House Committee on Business Affairs and Labor (04/14/2010)

Final
STAFF SUMMARY OF MEETING

HOUSE COMMITTEE ON BUSINESS AFFAIRS AND LABOR

Date:	04/14/2010	ATTENDANCE

Time:	11:52 AM to 12:28 PM	Balmer	X
		Bradford	X
Place:	HCR 0112	Casso	X
		Kerr A.	X
This Meeting was called to order by		Liston	X
	Representative Rice	Middleton	*
		Priola	X
This Report was prepared by		Soper	X
	Christie Lee	Stephens	X
		Gagliardi	X
		Rice	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
HB10-1400		Amended, Referred to the Committee of the Whole

11:52 AM -- House Bill 10-1400

Representative Apuan, prime sponsor, presented House Bill 10-1400 concerning refund anticipation loan facilitators, and, in connection therewith, requiring refund anticipation loan facilitators to be registered as electronic return originators with the U.S. Internal Revenue Service and to make certain disclosures when facilitating refund anticipation loans. This bill creates the Refund Anticipation Loans Act and restricts the practice of offering short term loans to consumers in anticipation of the consumer receiving a tax refund. Individuals who facilitate a refund anticipation loan must be employed by an electronic return originator, i.e., a person or company authorized by the U.S. Internal Revenue Service to originate the electronic submission of income tax returns.

A refund anticipation loan may not be given unless the loan facilitator communicates the following information verbally, on a sign posted in the office, and with a written statement:

a schedule of fees, including examples of interest rates for different loan amounts up to $5,000;
the duration, applicable fees, interest rates, and other conditions of the loan;
the estimated time necessary to receive the anticipated refund; and
where to make complaints about the refund anticipation loan.

Any person who violates the provisions of the bill commits an unclassified misdemeanor. The administrator of the Uniform Consumer Credit Code in the Colorado Department of Law is responsible for enforcement and is authorized to receive and act on complaints or to act on the administrator's own initiative. The bill is repealed on September 1, 2019, following a sunset review.

11:58 AM

Representative Rice clarified that the bill does not ban the practice, but simply requires disclosure. Representative Apuan concurred. Representative Stephens asked a question about the Bell Policy Center. Representative Apuan read a prepared statement from the Bell Policy Center (Attachment A). Representative Liston asked whether the companies that issue these types of loans were involved in the discussions around this legislation. Representative Apuan responded.

12:02 PM -- Ben Hanna, representing the Colorado Progressive Coalition, testified in support of the bill. He talked about the confusion consumers who receive these loans have due to the lack of disclosure when obtaining the loan. Representative Liston asked how much an average refund anticipation loan is for. Mr. Hanna deferred to later witnesses who would speak on that issue. Representative Liston asked a follow-up question to which Mr. Hanna responded.

12:07 PM -- Bridget Kaminetsky, representing 9 to 5, the National Association of Working Women, testified in support of the bill and talked about the importance of disclosures.

12:08 PM -- Chris Lines, representing the Colorado Department of Regulatory Agencies, testified in support of the bill and talked about the sunrise analysis that was prepared by the department. He said the department did find that there is harm to the public within this industry.

12:10 PM -- Laura Udis, representing the Colorado Attorney General's Office, Consumer Credit Unit, was asked to come to the table to respond to questions. She explained that her office would enforce the law if it were to pass and talked about some technical amendments the office suggested in order to clarify the bill. Representative Stephens asked what the bill will cost her office if the bill were to pass. Ms. Udis explained that the bill is a disclosure bill and does not require registration. Representative Stephens asked how Colorado compares to other states regarding regulation of this industry. Ms. Udis said Colorado is at the least restrictive end and mentioned that most states have a registration requirement. Representative Stephens asked whether there have been many consumer complaints against these companies. Ms. Udis explained that they have received very few complaints in regard to this industry, but believes it is due to the office's current lack of regulation over the industry.

12:15 PM -- T.A. Taylor-Hunt, representing the Colorado Center on Law and Policy, testified in support of the bill. Ms. Taylor-Hunt addressed some of the questions that were asked earlier by the committee. She talked about the number of taxpayers who receive these types of loans. Ms. Taylor-Hunt talked about the Earned Income Tax Credit and the effects the loan fees have on consumers who receive the credit. She talked about the types of consumers who use these loans and how the disclosures would help them in making a decision on whether to obtain a loan or not. Representative Liston asked whether a sample contract is available that he could review. Ms. Taylor-Hunt said she would provide one to Representative Liston and explained how these loans differ from other types of loans. Representative Liston commented on refund anticipation loans and how they are currently handled. Ms. Taylor-Hunt responded.


BILL:	HB10-1400
TIME:	12:24:23 PM
MOVED:	Gagliardi
MOTION:	Moved amendment L.001 (Attachment B). The motion passed without objection.
SECONDED:	Casso
		VOTE
	Balmer
	Bradford
	Casso
	Kerr A.
	Liston
	Middleton
	Priola
	Soper
	Stephens
	Gagliardi
	Rice
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

12:26 PM

Representative Apuan gave some closing remarks on the bill.


BILL:	HB10-1400
TIME:	12:27:31 PM
MOVED:	Gagliardi
MOTION:	Moved to refer House Bill 10-1400, as amended, to the Committee of the Whole. The motion passed 9-2.
SECONDED:	Middleton
		VOTE
	Balmer	No
	Bradford	Yes
	Casso	Yes
	Kerr A.	Yes
	Liston	No
	Middleton	Yes
	Priola	Yes
	Soper	Yes
	Stephens	Yes
	Gagliardi	Yes
	Rice	Yes
Final YES: 9 NO: 2 EXC: 0 ABS: 0 FINAL ACTION: PASS

12:28 PM

The committee adjourned.