVING SOME TO SEE WHETHER THERE
IS A SWEET SPOT. THANK YOU.
THANK YOU. AND NEXT WE'RE GOING
TO GO TO OUR VICE CHAIR, NILO.
THANK YOU, MADAM CHAIR. SENATOR
GLAZER, COULD YOU COMMENT ON THE
REQUESTED AMENDMENTS? AND WHAT'S
YOUR POSITION ON TOWARD THAT?
YEAH, FROM THE REVENUE BASED
FINANCING, WE TOOK ONE OF THEIR
AMENDMENTS. THAT'S THE AMENDMENT
THAT TOOK AWAY THE LOW APR. SO
AND THE ONLY OTHER ISSUE THAT
THEY'VE RAISED IS THEY PREFER A
REGISTRATION, NOT A LICENSING
OPTION. AND THEY'D PREFER THAT
WE WAIT AND ALLOW THE
IMPLEMENTATION OF SENATOR
LEMON'S BILL. THAT SHE PASSED
SENATOR MIN'S BILL ON FEES THAT
HE PASSED. AND I GUESS, IT TAKES
THE DEPARTMENT A LONG TIME TO DO
THESE REGULATIONS. I HAD A BILL
RECENTLY THAT IT TOOK FIVE
YEARS. SO I HAVE A BILL THAT
MIGHT FIX THAT. AND I MAY
COAUTHOR IT, BUT SERIOUSLY, LOOK
, WE HOPE THAT THEY'LL DO THEIR
WORK ON THESE PREVIOUS MEASURES,
BUT MY GUESS IS IT'S GOING TO BE
A 2 TO 3 YEAR LAG BEFORE
REGULATIONS COME OUT TO
IMPLEMENT THIS BILL. AND I THINK
THERE'LL BE PLENTY OF TIME TO
SEE IT IN PRACTICE, I ACTUALLY
THINK, THOUGH, THAT WHILE THOSE
BILLS ARE LAUDABLE, THEY DON'T
DO WHAT THIS BILL IS PROPOSING.
IT HAS ENHANCED PROTECTIONS THAT
I THINK ARE NECESSARY THAT
AREN'T DUPLICATIVE AND THEY'RE
MODEST, HONESTLY, THEY'RE VERY
THEY'RE WHEN YOU THINK ABOUT IT,
THEY'RE VERY THEY'RE VERY
MODEST, A LICENSING WOULD LOOK
AT, THOSE WHO ARE LICENSED, WITH
A LITTLE BIT MORE DEPTH, IT
WOULD, ALLOW THE DEPARTMENT TO
REQUIRE THAT THEY, THEY LOOK AT
NOT JUST THE ACTUAL, COST OF
FINANCING THAT THEY'VE PROVIDED,
BUT WHAT THEY, WHAT THEY SAID UP
FRONT TO SEE WHETHER THERE'S A
BAIT AND SWITCH, THERE'S A FEW
THINGS THAT ARE OF VALUE IN THIS
SPACE THAT GO BEYOND THE GOOD
WORK OF THE CHAIR AND THE OTHER
MEMBER OF YOUR COMMITTEE THAT
HAVE ADVANCED LAWS IN THIS
SPACE. SO I THINK IT HAS ITS OWN
LANE. IT'S A VERY MODEST ONE.
AND I THINK THAT GIVEN THE
PRACTICE OF THE DEPARTMENT AND
IMPLEMENTING REGULATIONS, THAT
THERE'LL BE A LOT OF TIME FOR US
TO HAVE THEM EXAMINE THE
IMPLEMENTATION OF THAT, OF THAT,
THAT WORK. AND HOW DO YOU SEE
THE DIFFERENCE BETWEEN
REGISTRATION AND LICENSURE?
WELL, LOOK, I WILL COMMIT TO
CONTINUING TO WORK WITH THE
OPPONENTS WHO HAVE RAISED THIS
ISSUE. THEY'D PREFER TO HAVE A
MUCH MORE MILDER, YOU KNOW,
REGISTRATION PROCESS. I'M STILL
SKEPTICAL THAT THAT'S ENOUGH TO
HAVE SOME ACCOUNTABILITY IN THAT
SPACE. THERE'S A LOT OF
VULNERABILITY. YOU KNOW THIS
FROM YOUR BUSINESS BACKGROUND.
THERE'S A LOT OF VULNERABILITY
ON FINANCING. AND, AND THERE'S A
LOT OF FOLKS IN THE SMALL
BUSINESS SPACE THAT DON'T HAVE
THE SOPHISTICATION OF A OF A
BOOKKEEPING OR A ACCOUNTING
DEGREE FROM A UNIVERSITY. AND SO
THEY'RE VERY VULNERABLE WITH
THESE NEW FORMS OF FINANCING.
YOU'VE EVEN HEARD THE
DESCRIPTIONS THAT I CAN TALK TO
YOU AND WE CAN DO A LITTLE QUIZ
ON WHAT FACTORING IS. AND, AND
USING YOUR RECEIVABLES IN A
SALES BASED AND YOU KNOW, IT CAN
BE VERY COMPLICATED AND IT CAN
BE A WILD WEST OF FINANCING OUT
THERE. SO I WANT TO AND WE'VE
DONE SOME WORK WITH THIS
COMMITTEE OVER THE YEARS TO TRY
TO PROVIDE UNDERSTANDABLE
LANGUAGE AND TERMS SO THEY CAN
MAKE GOOD CHOICES. IT'S TOUGH
THOUGH, AND IT'S EASILY
MANIPULATED. SO MY CONCLUSION IS
THAT, JUST A REGISTRATION
REQUIREMENT SEEMS TOO MUCH OF A
LIGHT TOUCH AND A LICENSING IS
MORE SERIOUS. LET ME JUST TELL
YOU THAT GOING THE LICENSING
ROUTE MAKES THIS BILL
VULNERABLE. THAT'S THE IRONY.
OKAY BECAUSE THERE'S A COST
INVOLVED IN DOING THAT. AND
THAT'S GOING TO MAKE THIS
MEASURE VULNERABLE AS IT GOES
THROUGH OUR LEGISLATIVE PROCESS,
AS YOU KNOW, YES, I DO. OKAY.
AND SO THERE'S KIND OF AN IRONY
OF KIND OF TRYING TO DO IT
BETTER AND SMARTER, YET ACTUALLY
PUTTING THE BILL IN JEOPARDY.
THEY SHOULD BE ARGUING FOR, FOR
LICENSING FOR THE THOSE REASONS.
BUT I KNOW THAT THEY'RE GENUINE
ABOUT THEIR CONCERNS THAT THEY
SEE IN THE BILL. AND I
APPRECIATE THAT. SO I'M OPEN TO
THOSE CONTINUED CONVERSATIONS.
THE BILL WILL HAVE A LONG WAY TO
GO THIS YEAR IF IT IF IT GETS
THROUGH THIS COMMITTEE AND I'M
COMMITTED TO CONTINUING THOSE
CONVERSATIONS. WELL, I SUPPORTED
THE BILL THAT YOU HAD IN
JANUARY. IT'S ESSENTIALLY THE
SAME BILL, AND I KNOW YOU'LL
WORK AS BEST YOU CAN TO TRY TO
ADDRESS THOSE OF THE OPPONENTS.
AND SO I TRUST THAT YOU WILL DO
THAT. I'LL DO MY BEST, SIR.
THANK YOU. THANK YOU. NEXT,
SENATOR MINH, THANK YOU,
APPRECIATE THE BILL. AND I'M A
COAUTHOR ON IT, BUT I DID WANT
TO JUST SEE IF YOU HAD ANY
RESPONSE TO THE CONCERNS RAISED
BY, OPPOSITION ON, YOU KNOW, I
TAKE IT, YOU KNOW, WE DID JUST
PASS A BUNCH OF STUFF, AND, YOU
KNOW, WHILE I SUPPORT THIS WHOLE
FRAMEWORK, YOU KNOW, HOW WOULD
YOU RESPOND TO THE IDEA THAT,
YOU KNOW, MAYBE WE NEED TIME TO
DIGEST, RIGHT. SO THANK YOU,
SENATOR BENNETT. THANK YOU FOR
YOUR COAUTHORS OF THE BILL.
THEY'VE RAISED THREE ISSUES. THE
FIRST ONE BEING THAT THEY'D
PREFER REGISTRATION OVER
LICENSING. AND I SPOKE TO THAT
JUST A MOMENT AGO, THE SECOND
ONE WAS THE ISSUE OF THAT THEY
WANT TO HAVE TIME TO SEE WHAT
EXISTING LAWS AS THE REGULATIONS
COME OUT, HOW THEY WORK. AND I
SPOKE TO THAT ALSO EARLIER THAT
I, THAT THERE IS A LANE THAT
WE'RE IN THAT'S DIFFERENT THAN
WHAT'S BEEN ESTABLISHED, THAT
THE PROCESS OF THE DEPARTMENT
GOES THROUGH TO ISSUE THESE
REGULATIONS MEANS THAT WHEN THE
REGULATIONS ARE FINALIZED OVER
THE CHAIR LAYMAN'S BILL, AS AN
EXAMPLE, THERE'LL BE YEARS
BETWEEN THAT AND THE FINAL
REGULATIONS. IF THIS BILL WERE
TO BE IMPLEMENTED. SO I THINK
THERE'S A LOT OF TIME FOR THAT.
AND FINALLY, THE THIRD ISSUE WAS
THE CONCERN ABOUT, THE
REQUIREMENT THAT THEY, THAT THAT
THEY, REVEAL TO THE CONSUMER THE
LOWEST COST OF FINANCING THEY'VE
EVER PROVIDED. AND WE ELIMINATED
THAT OBLIGATION. SO WE TOOK CARE
OF THAT ISSUE. WELL, I
APPRECIATE IT. AND I KNOW YOU'RE
GOING TO CONTINUE TO WORK HARD
ON MAKING THE BILL TIGHTER,
BECAUSE THAT IS WHAT YOU DO. AND
I JUST WANT TO STEP BACK AND
POINT OUT THAT THE PROBLEM
YOU'RE TRYING TO ADDRESS, THE
SAME PROBLEM THAT SENATOR LEMON
AND I WERE TRYING TO ADDRESS
LAST YEAR IS THE RISE IN COMPLEX
AND OFTEN PREDATORY LENDING
PRACTICES. AND PRODUCTS TARGETED
AT SMALL BUSINESSES. AND I JUST
WANT TO POINT OUT THAT THAT IS
STILL A PROBLEM WE HEAR A LOT
ABOUT, I BELIEVE ACROSS THE
STATE, IT'S A PROBLEM TARGETED
AT OFTEN MINORITY OWNED
BUSINESSES, BUSINESSES THAT ARE
OWNED BY PEOPLE WHO DON'T
NECESSARILY SPEAK ENGLISH
PROFICIENTLY, WHO MAYBE ARE NOT
SOPHISTICATED. RIGHT, EXACTLY.
THANK YOU, THANK YOU, THANK YOU.
NEXT, SENATOR BRADFORD, THANK
YOU, MADAM CHAIR. MY QUESTION
WAS ALONG THE SAME LINES AS THE
VICE CHAIR. NILO AS TO WHY
LICENSING OVER REGISTRATION,
WHICH IS A FAR CHEAPER, MANNER.
BUT I THINK YOU PRETTY MUCH
STATED REASON I'M SENSITIVE TO
IT. SENATOR BRADFORD, I AND I'LL
CONTINUE TO DELIBERATE WITH,
OPPONENTS ABOUT THAT AND
SUPPORTERS ABOUT WHETHER WE'RE
STRIKING THE RIGHT BALANCE. AND
I APPRECIATE YOU RAISING THAT.
AND SENATOR PORTANTINO, THANK
YOU, MADAM CHAIR. THANK YOU TO
THE AUTHORS. AS IT'S BEEN SAID,
THIS IS AN IMPORTANT ISSUE. WE
WANT TO MAKE SURE THAT SMALL
BUSINESSES IN PARTICULAR, AT A
TIME WHEN WE RELY SO HEAVILY ON
THE SMALL BUSINESS ECONOMY, IS
IT FALL VICTIM TO PREDATORY
PRACTICES? AND I APPRECIATE THE
FACT THAT YOU'RE WILLING TO
CONTINUE TO HAVE AN ONGOING
CONVERSATION WITH THE BOTH THE
PROPONENTS AND THE OPPONENTS,
BECAUSE OBVIOUSLY, THE MORE WE
TALK TO EACH OTHER, THE BETTER
THE FINAL PRODUCT WILL BE. AND I
KNOW THAT YOUR COMMITMENT TO
CONTINUE TO DO THAT IS SOMETHING
THAT I KNOW YOU'RE GOING TO
KEEP. I DO HAVE ONE SORT OF
QUESTION. DFP HAS CERTAIN
AUTHORITIES ALREADY TO DO SOME
OF THIS. IS IT SORT OF THE
CONTENTION THAT THEY'RE JUST NOT
GOING TO DO IT IN A TIMELY
MANNER, OR THAT WE NEED TO PUT
MORE, MORE WHAT'S SINCE THEY CAN
THEY CAN DO SOME OF THIS? IS IT
THAT THEY'RE NOT WILLING TO DO
IT OR THEY'RE NOT TIMELY OR
WHAT? WHAT'S WHAT'S THE THINKING
THERE, THROUGH THE CHAIR? I
THINK THE THINKING IS, NUMBER
ONE, THAT TO MAKE SOME
ADDITIONAL REQUIREMENTS TO HELP
PROTECT SMALL BUSINESSES MORE
THAN WHAT'S IN LAW AND UNDER
REGULATION REVIEWED TODAY. SO
THAT'S ONE LEVEL. AND YOU KNOW,
A LICENSURE. AND THIS GOES BACK
TO THIS QUESTION OF REGISTRATION
OR LICENSURE IS A HIGHER
STANDARD OF OBLIGATION AND
REVIEW. AND WE THINK THAT AT THE
MOMENT THAT THAT'S THAT'S THE
PROPER COURSE TO GO THROUGH. WE
ARE WORKING WITH A BROAD
COALITION OF RESPONSIBLE SMALL
BUSINESS LENDERS THAT, HAVE, ARE
WORKING IN THIS AREA AT THE SAME
AS WELL. AND, AND FEEL LIKE THAT
THEY WANT TO SUPPORT THE, THE
GOOD PRACTICES AND, AND TRY TO
MAKE SURE THAT THERE'S PROPER
ENFORCEMENT OF THE BAD
PRACTICES. AND I THINK THAT THE
CONSENSUS AT THE MOMENT AND IT'S
REFLECTED IN THE BILL THAT YOU
SEE BEFORE YOU, IS THAT THAT
WE'RE TRYING TO FIND A BALANCE
THAT INCLUDES A LITTLE BIT MORE
ACTIVE ENFORCEMENT AND SOME NEW
PROVISIONS THAT WILL HELP. AND
THAT'S THAT'S WHAT YOU HAVE
BEFORE YOU. THANK YOU. THANK YOU
. ALL RIGHT, AND I JUST WANT TO
THANK YOU. YOU'VE BEEN WORKING
ON THIS ISSUE FOR AT LEAST FIVE
YEARS, AND SO, SO THIS IS A FIVE
YEAR POLICY LOVE PROJECT, AND,
YOU KNOW, YOU'RE DOING IT FOR
THE RIGHT REASONS. AND I JUST
THANK YOU FOR WORKING REALLY
CLOSELY WITH THE COMMITTEE. BUT
ALSO, I KNOW HE'LL CONTINUE
WORKING WITH THE OPPOSITION.
WOULD YOU LIKE TO CLOSE? THANK
YOU, CHAIR. AND I THANK YOU AND
YOUR STAFF WHO HAVE WORKED SO
DILIGENTLY WITH US, OVER A LONG
PERIOD OF TIME. I WOULD SIMPLY
MY CLOTHES WANT TO APOLOGIZE TO
HEIDI. I TALKED ABOUT COMING IN
HERE, AND WE'RE A LITTLE
OVERWHELMED WITH OUR DAY TO DAY,
AND I DIDN'T LOOK UP TO SEE HER
AND READ MY SCRIPT INCORRECTLY.
SO I. MY APOLOGIES TO YOU AND
THANK YOU TO THE COMMITTEE FOR
YOUR CONSIDERATION TODAY.
RESPECTFULLY ASK FOR AN AYE
VOTE. THANK YOU. ALL RIGHT. THIS
BILL IS SENATE BILL 1482. THE
RECOMMENDATION IS DO PASS AND
REFER TO THE COMMITTEE ON
JUDICIARY. AND I DON'T KNOW IF
WE HAVE A MOTION. SENATOR MINH,
MOVES THE BILL AND WE WILL GO
AHEAD AND CALL THE ROLL MOTION
IS DUE PASSED. COMMITTEE ON
JUDICIARY. SENATOR LIMÓN I LIMON
I NHIÀU I NILO I BRADFORD.
BRADFORD I CABALLERO. CABALLERO
I MEN MINH I NGUYEN PORTANTINO
PORTANTINO I I'VE GOT SIX. ALL
RIGHT. THAT BILL HAS, SIX VOTES
AND IT IS OUT. WE HAVE ALL
COMMITTEE MEMBERS HERE. SO WE'LL
CLOSE THE ROLL ON THAT ONE.
THANK YOU. AND THANK YOU,
SENATOR GLASER. AND NEXT WE HAVE
OUR FINAL BILLS, SENATE MINH.
AND WHILE HE IS, GOING, I THINK.
YEAH. NO, I THINK WE'RE GOOD AT
THE END. OKAY SO SENATOR MINH IS
GOING TO PRESENT SENATE BILL
1286. THANK YOU. AND, SENATOR
MINH, YOU MAY BEGIN WHEN YOU'RE
READY. THANK YOU. CHAIR LIMÓN
AND COMMITTEE MEMBERS, BEFORE WE
START, I JUST WANT TO THANK THE
COMMITTEE STAFF FOR THEIR HARD
WORK ON THIS BILL AND NOTE THAT
WE WILL BE ACCEPTING THE
COMMITTEE'S PROPOSED AMENDMENTS,
1280, SB 1286 WOULD EXTEND
PROTECTIONS UNDER THE ROSENTHAL
FAIR DEBT COLLECTION ACT TO
INDIVIDUALS WHO PERSONALLY
SIGNED FOR THEIR BUSINESS DEBT
IN ORDER TO TRY TO PROTECT SMALL
BUSINESS OWNERS AND PROPRIETORS
FROM UNFAIR, DECEPTIVE AND
ABUSIVE DEBT COLLECTION
PRACTICES, WE KNOW THAT CAPITAL
HAS BEEN DIFFICULT FOR
BUSINESSES TO COME BY IN RECENT
YEARS, PARTICULARLY DURING THE
COVID CRISIS AND THE AFTERMATH
OF THAT. AND MANY WERE FORCED TO
TURN TO ALTERNATIVE FORMS OF
LENDING IN ORDER TO KEEP THEIR
BUSINESSES AFLOAT. AND AS A
RESULT, WE SAW A STEEP RISE IN
ALTERNATIVE PRODUCTS COMING FROM
A VARIETY OF DIFFERENT SOURCES,
INCLUDING COMMERCIAL FINANCING
AND FINTECH COMPANIES. THIS WAS
ESPECIALLY TRUE FOR MINORITY
OWNED BUSINESSES, WHICH OFTEN
HAVE UNFORTUNATELY STILL TODAY,
LOWER LOAN APPROVAL RATES THAN
WHITE OWNED BUSINESSES. EVEN
WHEN THEY HAVE SIMILAR REVENUES,
CREDIT SCORES AND DEBT LEVELS.
OF COURSE, YOU KNOW, WE SAW A
LOT OF THESE SAME TYPES OF
NOXIOUS PREDATORY LOANS AND
LENDING PRACTICES DURING THE RUN
UP TO THE 2008 FINANCIAL CRISIS,
AND THAT WAS KIND OF WHERE I CUT
MY TEETH EARLIER IN MY CAREER AS
A, SOMEONE WHO WAS A HILL
STAFFER AT THE TIME. AND I THINK
WE STILL HAVEN'T LEARNED THE
LESSONS OF THAT CRISIS WHERE WE
HAVE SEEN THAT MANY OF THESE
PRODUCTS ARE NOT DESIGNED TO BE
SUSTAINABLE. THEY ARE, ARE VERY
MUCH USE VARIOUS IN FORM, AND
OFTEN THEY TAKE THE FORM OF
PRODUCTS THAT ARE NOT
NECESSARILY STRUCTURED AS LOANS.
AND WE'VE SEEN A RISE IN
NONTRADITIONAL LENDING THAT
WHERE THEY'RE STRUCTURED AS
DIFFERENT TYPES OF SECURITIES,
SO THAT THEY CAN GET AROUND
PROHIBITIONS ON LOANS. AND SO
WHAT THIS BILL IS TRYING TO DO
IS TO EXTEND THE PROTECTIONS
THAT EXIST UNDER CALIFORNIA LAW
TO THIS SITUATION FOR SMALL
BUSINESSES WHERE YOU HAVE A
SIGNATORY WHO IS A PERSON WHO
COSIGNS AND THIS WOULD, I THINK,
OPEN THE DOOR TO PROVIDING
PROTECTIONS AGAINST THESE TYPES
OF ABUSIVE DEBT COLLECTION
PRACTICES HERE. AND SO THESE
PRACTICES INCLUDE THREATS,
CONTACTING BORROWERS AT
INCONVENIENT HOURS, USING FALSE
STATEMENTS OR ADDING
UNAUTHORIZED INTERESTS OR FEES
TO THE AMOUNTS OWED. AND SO,
UNDER SB 1286, BORROWERS WOULD
STILL BE RESPONSIBLE FOR PAYING
THEIR DEBTS. BUT WHEN THE DEBTS
WERE TRIED TO BE COLLECTED,
SUBJECTED TO UNFAIR, DECEPTIVE
OR ABUSIVE COLLECTION PRACTICES,
THEY WOULD FALL UNDER THE
PROTECTIONS OF THE ROSENTHAL
ACT. SO HERE TO TESTIFY IN
SUPPORT OF THE BILL, I HAVE
DESIREE NGUYEN AUTH WITH THE
EAST BAY COMMUNITY LAW CENTER
AND HEIDI PECHMAN WITH THE
CALIFORNIA ASSOCIATION FOR
MICRO-ENTERPRISE OPPORTUNITY.
GOOD AFTERNOON, CHAIR, VICE
CHAIR AND COMMITTEE. I AM
DESIREE NGUYEN, AUTH DIRECTOR OF
THE CONSUMER JUSTICE PRACTICE AT
EAST BAY COMMUNITY LAW CENTER,
LECTURE AT UC BERKELEY LAW AND I
SIT ON THE BOARD OF THE DFSCI
DEBT COLLECTION ADVISORY BOARD,
PRIOR TO MY CURRENT ROLE IN
PUBLIC INTEREST, I OWNED A LAW
FIRM THAT FOCUSED ON WORKING
WITH SMALL BUSINESSES, SB 1286
IS AN IMPORTANT MEASURE THAT
WILL REQUIRE LONG ACCEPTED
PRACTICES OF DECENCY AND DEBT
COLLECTION TO BE APPLIED TO DEBT
COLLECTION FOR SMALL BUSINESS
OWNERS. AS OF 2023, 98.8% OF
CALIFORNIA BUSINESSES ARE SMALL
BUSINESSES. THAT AMOUNTS TO 4.1
MILLION SMALL BUSINESSES IS 3.35
MILLION. OF THESE SMALL
BUSINESSES DO NOT HAVE
EMPLOYEES. THAT'S 3.35 MILLION
PEOPLE DOING THE ADVERTISING.
THE MARKETING, THE ACCOUNTING,
THE WEB DESIGN ON TOP OF THE
SERVICE OR PRODUCT THAT THEY'RE
TRYING TO SELL. THAT'S 3.5, 3.35
MILLION PEOPLE WHO DO NOT HAVE A
DETACHED, FACELESS ACCOUNTING
DEPARTMENT. SB 1286 SEEKS TO
ENSURE THAT PERSONAL GUARANTEES
FROM THESE 4.1 MILLION
BUSINESSES ARE COLLECTED FAIRLY,
WITHOUT DECEIT OR HARASSMENT. SB
1286 IS NARROWLY TAILORED TO
APPLY TO DEBT COLLECTION ON
INDIVIDUALS WHO PERSONALLY INCUR
THE BUSINESS DEBT. IT IS
CONSISTENT WITH THE BASIC
LEGISLATIVE FINDINGS OF
ROSENTHAL, 1780 8.1 A STATE'S
UNFAIR, DECEPTIVE COLLECTION
PRACTICES UNDERMINE PUBLIC
CONFIDENCE, WHICH IS ESSENTIAL
TO THE CONTINUED FUNCTIONING OF
THE BANKING AND CREDIT SYSTEM.
WHILE SB 1286 WILL DO A LOT TO
PROTECT AND OVERLOOKED
COMMUNITY, HERE'S WHAT SB 1286
DOES NOT DO. IT DOES NOT CHANGE
THE FACT THAT ORIGINAL CREDITORS
AND DEBT COLLECTORS ARE ALREADY
SUBJECT TO THE FDCPA. IT DOES
NOT MODIFY THE LONG HELD
RESPONSIBILITIES OR REQUIREMENTS
UNDER THE FDCPA, AND IT DOES NOT
ADD TO THE DEBT COLLECTOR
LICENSING ACT REQUIREMENTS. I'D
LIKE TO THANK SENATOR MENN FOR
PRIORITIZING SMALL BUSINESSES
WHICH ARE LARGELY
UNDERREPRESENTED COMMUNITY THAT
COMPRISES A VAST PORTION OF THE
ECONOMIC FABRIC OF CALIFORNIA.
THANK YOU FOR YOUR
CONSIDERATION. I RESPECTFULLY
URGE AN AYE VOTE. THANK YOU. HI
AGAIN. GOOD AFTERNOON TO THE
COMMITTEE. AND JUST FOR THE
RECORD, I AM HEIDI PICKMAN FROM
THE CAMEO NETWORK, OUR 400 PLUS
BUSINESS SERVICE PROVIDERS AND
COMMUNITY LENDERS SERVE ABOUT
200,000 OF THESE VERY SMALLEST
BUSINESSES. AS MY COLLEAGUE
MENTIONED, THEY GIVE COACHING,
RESPONSIBLE CAPITAL AND OTHER
BUSINESS SUPPORT TO THESE SMALL
BUSINESSES. I'D LIKE TO READ
THREE REAL LIFE EXAMPLES OF
BUSINESS OWNERS EXPERIENCING
DEBT COLLECTION ABUSE FOR THEIR
BUSINESS. BUSINESS DEBT NAMES
HAVE BEEN CHANGED FOR PRIVACY.
LIKE SO MANY, JAMES TOOK OUT A
MERCHANT CASH ADVANCE THAT
SNOWBALLED INTO FOUR MCAS DUE TO
THE PREDATORY BUSINESS MODEL OF
MCAS THAT YOU MIGHT HAVE HEARD
ABOUT EARLIER, AS HE TRIED TO
MANAGE HIS BUSINESS DEBTS, JAMES
EXPERIENCED SOME FAMILY TROUBLE
AND DIDN'T LIKE TO BRING HIS
WORK PROBLEMS HOME WITH HIM.
HOWEVER, DURING THE DEBT
COLLECTION PROCESS, THE LENDER
SENT PEOPLE TO HIS HOUSE, NOT
HIS OFFICE, TO HAVE A CHAT ABOUT
HIS BUSINESS DEBT. THAT WAS
SCARY FOR HIM AND HIS FAMILY. I
WOULD AGREE WITH JAMES AND HOPE
YOU WOULD TOO WHEN HE STATED
SENDING PEOPLE TO MY HOUSE IS
OUT OF LINE. TOM, ANOTHER VICTIM
OF THE MERCHANT CASH ADVANCE
SCHEME, EXPERIENCED WHAT HE
CALLS A TON OF PSYCHOLOGICAL
WARFARE. HE RECEIVED LATE NIGHT
CALLS TO LECTURE HIM ON HIS
BUSINESS WHILE BEING OFFERED
MORE PREDATORY LOANS. FINALLY,
DAVE, A SUCCESSFUL TRAINER FOR
NEARLY 30 YEARS, PUT ALL HIS
SAVINGS INTO OPENING A GYM. HE
TOOK OUT FINANCING TO MAKE
IMPROVEMENTS TO THE SPACE. THEN
HE BROKE HIS FEMUR IN AN
ACCIDENT AND WAS UNABLE TO WORK
FOR A TIME, BUT HE STILL NEEDED
TO PAY HIS 6000 A MONTH IN
COMMERCIAL RENT, AND HE KEPT UP
WITH PAYMENTS UNTIL COVID HIT.
AND WE ALL KNOW WHAT HAPPENED
WHEN COVID HIT. MOST OF THE GYMS
CLOSED SOON. DAVE'S REVENUE WAS
INSUFFICIENT TO MAKE THE
REQUIRED PAYMENTS FOR HIS
FINANCING, AND THE FINANCING
COMPANY ENGAGED IN THE FOLLOWING
ABUSIVE PRACTICES. LEFT
THREATENING MESSAGE ON HIS
WIFE'S PHONE, TRACKED DOWN THE
INFORMATION OF HIS CUSTOMERS,
TELLING THEM ABOUT HIS DEBT, AND
THE FINANCE FINANCING COMPANY
SENT EMAILS TO HIS CLIENTS THAT
THE COMPANY WOULD PURSUE THEM TO
GET THE MONEY THEY WERE OWED.
THE EFFECT ON THE GYM WAS, OF
COURSE, DEVASTATING. SB 1286
SIMPLY ASKS THAT OWNERS OF SMALL
BUSINESSES BE TREATED WITHOUT
DECEIT, HARASSMENT OR
INTIMIDATION IN THE COLLECTION
OF THEIR BUSINESS DEBT, AND THAT
DEBT COLLECTORS PLAY NICE WHEN
TRYING TO COLLECT THEIR DEBTS.
THANK YOU FOR CONSIDERATION. I
RESPECTFULLY REQUEST AN AYE VOTE
ON SB 1286. GREAT. THANK YOU.
ANY OTHER WITNESSES IN SUPPORT
OF THE BILL? PLEASE JUST COME
FORWARD. NAME ORGANIZATION AND
POSITION. GOOD AFTERNOON, MADAM
CHAIR. MEMBERS. ROBERT HORRELL,
EXECUTIVE DIRECTOR OF THE
CONSUMER FEDERATION OF
CALIFORNIA. WE ARE PLEASED TO BE
A CO-SPONSOR WITH OUR SMALL
BUSINESS ALLIES ON THIS BILL.
THANK YOU. GOOD AFTERNOON, CHAIR
AND MEMBERS. BRIAN AUGUSTA, ON
BEHALF OF, CALIFORNIA COALITION
FOR COMMUNITY INVESTMENT AND
HOUSING AND ECONOMIC RIGHTS
ADVOCATES IN SUPPORT. THANK YOU.
DANNY KENDALL KAISER, ON BEHALF
OF THE CALIFORNIA LOW INCOME
CONSUMER COALITION, IN SUPPORT.
THANK YOU. ALL RIGHT. NOW, WE'LL
MOVE TO WITNESSES IN OPPOSITION.
LEAD WITNESSES MAY COME UP HERE
TO THE DAIS. AND WE CAN MAKE
ROOM IF THERE'S ROOM, MAYBE JUST
SCOOT. THERE'S ONLY. OKAY SO
WE'LL HAVE THE TWO. I DON'T KNOW
WHO WANTS TO. WHO WANTS TO
BEGIN? I CAN GO AHEAD. GOOD
AFTERNOON, MADAM CHAIR AND
MEMBERS. MELANIE CUEVAS WITH THE
CALIFORNIA BANKERS ASSOCIATION,
SINCERELY APPRECIATE THE WORK
OVER THE PAST WEEK OF THE
COMMITTEE, AS WELL AS THE
AUTHOR'S WILLINGNESS TO ACCEPT
THOSE COMMITTEE AMENDMENTS, IF
IT IS THE WILL OF THIS COMMITTEE
TO INCORPORATE SMALL BUSINESS
DEBTS INTO THE ROSENTHAL ACT, AN
ACT THAT IS SPECIFICALLY
DESIGNED TO ADDRESS INDIVIDUAL
CONSUMER DEBTS, THEN THESE
AMENDMENTS REPRESENT STEPS
TOWARDS IMPROVING THE MEASURE,
HOWEVER, WE HAVE TO REMAIN
OPPOSED BECAUSE THERE ARE
SIGNIFICANT ISSUES THAT REMAIN
THAT DESERVE SIMILAR THOUGHTFUL
CONTEMPLATION AND SOLUTIONS. FOR
EXAMPLE, THE MEASURE STILL
PRESENTS ISSUES WHEN A FAMILY
MEMBER IS AN EMPLOYEE OF THE
COMPANY OR WHERE ACTIONS CAN BE
FILED IN A CONSUMER CONTEXT.
THESE RESTRICTIONS WITHIN
ROSENTHAL MAKE SENSE. INDIVIDUAL
CONSUMERS SHOULD NOT HAVE TO GO
TO A FARAWAY COURT OF WHICH THEY
HAVE NO AFFILIATION. HOWEVER, IN
A COMMERCIAL CONTEXT, ACTIONS
ARE OFTEN REQUIRED TO BE BROUGHT
WHERE THE COLLATERAL IS LOCATED,
NOT WHERE THE BORROWER IS
LOCATED. AND THESE ISSUES REALLY
ILLUSTRATE THE CRUX OF OUR
OPPOSITION CONSUMER DEBT AND
COMMERCIAL DEBT ARE APPLES TO
ORANGES. ROSENTHAL IS MODELED
AFTER THE FAIR DEBT COLLECTION
PRACTICES ACT, AND THESE ACTS
CONTEMPLATE CIRCUMSTANCES
ASSOCIATED WITH CONSUMERS. THEY
DO NOT CONTEMPLATE THE NUANCES
ASSOCIATED WITH COMMERCIAL DEBTS
AND WITH BUSINESSES. IT'S ALSO
WORTHWHILE TO NOTE THAT THE
AUTHOR'S STATEMENT IN THE
COMMITTEE ANALYSIS INDICATES
THAT NONTRADITIONAL LENDERS ARE
NOT ACTING UNDER THE SAME
REGULATIONS AS TRADITIONAL
LENDERS. SO, MEMBERS, I ASK YOU
WHETHER SB 1286 METHOD IS A
PRACTICAL SOLUTION TO THE HEART
OF THE AUTHOR'S STATED ISSUE,
AND THE AUTHOR'S STATEMENT ALSO
FOCUSES ON MICRO BUSINESSES. AND
WE BELIEVE THAT THE THRESHOLDS
IN THE MEASURE DO NOT ACCURATELY
REFLECT THAT POPULATION. SO WE
WOULD RESPECTFULLY ASK FOR
ADDITIONAL RECONSIDERATION.
THERE IN THE TRADITIONAL LENDING
SPACE, COMMERCIAL LENDING GOES
THROUGH MORE RIGOROUS
UNDERWRITING UNDERWRITING THAN A
CONSUMER LENDING, EXCUSE ME. AND
SMALL BUSINESS BORROWERS ARE
ENTRUSTED WITH HIGHER LINES OF
CREDIT, IN PART DUE TO THE
SOPHISTICATION THAT IS NEEDED TO
ACCESS COMMERCIAL PURPOSE LOANS.
IF THE GOAL IS TO LOOK AT WAYS
TO SUPPORT SMALL BUSINESS
BORROWERS, WE WOULD CERTAINLY
RECOMMEND OR WELCOME A DIALOG,
AND WE WOULD BE HAPPY TO PROVIDE
FEEDBACK ON ALTERNATIVE METHODS
TO ACCOMPLISH THAT GOAL. SO IN
CLOSING, WE URGE THE COMMITTEE
TO SERIOUSLY CONSIDER WHETHER
THIS APPROACH, AND ESPECIALLY
THE ROBUST NATURE OF SUCH A
MASSIVE CHANGE TO EXISTING LAW,
IS THE APPROPRIATE METHOD AND
RESPECTFULLY REQUEST A NO VOTE
TODAY. THANK YOU. THANK YOU,
MADAM CHAIR CLIFF BERG, ON
BEHALF OF THE CALIFORNIA
ASSOCIATION OF COLLECTORS. FIRST
OFF, I DO WANT TO THANK THE
STAFF AT THE COMMITTEE FOR
WORKING CLOSELY WITH
STAKEHOLDERS IN THE ANALYSIS
CERTAINLY REFLECTS, I THINK, A
NUMBER OF THE CONCERNS AND THE
AMENDMENTS ARE MOVING IN THE
RIGHT DIRECTION, BUT I MEAN,
FUNDAMENTALLY, FUNDAMENTALLY,
THIS BILL PRESENTS A SIGNIFICANT
CHALLENGE TO THE BUSINESS
COMMUNITY AS IT TRIES TO JAM
INTO A LAW THAT IS DESIGNED
SPECIFICALLY FOR PROTECTING
INDIVIDUAL CONSUMERS, BUSINESSES
, BUSINESSES. WE HAVE REPEATEDLY
SUGGESTED TO THE AUTHOR, THAT
THIS THE APPROACH WHICH SHOULD
BE CHANGED TO CREATE A STAND
ALONE ACT AIMED AT THE DECEPTIVE
PRACTICES THAT HE HE ARTICULATED
TO THE COMMITTEE. CERTAINLY THE
COLLECTION INDUSTRY WHICH I
REPRESENT DOES NOT SUPPORT
DECEPTIVE PRACTICES AND WOULD
WOULD NOT CONDUCT MY MEMBERS
WOULD NOT DO DO THAT. BUT THIS
BILL GOES WAY BEYOND DEALING
WITH DECEPTIVE PRACTICES. THE
ROSENTHAL ACT CONTAINS VERY
DETAILED PROVISIONS REGARDING
INDIVIDUAL CONSUMER RIGHTS
RELATING TO HOW TO CONTACT THEM,
WHEN TO CONTACT THEM, WHO YOU
CAN CONTACT, WHO YOU CAN LEAVE
MESSAGES WITH AND IT JUST DOES
NOT FIT, THE ROSENTHAL ACT IS
NOT FIT FOR A BUSINESS MODEL,
THE WAY TO APPROACH THIS PROBLEM
WOULD BE TO LOOK AT THE
ROSENTHAL ACT, TAKE OUT OF THOSE
ACT, THOSE PROVISIONS THAT
RELATE TO DECEPTIVE PRACTICES,
AND CERTAINLY I THINK THE AUTHOR
COULD WORK WITH STAKEHOLDERS TO
COME UP WITH A BILL THAT
PROVIDES GOOD PROTECTION FOR
SMALL BUSINESSES. THRESHOLD
PROBLEM. WHO DOES THIS ACT EVEN
COVER, AND WHO'S GOING TO COVER?
AND HOW IS THE CREDITOR GOING TO
KNOW C , WHO THEY'RE DEALING
WITH WHEN THEY DEAL WITH IT? THE
BILL, AS IT'S CURRENTLY DRAFTED
AND IS PROPOSED TO BE AMENDMENT
SIMPLY DOES NOT BELONG IN THE
ROSENTHAL ACT, WHICH IS TAILORED
FOR INDIVIDUAL CONSUMERS.
THEREFORE, AS LONG AS THE BILL
CONTINUES IN ITS PRESENT FORM,
WE HAVE TO OPPOSE THIS MEASURE.
THANK YOU. ANY OTHER WITNESSES
IN OPPOSITION, PLEASE COME
FORWARD. STATE YOUR NAME,
ORGANIZATION AND POSITION. OH,
SORRY ABOUT THAT. HI. RODNEY
MEEKS, CREDIT CONSULTING
SERVICES, SALINAS, CALIFORNIA.
SO SORRY. THIS IS JUST NAME
POSITION AND OPPOSED. OKAY.
THANK YOU. SEAN DELUNA
COLLECTION. BUREAU OF AMERICA
OPPOSE MARY ROSE DIAZ WITH GRANT
MERCANTILE OPPOSED INDIRA
MCDONALD HERE ON BEHALF OF THE
CALIFORNIA MORTGAGE BANKERS
ASSOCIATION. THÀNH RESPECTFULLY
OPPOSE, UNLESS AMENDED, WE WOULD
ALIGN OUR COMMENTS WITH THOSE OF
THE CALIFORNIA BANKERS
ASSOCIATION. THANK YOU. TIM
LYNCH, ON BEHALF OF THE
RECEIVABLES MANAGEMENT
ASSOCIATION, THANKING THE
COMMITTEE FOR THEIR HARD WORK ON
THE BILL AND ALIGNING OUR
COMMENTS WITH THE CAC. LINDSAY
GOLDEN WITH CAPITAL ADVOCACY ON
BEHALF OF THE CALIFORNIA
COMMUNITY BANKING NETWORK, ALSO
RESPECTFULLY OPPOSED, UNLESS
AMENDED. THANKS SEAN. SIR, WITH
CONTINENTAL CREDIT CONTROL, A
POST STEPHEN ERNST, OWNER OF THE
INA GROUP AND OPPOSE. THANK YOU,
MADAM CHAIR AND SENATORS CLIFF
COSTA, ON BEHALF OF THE
CALIFORNIA CREDITORS BAR
ASSOCIATION, AND RESPECTFULLY
OPPOSE. UNLESS AMENDED POSITION,
MISS CUEVAS RAISED OUR ISSUES.
THANK YOU. GOOD AFTERNOON, CHAIR
AND MEMBERS. ROBERT WILSON,
CALIFORNIA CREDIT UNION LEAGUE
HERE IN OPPOSED UNLESS AMENDED
POSITION. THANK YOU. GOOD
AFTERNOON, MADAM CHAIR. AND
MEMBERS. ANGIE MINETTI HERE AS A
TWEENER, I REPRESENT COX
AUTOMOTIVE, WHO HAS NEXT GEAR
CAPITAL AS A SUBSIDIARY. WE'VE
BEEN IN DISCUSSIONS WITH THE
SENATOR'S OFFICE AND HIS STAFF
TO CLARIFY OUR UNIQUE LENDING
SCENARIOS AND CREDIT SCENARIOS
THAT WE PROVIDE FOR, A CAR FLOOR
PLAN LENDING. THANK YOU. WE LOOK
FORWARD TO CONVERSATIONS.
MEMBERS WILL TAKE IT BACK FOR A
DISCUSSION OR QUESTIONS, WE'LL
START WITH VICE CHAIR NILO.
THANK YOU, MADAM CHAIR. SENATOR
MIN, I REALLY DO APPRECIATE WHAT
IT IS YOU'RE TRYING TO DO. AND,
I THINK WE HAVE WE HAVE BUSINESS
LENDING, AND WE HAVE BUSINESS
LENDING. YOU MENTIONED, SMALL
BUSINESSES, PARTICULARLY IN
DISADVANTAGED AREAS, SOME WITH,
ENGLISH AS A SECOND LANGUAGE,
AND, I DO BELIEVE THERE IS A
DIFFERENCE. CGRTS. BUT TO IMPOSE
THOSE, ROSENTHAL FRANKLY, I
THINK EVEN PARTIALLY, TO A
BUSINESS LENDING, SITUATION IS
KIND OF LIKE A, AN OVAL PLAY PEG
IN A ROUND HOLE. AND I USE THAT
ANALOGY BECAUSE IT'S SIMILAR AS
OPPOSED TO A SQUARE PEG, AN OVAL
PEG IS SIMILAR TO THE ROUND PEG,
BUT IT'S NOT THE SAME, AND IT
WOULD SEEM TO ME THAT, TO PURSUE
THIS APPROACH WOULD BE TO TAKE A
NEW APPROACH, PERHAPS AS, WAS
SUGGESTED WITH REGARD TO TAKING
PIECES OUT OF ROSENTHAL. BUT BUT
REALLY, MAYBE CREATING A
SEPARATE, CIRCUMSTANCE OF
REGULATION FOR A PARTICULAR
CLASS OF BUSINESS, TO, WITH
APOLOGIES FOR THE MIXED
METAPHOR, I THINK TO APPLY
ROSENTHAL IS JUST A BRIDGE TOO
FAR. I TAKE IT THAT WAS A
STATEMENT, NOT A QUESTION. OR
WAS THAT A QUESTION? NO. OKAY.
AND THEY USED APPLE. THEY USED
APPLES AND ORANGES. SO THERE YOU
GO. I WOULD JUST NOTE AGAIN THAT
I AGAIN WANT TO THANK THE
COMMITTEE FOR THEIR HARD WORK
HERE. AND, YOU KNOW, WE
RECOGNIZE THAT THERE ARE
DIFFERENCES, BUT THAT IS ONE OF
THE REASONS WE TOOK THE
COMPREHENSIVE AMENDMENTS THAT
SPECIFICALLY BAR COMPANIES FROM
BEING INCLUDED HERE. SO THIS IS
PERSONAL INDIVIDUALS WHO ARE
COSIGNERS. AND I THINK THAT THAT
ADDRESSES THE ISSUES THAT WERE
RAISED IN THE INITIAL,
AMENDMENTS AND OPPOSITION
LETTERS, MAYBE NOT PERFECTLY.
I'M SURE THEY'D RATHER JUST SEE
THIS BILL GO AWAY, BUT I THINK
IT ADDRESSES A LOT OF THOSE
CONCERNS. AND OF COURSE, WE ARE
WILLING TO WORK ON ON THE
CONCERNS RAISED IN PARTICULAR BY
THE BANKERS ASSOCIATION AND ANY
OTHERS THAT THAT, YOU KNOW, ARE
WORTH TRYING TO ADDRESS, BECAUSE
I THINK THIS IS IMPORTANT TO GET
IT RIGHT. AND UNDERSTANDING THE
ORIGINAL PURPOSES OF THE
ROSENTHAL ACT, WE ARE TRYING TO
APPLY SOMETHING. BUT OF COURSE,
IF WE WERE TO TRY TO CREATE A
BRAND NEW FRAMEWORK THAT WOULD
BE A MONUMENTAL UNDERTAKING. AND
OF COURSE, I'M SURE MANY OF
THESE PEOPLE WOULD BE IN
OPPOSITION TO THAT AS WELL. BUT
WITH THAT, MAYBE I'D OPEN IT UP
TO MY WITNESS IF SHE HAS ANY
RESPONSE, I'D LIKE TO,
RESPECTFULLY POINT OUT THAT THE
NARRATIVE THAT THE FDCPA IS
INTENDED SOLELY FOR CONSUMERS IS
A LITTLE BIT OF A MISNOMER. IT'S
INTENDED TO PROTECT PEOPLE, AND
PEOPLE SHOULD BE TREATED WITH
DECENCY WHEN THEY'RE HAVING
THEIR BILLS COLLECTED. THAT'S
WHAT THIS BILL DOES. WE SEVER
THE TIE BETWEEN THE BUSINESS
ORGANIZATION ITSELF AND THE
BUSINESS OWNER. THIS BILL
APPLIES TO THE BUSINESS OWNER.
SO WHEN A BUSINESS OWNER SIGNS A
CONTRACT FOR A DEBT, AND IF THAT
DEBT HAPPENS TO BE FOR BUSINESS
PURPOSES, THEY WOULD BE SUBJECT
TO THE ROSENTHAL ACT. AND THE
SAME PROTECTIONS THAT ARE
CURRENTLY IN PLACE UNDER THE LAW
RIGHT NOW. WE ARE NOT EXPANDING
THE SCOPE OF THE PROTECTIONS.
WE'RE NOT CHANGING THE LAWS
AROUND THE PROTECTIONS. SOME OF
THE CONFUSION THAT COULD
POSSIBLY BE RAISED OR HAS BEEN
RAISED BY THE OPPOSITION, IT IT
QUESTIONS PARTS OF THE LAW THAT
ARE CURRENTLY HAPPENING. SO, FOR
EXAMPLE, UNDER 1788 12 I BELIEVE
IT'S D OR C WITH THE PART
TALKING ABOUT CONTACTING A
FAMILY MEMBER. RIGHT, LET'S SAY
A FAMILY MEMBER WORKS FOR THAT
SMALL BUSINESS. NOTHING CHANGES.
THE FACT THAT THAT COULD BE
HAPPENING RIGHT NOW. MAYBE AN
EMPLOYEE, IS EMPLOYED BY THEIR
FATHER, AND THEY'RE BEING
COLLECTED ON FOR THEIR PERSONAL
DEBT. THAT'S SUBJECT TO THE
FDCPA. THERE'S NO DIFFERENCE. WE
HAVEN'T CHANGED ANY PART OF THE
FDCPA REQUIREMENTS, ONLY
INCLUDING A SUBSET OF PEOPLE WHO
ARE REALLY FALLING IN A GRAY
AREA RIGHT NOW. ALL RIGHT. THANK
YOU. NEXT, SENATOR CAVALETTO,
THANK YOU VERY MUCH, MADAM CHAIR
, SO I YOU KNOW, I'VE LISTENED
TO THE ARGUMENTS AND I GUESS,
THE AMENDMENTS ARE FAIRLY
SIGNIFICANT. AND MY GUESS,
SENATOR, IS THAT YOU TOOK THESE
AMENDMENTS IN DEFERENCE TO SOME
OF THE OPPOSITION THAT WAS
RAISED, AND, AND, AND IN TRYING
TO FIT, THE THIS KIND OF CREDIT
INTO AN EXISTING FRAMEWORK THAT
ALREADY EXISTS THAT EVERYBODY
UNDERSTANDS HOW IT OPERATES.
RIGHT? I MEAN, I'M ASSUMING
THAT'S THE AND SO THE, THE
ARGUMENT THAT IT THERE ARE.
THAT, THAT THERE ARE, PROBLEMS
WITH THE WAY THAT THE, ROSENTHAL
ACTS, ROSENTHAL ACT ACTS, IN
REGARDS TO, BUSINESS LOANS,
LOANS TO INDIVIDUALS THAT OWN
SMALL, SMALL BUSINESSES, AND
WHAT'S YOUR RESPONSE TO THAT?
BECAUSE I'M, I WANT TO MAKE SURE
WE'RE BEING FAIR IN TERMS OF HOW
THIS OPERATES. YEAH. AND MY
READING OF IT WHEN I READ WAS
THAT IT THAT THE AMENDMENTS TOOK
CARE OF MOST OF THE ISSUES THAT
HAD BEEN RAISED. BUT I THINK
THAT THAT WAS MY READ AS WELL.
AND SO THE ISSUES THAT ARE BEING
RAISED HERE ARE, ARE, AT LEAST
TO ME, AS THE PRINCIPAL LEVEL,
MAYBE THEY WERE RAISED TO MY
STAFF, BUT THEY WERE NOT BROUGHT
TO MY ATTENTION PRIOR TO JUST
NOW. SO WE ARE HAPPY TO CONTINUE
WORKING TO TRY TO ADDRESS
DISCRETE CONCERNS THAT WHERE
THERE MIGHT BE AN APPETITE. BUT
I THINK THAT LOOK, AT THE END OF
THE DAY, WE'RE TALKING ABOUT
UNFAIR AND DECEPTIVE, NOT JUST
DECEPTIVE PRACTICES, BUT ALSO
UNFAIR ONES HARASSING ONES THAT
WHERE INDIVIDUALS ARE BEING
WE'RE TALKING ABOUT INDIVIDUAL
PEOPLE HERE ARE BEING, YOU KNOW,
JUST HARASSED, HARRIED, LED, YOU
KNOW, ALL THE THINGS THAT, YOU
KNOW, THE MOST UNSCRUPULOUS
MIGHT BE DOING TO TRY TO COLLECT
DEBTS, AND WE'RE TRYING TO
PROVIDE A FRAMEWORK THAT ALREADY
EXISTS FOR PROTECTING PEOPLE
FROM THOSE TYPES OF UNFAIR
PRACTICES. AND AGAIN, WE'RE
HAPPY TO TRY TO MAKE THE BILL
BETTER. WE'RE HAPPY TO WORK WITH
OPPOSITION AND ALL STAKEHOLDERS
ON PARTICULAR SCENARIOS. BUT WE
THINK THE OVERALL FRAMEWORK
MAKES SENSE HERE. AND IT IS
ADDRESSING A PROBLEM THAT IS
VERY CLEARLY HAPPENING AND MASS.
AND SO THIS IS NOT A PROBLEM. A
SOLUTION IN SEARCH OF A PROBLEM.
IT IS A PROBLEM WE'RE TRYING TO
ADDRESS. AND WE'RE WILLING TO
TAILOR IT AS NEEDED. I
APPRECIATE YOUR COMMENT ABOUT
CONTINUING TO WORK, AND I'LL
SUPPORT YOUR BILL TODAY, BUT,
WANT TO SEE WHAT SUCCESS YOU'VE
HAD BY THE TIME IT HITS THE
FLOOR? IF IT GETS THERE. THANK
YOU. THANK YOU. ALL RIGHT.
SEEING NO OTHER QUESTIONS, I
JUST WANT TO COMMENT. JUST A
LITTLE BIT ON WHAT I'VE HEARD.
SO ONE, JUST CLARIFY THAT THE
AMENDMENTS TAKEN TODAY AND
THEY'RE EXTENSIVE. THEY'RE ON
PAGE SEVEN AND EIGHT OF OUR
ANALYSIS, ARE TO THE ORIGINAL
CONCERNS OF OPPOSITION THAT WERE
BROUGHT UP. ADDITIONAL CONCERNS
HAVE BEEN BROUGHT UP, AND, YOU
KNOW, WHEN I WAS THINKING ABOUT
THIS, ONE OF THE QUESTIONS THAT
I ASKED IS, YOU KNOW, THE VALUE
IN CREATING A SEPARATE NEW LAW
VERSUS, FOLDING THIS INTO
EXISTING LAW. AND WHAT WAS
POINTED OUT TO ME WAS JUST THE,
THE OVERLAP IN THE SAME TYPE OF
THINGS THAT WE'RE TRYING TO
ACCOMPLISH FOR, INDIVIDUALS AND
ALSO FOR, FOR BUSINESS DEBT. SO
INDIVIDUAL DEBT VERSUS KIND OF
BUSINESS DEBT, BUT ALSO, YOU
KNOW, WHAT HAPPENS IS WHEN WE DO
WHEN WE DO KIND OF FOLD IT IN,
WE ARE GOING TO BE KIND OF
LEARNING ABOUT, OKAY, WELL, THIS
WAS FIXED AND HOLD ON, AS
OPPOSED TO CREATING A SEPARATE
LAW. RIGHT. AND EXEMPTING
SECTION BY SECTION BY SECTION.
SO I'M NOT SURE EITHER PROCESS
IS EASY, BUT I JUST WANT TO
RECOGNIZE THAT I THINK A LITTLE
BIT OF WHAT'S HAPPENING IN THIS
DISCUSSION IS A FUNCTION OF THE
METHOD THAT HAS BEEN CHOSEN OF,
YOU KNOW, TAKING AN EXISTING LAW
THAT HAS A LOT OF OVERLAP WITH
SIMILAR DESIRED OUTCOMES, AND
FOLDING IN A NEW TYPE OF DEBT
INTO THAT LAW. SO, YOU KNOW, I
WANT TO RECOGNIZE THAT. AND, YOU
KNOW, THERE ARE SOME SUBSTANTIAL
AMENDMENTS. AND I'M GLAD TO HEAR
THAT YOU WILL CONTINUE TO WORK
WITH THE OPPOSITION ON NEW
ISSUES RAISED, IN TODAY'S
HEARING, I THINK THAT THAT WILL
BE HELPFUL FOR THE SUCCESS OF
THE BILL AND THE IMPLEMENTATION,
SO WITH THAT, YOU'RE WELCOME TO
CLOSE. I THANK YOU FOR YOUR
THOUGHTFUL COMMENTS, AND I
RESPECTFULLY ASK FOR YOUR I VOTE
. THANK YOU. SO THIS BILL DOES
HAVE A DUE PASS, TO JUDICIARY.
AND, SO DO PASS AND REFER TO
JUDICIARY COMMITTEE, SO WE'LL GO
AHEAD AND CALL THE ROLL AS AN
AMENDMENT AS AMENDED, AS AMENDED
. AND NO. SO THANK YOU. SO, THE
AMENDMENTS NEED TO BE TAKEN IN
JUDICIARY BECAUSE OF THE TIMING,
WHICH IS THE COMMITTEE HEARINGS
TOMORROW, NEXT WEEK. SO THERE
YOU GO, BUT WE DON'T HAVE A
MOTION. SO WE HAVE A MOTION BY
SENATOR CAVALLERO. AND SO THIS
WILL AGAIN DO PASS AND RE REFER
TO THE COMMITTEE ON JUDICIARY,
WHERE AMENDMENTS WILL BE TAKEN
AND THE AMENDMENTS OUT ARE
OUTLINED IN PAGE EIGHT AND NINE
OF THE ANALYSIS WE'LL CALL THE
ROLL MOTION IS DUE PASSED TO
COMMITTEE ON JUDICIARY. SENATOR
LIMÓN I LIMÓN I NILO NØ. NILO NØ
BRADFORD CABALLERO CABALLERO I
MINH I MEAN I NGUYEN NØ NGUYEN
NØ PORTANTINO PORTANTINO I 42.
ALL RIGHT. THAT BILL HAS, FOUR
VOTES IN SUPPORT AND TWO IN
OPPOSITION. THAT BILL DOES MOVE
OUT OF COMMITTEE. ALL RIGHT.
MEMBERS. SO THAT WAS OUR FINAL
BILL. WE WILL NOW LIFT THE CALLS
AND OPEN THE ROLL. AND WE WILL
GO THROUGH EACH MOTION. START
WITH THE CONSENT. SO WE'RE GOING
TO GO AHEAD AND START WITH
CONSENT. CONSENT ITEMS FOR
SENATE BILL 1146 AND SENATE BILL
1521 CONSENT CALENDAR. CHAIR
VOTING AYE. SENATOR CABALLERO.
AYE. PORTANTINO PORTANTINO. AYE
SEVEN SEVEN. ALL RIGHT. SO THE
CONSENT CALENDAR HAS SEVEN VOTES
IN SUPPORT. NEXT WE WILL MOVE TO
SENATE BILL 1146. I'M SORRY.
THAT WAS CONSENT. SORRY. SENATE
BILL 919 UMBERG MOTION IS DUE.
PASS TO JUDICIARY WITH THE CHAIR
VOTING AYE. CABALLERO.
CABALLERO. AYE. PORTANTINO
PORTANTINO. AYE. NGUYEN. NGUYEN
NO. ALL RIGHT. SO THAT BILL
MOVES OUT OF COMMITTEE WITH A61
VOTE. NEXT BILL IS SENATE. WE
JUST AND WE WERE ACTUALLY ABLE
TO CLOSE THE ROLL ON THE SENATE
BILL 1482. I THINK EVERYBODY
12-1. 1201 1201 SORRY. SENATE
BILL 1201 MOTION IS DUE. PASS TO
COMMITTEE ON APPROPRIATIONS WITH
THE CHAIR VOTING AYE. SENATOR
PORTANTINO AYE. PORTANTINO AYE
HAS 5123455. ALL RIGHT. SO THAT
IS 522. SO THAT BILL MOVES OUT
OF COMMITTEE. AND SO WITH THAT
WE WILL GO AHEAD AND ADJOURN ON