Business and Economic Development (BED) Policy Committee

A RESOLUTION URGING POLICYMAKERS AND INDUSTRY TO REMOVE BARRIERS TO FINANCIAL INCLUSION

WHEREAS, information from credit reports are widely used by financial institutions to assess eligibility for mortgages, credit cards, student loans, personal loans, retail credit and other consumer credit, as well as for many small business loans;

WHEREAS, consumers with limited credit histories can be placed into two groups, the first group is comprised of consumers without NCRA credit records, who are referred to as “credit invisible,” and the second group includes consumers who, while they have NCRA credit records, have records that are considered “unscorable” meaning they contain insufficient credit histories to generate a credit score;

WHEREAS, as of 2010, the Consumer Financial Protection Bureau (CFPB) found that 26 million consumers in the United States were credit invisible, representing about 11 percent of the adult population, and an additional 19 million consumers, or 8.3 percent of the adult population, had credit records that were treated as unscorable by a commercially-available credit scoring model;

WHEREAS, in 2016, nearly one in five consumers have no credit history or credit score;

WHEREAS, an insufficient credit history disproportionately impacts minority consumers, the CFPB found that About 15 percent of Blacks are credit-invisible (compared to 9 percent of Whites and Asians) and an additional 13 percent of Blacks (compared to 7 percent of Whites) and that these credit histories differences are observed across all age groups, suggesting that these differences materialize early in the adult lives of these consumers and persist thereafter;

WHEREAS, barriers to credit access often force consumers to resort to high-cost short-term loans that may not help build a credit history;

WHEREAS, while a consumer may not have a credit card or mortgage to build credit, they regularly make payments on their utility, rent, and wireless phone bills, yet this payment information only appears on a credit report when a consumer is in collection, not when bills are paid on- time;

WHEREAS, according to the study conducted by Pew Research Center in 2018, 98% of African-American adults own a cell phone, yet are not able to build credit from on-time payments; and

WHEREAS, research by the Policy and Economic Research Council in 2006 showed that incorporating utility payments could lift the number of scorable borrowers by more than 60 percent, while the inclusion of phone payment data could result in an increase in the number of scorable borrowers by more than 67 percent.

THEREFORE BE IT RESOLVED, that the National Black Caucus of State Legislators (NBCSL) calls upon policymakers at the state and federal level to reduce barriers to the reporting of payment data from utilities, telecommunication companies and rental agencies only if the reporting of utilities does not preclude consumers from getting necessary utility services or negatively impact the credit scores of consumers;

BE IT FURTHER RESOLVED, that the NBCSL calls on the national wireless communication, utility, and rental companies to report payments to the nationwide consumer reporting agencies so consumers can benefit from making regular on-time payments;

BE IT FURTHER RESOLVED, that the NBCSL encourages the use of utility payment, wireless, telephone and rental agencies to report payment data to bolster the credit file of consumers who otherwise lack creditworthiness if the reporting of utilities does not preclude consumers from getting necessary utility services or negatively impact the credit scores of consumers; and

BE IT FINALLY RESOLVED, that a copy of this Resolution be transmitted to the President of the United States, the Vice President, Members of the United States House of Representatives and the United States Senate, and other federal and state elected and appointed government officials as appropriate.

• SPONSOR: Representative Billy Mitchell (GA)
• Committee of Jurisdiction: Business and Economic Development Policy Committee
• Certified by Committee Chair: Representative W. Curtis Thomas (PA)
• Ratified in Plenary Session: Ratification Date is November 30, 2018
• Ratification is certified by: Representative Gregory W. Porter (IN), President

RESOLUTION TO ADVANCE CONSUMER PROTECTION IN ONLINE LEAD GENERATION

WHEREAS, according to the Federal Trade Commission (“FTC”), lead generation is the process of identifying and cultivating individual consumers who are potentially interested in purchasing a product or service;

WHEREAS, “lead generation” means to initiate consumer interest or inquiry in consumer financial products through online marketing, direct response advertising, telemarketing, or other similar consumer contact; engage in the business of selling leads for loans; generate or augment leads for other persons for, or with the expectation of, compensation or gain; or refer consumers to other persons for loans for, or with the expectation of, compensation or gain;

WHEREAS, a lead may consist of consumer’s information, including consumers’ names, addresses, occupations, telephone numbers, home and email addresses, military statuses, credit ratings, dates of birth, bank routing and account numbers, employers’ names, and pay schedules, or may involve more detailed and potentially sensitive information such as Social Security or consumer account numbers;

WHEREAS, the goal of online lead generation is to connect companies with consumers so that they can convert leads generated online into sales;

WHEREAS, according to the FTC, online lead generation is nearly ubiquitous in the modern marketplace but, because they operate behind the scenes, consumers and many businesses know little about what they do and how they do it;

WHEREAS, the Consumer Financial Protection Bureau (“CFPB”) has found that some lead generation companies have failed to ensure that consumers were adequately informed about the use and selling of personal information during the lead generation process;

WHEREAS, the FTC also recognized that the lead generation process is often not transparent about consumer information going to lender instead of the lead generator, being sold multiple times, or being auctioned off to the highest bidder irrespective of that bidder’s legitimate need for that information;

WHEREAS, the process of collecting, preparing, and selling consumer leads can be quite complex, and the roles played by different entities in the lead ecosystem can vary and overlap significantly;

WHEREAS, the lead generation ecosystem is typically comprised of: publishers, which are the consumer-facing websites which encourage consumers to submit information in order to connect with certain products; aggregators, which collect consumer information from multiple publishers in order to consolidate the data for sale to end buyer; and the end-buyer of the leads, often lenders seeking to acquire new customers;

WHEREAS, the payday and installment lending lead generation industry, in particular, is a significant part of the lead marketplace, where lenders employ lead generators to cater to consumers seeking unsecured personal loans. To immediately underwrite and fund such loans, many lenders ask their lead generators to collect detailed personal and financial information associated with each loan application, including the consumer’s employers, Social Security number, and financial account numbers;

WHEREAS, consumers are often unaware that their information is going to a lead generator and not an actual lender;

WHEREAS, consumers are often unaware that their information may be further sold to a “data aggregator” which take the leads from various websites, consolidates them and prepares them for sale to lenders;

WHEREAS, consumers are also often unaware that, behind the scenes, their information may also be sold multiple times to multiple lenders interested in their information in order to make an offer;

WHEREAS, the consumer also unaware that the offer made to that consumer is often from the lender which paid the most for that lead, not necessarily the lender with the best product for that consumer;

WHEREAS, because lead generators are often not transparent about the parties involved in a particular transaction, it is often hard for consumers to know exactly which entity has access to their sensitive personal information;

WHEREAS, because of that same difficulty in identifying the parties involved, some experts believe that this creates a situation where lead generators are more likely to engage in deceptive marketing, knowing that it is difficult to identify exactly which entity made the deceptive representations;

WHEREAS, the FTC and the CFPB have taken enforcement actions against lead generators for misrepresenting the products being offered, misrepresenting the use of consumer’s personal information or for selling consumer’s information without verifying that the entities purchasing the consumer information are engaged in legitimate businesses and are appropriately licensed to operate in the states in which they are offering consumer financial products; and

WHEREAS, the practice of lead generation in lending results in potentially unlawful conduct and the lack of transparency by lead generators makes it difficult for consumers and regulators to hold lenders and the lead generators accountable.

THEREFORE BE IT RESOLVED, that the National Black Caucus of State Legislators (NBCSL) supports the creation of a regulatory framework which, 1) requires lead generators to be registered and/or licensed with state regulators prior to facilitating or brokering any loans to consumers; 2) subjects those lead generators to state examination authority; 3) requires lead generators to provide clear disclosures and contact information to consumers of those who have been given access to consumer information; 4) ensures that lead generators are subject to both state and federal consumer financial protections including, but not limited to, the Truth In Lending Act and requirements against Unfair, Deceptive and Abusive Acts and Practices and/or regulations on lead generation from the Federal Trade Commission and the Consumer Financial Protection Bureau, among others; and 5) precludes lead generators from selling leads to lenders which are themselves, not licensed or registered to offer those loans in a given state;

BE IT FURTHER RESOLVED, that lead generators should not violate the lending laws in the states that they operate;

BE IT FURTHER RESOLVED, that lead generators should not fail to clearly and conspicuously identify the lead generator and the purpose of the contact in its written and oral communications with a consumer;

BE IT FURTHER RESOLVED, that lead generators should not fail to provide the ability to opt out of any unsolicited advertisement communicated to a consumer via an electronic mail address;

BE IT FURTHER RESOLVED, that lead generators should not sell, lease, exchange or otherwise transfer or release the electronic mail address or telephone number of a consumer who has requested to be opted out of future solicitations;

BE IT FURTHER RESOLVED, that lead generators should not collect, buy, lease, exchange or otherwise transfer or receive an individual’s Social Security number or bank account number to any person or entity which does not have a legitimate business need for that information;

BE IT FURTHER RESOLVED, that lead generators should not use information from a trigger lead to solicit consumers who have opted out of firm offers of credit under the federal Fair Credit Reporting Act;

BE IT FURTHER RESOLVED, that lead generators should not represent to the public, through advertising or other means of communicating or providing information, including, but not limited to, the use of business cards or stationery, brochures, signs or other promotional items, that such lead generator can or will perform any other activity requiring licensure under this title, unless such lead generator is duly licensed to perform such other activity or exempt from such licensure requirements;

BE IT FURTHER RESOLVED, that lead generators should not refer applicants to, or receive a fee from, any person who is required to be licensed under this title, but was not so licensed as of the time of the performance of such lead generator’s services;

BE IT FURTHER RESOLVED, that lead generators should not assist or aid and abet any person in the conduct of business requiring licensure under this title when such person does not hold the license required; and

BE IT FINALLY RESOLVED, that the NBCSL send a copy of this resolution to the President of the United States, the Vice President of the United States, members of Congress, and other federal and state government officials as appropriate.

• SPONSOR: Delegate Angela Angel (MD)
• Committee of Jurisdiction: Business and Economic Development Policy Committee
• Certified by Committee Chair: Representative W. Curtis Thomas (PA)
• Ratified in Plenary Session: Ratification Date is November 30, 2018
• Ratification is certified by: Representative Gregory W. Porter (IN), President

A RESOLUTION SUPPORTING MINORITY-OWNED SMALL BUSINESS GROWTH AND RESPONSIBLE LENDING

WHEREAS, the National Black Caucus of State Legislators (NBCSL) has always been committed to the financial empowerment of African-Americans through increased access to capital and banking services, as well as local economic growth through small business entrepreneurship;

WHEREAS, small businesses are a proven driver of local job creation and economic development;

WHEREAS, the NBCSL has previously affirmed its support for providing small business loans and technical assistance to businesses owned by women of color via Resolution BED-17-10 “A RESOLUTION TO PROMOTE INCREASING EDUCATIONAL, ECONOMIC, AND ENTER PRENEURIAL OPPORTUNITIES FOR WOMEN AND GIRLS OF COLOR”;

WHEREAS, according to the most recent Survey of Business Owners from the U.S. Census Bureau released in 2016, there are 8.0 million minority-owned firms nationally, and 2.6 million were African American-owned firms;

WHEREAS, minority-owned firms account for 28.8 percent of all U.S. firms in 2012, and receipts for minority-owned firms reached $1.4 trillion;

WHEREAS, despite these numbers, in 2013 the U.S. Small Business Administration determined that the major constraint limiting the growth, expansion, and wealth creation of small firms—especially women- and minority-owned businesses—is inadequate capital;

WHEREAS, the stringent lending standards that many financial institutions adopted after the 2007-2009 financial crisis left many business owners, particularly small business owners, with decreased access to capital;

WHEREAS, availability of loans and other capital is crucial for small business start-up, survival, and growth;

WHEREAS, not all loan types are equally safe and affordable, and the structure of certain loans significantly increases the likelihood of borrowers falling into a cycle of debt;

WHEREAS, responsibly structured loans are essential to support a business’ ability to grow and provide a foundation for other community wealth-building activities;

WHEREAS, all qualified small business owners should have an equal opportunity to access affordable capital, as well as access to the broader financial system;

WHEREAS, at the White House Financial Technology (“FinTech”) Summit in June 2016, Cabinet Secretaries and senior officials from across the Obama Administration engaged with stakeholders about the potential for fintech to further policy goals, including small business access to capital and financial inclusion;

WHEREAS, since that time, some FinTech companies have worked to increase small business access to affordable capital; and

WHEREAS, working papers published by the Federal Reserve Bank of Philadelphia in 2018 concluded that FinTech lending has improved access to credit for consumers at a lower cost, and penetrated areas that may be underserved by traditional banks.

THEREFORE, BE IT RESOLVED, that the National Black Caucus of State Legislators (NBCSL) encourages lending and other programs that foster the growth of women- and- minority-owned small businesses;

BE IT FURTHER RESOLVED, that the NBCSL encourages FinTech companies to provide small business capital fairly to all communities;

BE IT FURTHER RESOLVED, that the NBCSL encourages federal, state, and local governments to promote responsible small business lending and financial innovation through strategic partnerships; and

BE IT FINALLY RESOLVED, that a copy of this resolution be transmitted to the President of the United States, the Vice President of the United States, members of the United States House of Representatives and the United States Senate, and other federal and state government officials as appropriate.

• SPONSOR: Senator Anastasia Pittman (OK)
• Committee of Jurisdiction: Business and Economic Development Policy Committee
• Certified by Committee Chair: Representative W. Curtis Thomas (PA)
• Ratified in Plenary Session: Ratification Date is November 30, 2018
• Ratification is certified by: Representative Gregory W. Porter (IN), President

A RESOLUTION PROMOTING THE ECONOMIC AGENDA OF BLACK WEALTH 2020

WHEREAS, the Black Wealth 2020 Coalition works to advance a plan to increase wealth for Black families nationally through a three-pronged strategy aimed at Increasing Black homeownership, expanding opportunities for Black-owned businesses and enhancing support for Black-owned financial institutions;

WHEREAS, legislators have a significant role to play in key components related to empowering, organizing and mobilizing constituents to develop a sustainable ecosystem that will lessen the social problems plagued by the rapid decline of Black wealth in any community;

WHEREAS, the Center for American Progress reports that African-Americans are more vulnerable to economic insecurity and therefore are in greater need of wealth;

WHEREAS, well-documented history of mortgage market discrimination, employment discrimination, and other discriminatory practices has aided in the persistent wealth disparity among Black Americans and has continued to create a vicious cycle of economic struggle;

WHEREAS, racial wealth disparity indicators are analyzed to illustrate the urgent economic needs of a historically marginalized race in America;

WHEREAS, the National Black Chamber of Commerce reports that there are only 2.6 million Black-owned businesses in the United States, whereas the U.S. black population is estimated to be over 40 million;

WHEREAS, the National Association of Real Estate Brokers noted that 27.6 percent of black applicants for conventional mortgage loans were denied in 2013 while white applicants were denied only 10.4 percent of the time;

WHEREAS, the number of Black-owned banks operating ln the U.S. has been dropping steadily for the past 15 years and fell to 23 this year, the lowest level in recent history, according to the Federal Deposit Insurance Corp;

WHEREAS, Black Wealth 2020 aims to unite some of the most historic national economic, civic and civil rights organizations with a goal to impact economic outcomes in Black America through the year 2020 and beyond;

WHEREAS, the economic goals of Black wealth 2020 have historic roots, referencing to when Dr. Martin Luther King Jr. had launched the “Poor People’s Campaign”, an economic justice movement that had begun in Memphis; the founders of Black Wealth 2020 view their work as a continuum of Dr. King’s vision, with a unique contemporary strategy for sustainability;

WHEREAS, the coalition members are the heads of organizations with strong economic interests and roots In the African-American community regularly meet to discuss ways that Black Wealth 2020 can close the racial wealth divide in the country and spur economic growth for Black people; and

WHEREAS, a specific type of government supported “grass root” initiative can be implemented throughout the nation with strategic planning and economic market analysis.

THEREFORE BE IT RESOLVED, the National Black Caucus of State Legislators (NBCSL), encourages state policymakers and their membership to establish a Black Wealth 2020 economic task force designed to develop economic building blocks for the African-American population to addresses racial wealth gap;

BE IT FURTHER RESOLVED, that the NBCSL encourages state policymakers and their membership to analyze the geopolitical landscape of their respective districts with statewide and national data to create an economic assessment of their area by evaluating factors from race, age, workforce, unemployment, businesses by industry, types of households, income, banked and underbanked population, and number of black-owned financial institutions in an effort to access the feasibility of a Black Wealth 2020 agenda;

BE IT FURTHER RESOLVED, that the NBCSL encourages state policymakers and its membership to set clear goals based on the economic assessment by identifying Initiatives that foster growth and sustainability within the three-pronged strategy targeted at homeownership, small business and banking;

BE IT FURTHER RESOLVED, that the NBCSL supports the Black Wealth 2020 economic agenda as a “solution-oriented” initiative designed to be driven by community stakeholders including but not limited to clergy, nonprofits, business owners, civic associations block associations, community boards, school clubs to HBCUs;

BE IT FURTHER RESOLVED, that the NBCSL urges state representatives to develop and implement state and community-based intervention programs aimed to address historical and systematic barriers to homeownership, small business and access to capital;

BE IT FURTHER RESOLVED, that the NBCSL urges Congress to fully support and fund the Minority Business Development Association, which is an agency of the U.S. Department of Commerce that promotes the growth of minority-owned business through the mobilization and advancement of public and private sector programs, policy, and research;

BE IT FURTHER RESOLVED, that the NBCSL members introduce effective legislation that will address the systemic inequality in the real estate industry, banking industry, the small business industry;

BE IT FURTHER RESOLVED, that the NBCSL supports the need for minority and women-owned banks to have direct access to legislators and regulators who have significant influence over the framework of authority, powers and general responsibilities of the financial services industry;

BE IT FURTHER RESOLVED, that the NBCSL encourages banks to increase lending in Black communities by investing in homeownership and entrepreneurial opportunities to current residents and emerging local businesses;

BE IT FURTHER RESOLVED, that the NBCSL encourages banks to support neighborhoods with rehabilitation loans, microlending for small businesses and Community Reinvestment Act homeownership products to serve the needs of the communities identified as communities of color stressed by gentrification;

BE IT FURTHER RESOLVED, that the NBCSL urges banks to make deposits or significant Investments to set numeric goals and commitments to low-income and minority communities;

BE IT FURTHER RESOLVED, that the NBCSL work with banks to release their small business lending data on loan applications, approval and refusals to minority and women-owned businesses;

BE IT FURTHER RESOLVED, that the NBCSL encourages states to increase investments in partnerships with housing, consumer finance, small business counseling agencies and organizations that provide counseling and technical assistance to prepare community members for homeownership, entrepreneurship, educates Black communities on the value of generational wealth accumulation;

BE IT FURTHER RESOLVED, that the NBCSL investigate policies that promote the unequal distribution of wealth by race and institutionalized obstacles Blacks face in building wealth;

BE IT FURTHER RESOLVED, that the NBCSL urges federal, state and local elected officials to support funding for public land grants for African-Americans for residential and commercial use; and

BE IT FINALLY RESOLVED, that a copy of this resolution be transmitted to the President of the United States, the Vice President of the United States, members of the United States House of Representatives and the United States Senate, and other federal and state government officials as appropriate.

• SPONSORS: Representative Gregory Porter (IN) and Senator James Sanders Jr. (NY)
• Committee of Jurisdiction: Business and Economic Development Policy Committee
• Certified by Committee Chair: Representative W. Curtis Thomas (PA)
• Ratified in Plenary Session: Ratification Date is November 30, 2018
• Ratification is certified by: Representative Gregory W. Porter (IN), President