Vermont Legislature SmartTranscripts:

[Michael Marcotte (Chair)]: Good afternoon, everyone. This is the Vermont House Committee of Commerce and Economic Development. It is Friday, 02/13/2027, 01:05 in the afternoon. This afternoon, we will be looking at a draft of OH-three 85, which is an act related to remedies and protections for victims of coarse death. So first, we'll hear from our legislative counsel, Maria Royal. And we have other witnesses that we hear from.

[Maria Royal (Legislative Counsel)]: Logan? Maria Royal? Legislative Council. Excellent. So I will walk through the latest draft 1.1 dated today, this morning, because there were a couple of one point tens in the interim. So all of the changes that we went through last week have been incorporated except for the ones that were just I have a note kind of still to be determined. So those are highlighted here as well as some additional revisions for your consideration. So we will just go through the revisions. On page two, a couple changes in the definition of coerced debt. One change is just to specify that the forms of coercion that are identified are within the context of domestic abuse, human trafficking, or the abuse, neglect, or exploitation of a vulnerable adult. Just links together who a debtor is and what the coercion is, and the coercion happened in that context. There was a concern raised, as you can see what's highlighted there in Roman numeral one on line seven, the use of the debtor's personal information without the debtor's knowledge authorization, that that seems to align with the definition of identity theft. And without tying it also to this context of domestic abuse, it seemed to open it up maybe a little bit more broadly than was intended. So that was the reason, for adding the language on line five and putting back in what is now Roman numeral one. Also in that definition subdivision b, this was the section that specifies that the debt was not subject to a final judgment in an action, specifically in a dissolution of marriage or some other collection matter. The concern was raised that that might be too broad, and really specify that there could be those prior judgments where maybe at the time the debtor was not represented by an attorney, and that might be a matter that could be looked at again. The prior order might be vacated in light of new evidence. But that it regardless, it made sense to say, was not subject to a final judgment in an action in which the court adjudicated the issue of course debt on the merits. So if they already looked at the issue and that was fully vetted, then it would not qualify instead for the purposes of the subject. In the definition, just a cross reference to the statutory definition of commercial loan. Just a note, I don't have language for you. I'm not sure if this is something that's going to be qualified. But this specifies that with respect to secured debt, it only include the coerced debt only includes the debtor's liability for any deficiency after the foreclosure, repossession, or surrender and disposition of the subject collateral. Some questions were raised about what if the collateral cannot be repossessed? If it's not known where it is, if it's a car, it's driven out of state, perpetrator's not known, how is that liability then handled? So there may be some additional I just wanted to note that. No new language here, but that's something that was raised. Do we think that

[Edye Graning (Vice Chair)]: the language needs additional definitions, right? Or is that a policy question?

[Charlie Gliserman (Policy Director, Vermont Network Against Domestic and Sexual Violence)]: I don't know how it would

[Maria Royal (Legislative Counsel)]: be handled if, in fact, the collateral could not be located. Because you're saying that the debtor is only liable for the deficiency, but how do you calculate the deficiency if you don't have the collateral? So we need to mean, it might be something that creditors kinda deal with and can come up with some language to make sure the intent is so I don't know, actually, how they would handle that. So probably the biggest issue for your consideration is the creditor's conduct once they receive a statement of coercedent and adequate documentation. And I've just summarized the options in one and two here. One option is if the creditor receives the properly filled out all the documentation, then at that point, the creditor has to cease all collection activities entirely. And the remedy would be to enforce try to enforce the debt in a court of law. So that's one option.

[Michael Marcotte (Chair)]: They'd have to seize if they were two creditors, one

[Maria Royal (Legislative Counsel)]: Two creditors?

[Michael Marcotte (Chair)]: Well, it could have been two take a joint. One is coerced, so you have two people, they take out a joint loan. They both sign for Maybe

[Maria Royal (Legislative Counsel)]: a portion of the debt. So then just the portion of the debt attributed, you know, quote, unquote, wrongfully

[Michael Marcotte (Chair)]: Right.

[Maria Royal (Legislative Counsel)]: To the debtor, that debtor could not be pursued by any collection activities.

[Michael Marcotte (Chair)]: Yeah. Somebody could be a cosigner.

[Maria Royal (Legislative Counsel)]: Yep. Just with with respect to the debtor. And then so the other option which we kind of talked to last through last week is and I haven't changed it here. I just noted a couple of sections that might need to be tightened up, but it really depends tightened up. But it depends which option you wanna go with. It's to have the creditor review any other information in the debtor's file, make a determination as to whether or not they agree or dispute the claim of debt. If they dispute the claim, then they could commence collection activities subject to the Debt Collection Practices Act. But if the debtor doesn't pay, they would still have to go to court to enforce the judgment. So there's a review period. There's a possibility of the creditor deciding to cease collection, finding that it it appears to be coerced debt and maybe trying to pursue the perpetrator, or disputing it, recommencing collection activities, if that's unsuccessful, then going to court. So two options for your consideration. So, yeah, I don't want to get putting the part in front of the horse, but I just wanted you to be aware of what was highlighted. So this subdivision a two is what a creditor would do if there were a review period and a determination. Subdivision 2 notified the debtor it has ceased all collection activities. So either permanently, unless going to court, or pending the review. So again, these are things that however you decide, whichever option that might need to be clarified a little bit. Similarly, I think there was some discussion. I wasn't sure exactly where the committee left off. But if there were if you do do a review and you allow for reconsideration of the review, does you know, should do you want to open it up so that any additional information could be considered? Then also, there was a one of the concerns raised about the creditor's responsibility of communicating with the debtor in the debtor's preferred language. On line 18, and I'm on page nine, the creditor shall make, and it had said, every reasonable effort to use the debtor's preferred language. There was a request for your consideration to take out every and instead just have reasonable efforts. And then still some concern about is that enough guidance so that a creditor is not what is considered reasonable? And in any event, just wanted to flag that. In terms of the information on the model form, just including what is actually the debtor preferred language, so giving notice to the creditor in advance if possible. What I've highlighted in blue, these are all things that are part of that model form and will might be amended based on which option you pursue. Right? So it says within thirty days after we're we receive the information, you know, that might be more relevant to a thirty day review period. It just needs to align with whatever

[Michael Marcotte (Chair)]: Going back to the preferred language.

[Maria Royal (Legislative Counsel)]: In the form or in the Oh. Okay. If

[Michael Marcotte (Chair)]: the person has already been better, they've already communicated, they've been communicating with the creditor. Why?

[Maria Royal (Legislative Counsel)]: I suppose it's possible. If they don't know, the account the loan has been signed for, they might not be the one communicating.

[Michael Marcotte (Chair)]: So if somebody signed their name, so they I'm trying to just trying to understand where they wouldn't have communication with creditor.

[Edye Graning (Vice Chair)]: But also if it's something that's been sent to collections. And this is interacting with the collections agency, not with the original creditor.

[Michael Marcotte (Chair)]: I can understand that, but with the creditor, is there always a relationship, and if someone has stolen someone's identity and finding their name, it's forged documents.

[Edye Graning (Vice Chair)]: Or e commerce, where the e loan is all done.

[Michael Marcotte (Chair)]: But it's still

[Edye Graning (Vice Chair)]: Somebody filled out.

[Michael Marcotte (Chair)]: Yeah.

[Abbey Duke (Member)]: We can

[Michael Marcotte (Chair)]: Yeah. I I'm just I mean, I think maybe we can put language in there that, you know, the debtor has already had previous there's been some communication. Somebody's understood. But okay. Let's think about that.

[Maria Royal (Legislative Counsel)]: And let's see. So a lot of the changes in the civil legal remedies, especially in these first several subsections, We're just cleaning up the language a little bit, making it align more with Vermont terms, not intended to be substantive changes. And by the way, Eric is reviewing this, he's the one who should actually review this and make sure it's written correctly. But more importantly, what I wanted to discuss with you were some substantive issues that came up in your discussion to be included in here. So new provisions begin in subsection H. So, a person alleged to be a perpetrator of forced debt shall not be a necessary party to an action between a debtor and a creditor under this subsector. However, no finding in such an action shall be binding on a person who was not a party to the action. So just being very explicit that there can be a dispute between the debtor and the creditor. They don't have to join the perpetrator. Perpetrator is not a necessary party. They can argue with the information they have. However, if there's a finding of coerced death, that doesn't necessarily apply to the perpetrator who wasn't present in the civil action and therefore not able to exercise due process rights.

[Edye Graning (Vice Chair)]: So it could be used in a case against them down the road, but it doesn't automatically find the

[Herb Olson (Member)]: It's not

[Maria Royal (Legislative Counsel)]: binding. Correct. Because they weren't there. Subsection I, it just states that the assertion of court's debt as a defense is not subject to a statute of limitations. That's pretty typical. And and but there were some kind of statute of limitations issues that were brought up. Subsection j, an action by a debtor against the perpetrator of coarse debt shall be commenced within six years of the date the debtor discovered or reasonably should have discovered the coarse debt. This typical kind of discovery rule in civil matters. But then it goes on to say, or within six years after the coercion or abuse giving rise to the debt ceased, whichever is later. So it gives a little more time If the debtor does not feel it's safe to actually bring an action once the abuse ends, then there's an opportunity. So for your consideration And then similarly, in subsection k, notwithstanding any other provision of law to the contrary, any applicable statute of limitations for an action by a predator against the perpetrator shall be told, doesn't start running, from the time the coercion occurred until the creditor knew or reasonably should have known of the existence of the coercion and the identity of the perpetrator. Concerns raised by creditors that if they don't know who to sue and have no way of knowing, that a statute of limitations should not be running during that time period.

[Michael Marcotte (Chair)]: So it's both. So if they know the existence of the coercion, ten years down the road they finally find out who the perpetrator is, they can still go after it.

[Abbey Duke (Member)]: Yep.

[Maria Royal (Legislative Counsel)]: With this and this was an issue think it was brought up. You talked about or it came up last week on the confidentiality. This is the disclosures. Basically, the creditor who receives information, financial, personally identifiable information, cannot disclose that information. What's added here is unless such disclosure is authorized by court order. So this might be an instance where the debtor doesn't want to disclose anything about the perpetrator, but the creditor might initiate an action in court, ask the judge to disclose the relevant information, have the relevant information disclosed, which then would be up to the judge to consider. And I think there is only one other change, and that's in the application. So the Act takes effect 07/01/2028, and shall apply to all outstanding force debt, including force debt incurred prior to July 2028. So it doesn't look back to anything that's already been paid off, but for any debts that are still outstanding, still being collected, it would apply to that debt. So it limits it a little bit. And that's it. Those are all the new changes.

[Michael Marcotte (Chair)]: Thanks, Maria. You're welcome. Grace, good afternoon.

[Grace Pazden (Vermont Legal Aid)]: Good afternoon. For the record, I'm Grace Pazden. I'm the director of the Consumer and Homeowner Rights Project at Vermont Legal Aid. And for the past seventeen years or so, I've been representing low income, older adult, disabled and other vulnerable consumers in various types of actions in Vermont, foreclosures, tax sales, debt collection cases, auto repossession deficiencies, and some affirmative consumer protection cases. And I want to thank the committee today for taking up what I think is a really important bill that has the potential to provide very meaningful and really life changing relief to victims of abuse and financial protection. I would like to just really quickly share one story of a former client from a few years back whose life was impacted by course debt. I'm going to call her Anya for purposes of this conversation, and she was an older, developmentally disabled adult who, despite a modest fixed income, had managed to always keep very good credit. And she contacted us with the help of a case manager because a trusted so called good friend of hers, who was suffering from poor credit and couldn't get a car loan on his own, had coerced Anya into cosigning on a vehicle that she never ended up having possession of and couldn't have driven anyway because she didn't have a driver's license. And when that friend stopped paying on the loan, eventually, she was threatened with a repossession deficiency action for more than $10,000 of debt that exceeded the car's value at that time. Because there weren't any legal protections in place for coerced debt victims at the time, we had to bring an affirmative lawsuit on her behalf to try and get her some relief. And it took over a year of litigation and over a hundred hours of attorney time to finally get a settlement that protected her from the liability and restored her good credit. And a coerced debt bill like h three eighty five really could have saved Anya a lot of stress, a lot of sleepless nights, and frankly, have saved the creditor the unnecessary time and legal fees that were associated with defending a lawsuit that ultimately ended in that debt being written off. As that case illustrates, I wanna just give a little bit of a backdrop of the legal landscape for debtors in Vermont. It's not at all easy, for victims of coerced debt to access relief in our current system. It's a very lengthy process that all but requires having access to an attorney and bringing a lawsuit. And as our twenty twenty four statewide legal needs assessment reported, even in consumer debt collection cases, over 94% of Vermont defendants in those cases don't have access to legal representation. And that's a scenario where you're talking about a lot less attorney time defending an action as opposed to bringing an affirmative case. And I can tell you that at Vermont Legal Aid, the unfortunate reality is that we no longer have funding or resources to help consumers even defend against debt collection actions on a regular basis, let alone bringing the kind of complex affirmative litigation that it takes to get relief for victims of coerced debt. So I think that illustrates the need for a robust coerced debt bill that provides an accessible pathway to relief for victims of coerced debt that doesn't create unnecessary procedural barriers and doesn't require access to an attorney in the first instance. Going specifically to this most recent draft, I would ask the committee to bear with me a little bit. There have been a number of different drafts that I've reviewed, so I'm still sort of getting up to speed on this. But I did want to acknowledge and thank the committee for the changes on page two under the course debt definition, I think it is really important to pull in victims of ID theft where the ID theft is in the context of domestic abuse or exploitation. I can't really see a good policy reason for excluding those cases where an abuser or trusted friend is exploiting someone and they're not even aware of financial exploitation. So I think that's a really important change. And then also the inclusion of debts that are subject to final judgment so long as the issue of coerced debt isn't a part of that judgment. Because, again, we know most folks in these debt collection actions don't have access to attorneys. Many, many judgments that are coming out of the debt collection docket are being entered by default, where the defendant has had no opportunity to defend against the debt, they haven't had access to a lawyer, and frankly, most pro se folks who are served with a debt collection lawsuit don't really know how to meaningfully participate in that process, so I think it's really important to allow relief for those folks so long as a court hasn't already sort of looked at the issue of coerced debt and made a determination about that. The thing I would really like to focus on is the specific section on creditors' conduct pursuant to a debtor statement of coerced debt. That starts on page six, and I think this is really where the rubber meets the road for this committee, and you have a choice to make where either you can make protections really accessible for true survivors of course debt, or you can sort of create something that might look good on paper but is effectively gonna help very few, if any, survivors. And what I'm referring to is that language that was added in this section in draft 1.9 that would allow creditors to unilaterally, just in writing, decide to resume collection after a thirty day review period if they dispute the claim. I think that would entirely undermine the purpose of the bill and eviscerate any meaningful access to relief for victims because even if the debtor provides the creditor with good evidence of a prima facie case of coerced debt through that written statement they're required to provide, plus the corroborating adequate documentation, the creditor can just unilaterally decide to dispute it and resume collection, which is basically going to force the debtor back into a position of having to take legal action to get relief under the statute, and they're not going to get it. Most of these folks don't have the resources to hire an attorney. There are very few of any attorneys that do consumer debt work in the state. It's just not going to be accessible to them. You're basically looking at the current situation that we have, which is victims of coerced debt having to find an attorney, bring an affirmative case, and they're just unable to access that process. The process that was contemplated in the bill is introduced, which is your option one here under this section, I think is really fair and balanced and it would provide, you know, meaningful access to victims of coerced debt so long as they have that adequate evidence to support their claim. And that's really the backstop, and that's the protection for creditors. And in that rare case where a creditor might have some basis to dispute the prima faca claim of coerced debt and believes that they should be entitled to collect from the debtor, their rights aren't gonna be impaired because what that means is they can go and file a lawsuit under the civil legal services section of this bill, and that's not onerous for creditors or debt collectors. They're already in the business of filing lawsuits to collect debts, and unlike debtors, they have the resources to do so. And if you look at the statistics out of the judiciary on the civil docket, it's somewhere in the range of 20 to 30% of the civil docket that is typically debt collection action. So this is a regular part practices to bring these lawsuits. And in any event, we think the need for this kind of lawsuit is going to end up being exceedingly rare because you're already requiring a robust documentation process on the part of the victims where they have to get adequate documentation through a police report or a sworn statement of a third party professional, which is going to make fraud very, very unlikely, in my opinion. So I don't want to take up much more of your time, but do believe, and Vermont Legal Aid believes, that with the protections that I've just discussed, that H-three 85 would ensure that survivors who have adequate evidence to support their claim of coerced debt can access a streamlined process to gain financial and credit relief without overly burdening creditors or bogging down the court system. And I greatly appreciate the opportunity to speak with you all today, and I'd be happy to answer any questions that the committee might have.

[Michael Marcotte (Chair)]: Jonathan?

[Jonathan Cooper (Member)]: Thanks very much, Grace. I'm asking about, just right there on page one of the definitions, we're talking about adequate documentation being one of the four, I think we have four things there, That b, the copy of an official valid report filed with the federal, state, or local law enforcement agency, which subjects the person filing to criminal penalties, is that and that and that's it. That doesn't have to be vetted by any anybody else. That's just you saying because I'm at risk of these penalties, it's sort of taken at its word. Is that is that

[Herb Olson (Member)]: why you're that right?

[Grace Pazden (Vermont Legal Aid)]: And and that's the kind of evidence that you would present in a civil action to support a prima facie claim, right? So certainly, you're, you know, I don't know that this committee has any way of necessarily preventing that type of fraud. If someone has the gall to lie in a police report, again, I'm not sure we can protect against that. But from my experience, that's typically pretty good backstop against fraud.

[Jonathan Cooper (Member)]: And so I was trying to make sure that I understood that that didn't also have to be in some way corroborated with a third party professional that sort of can stand on its own. Do I have my

[Grace Pazden (Vermont Legal Aid)]: That would stand on its own. There's the statement of coerced debt from the debtor themselves, which, again, is, you know, they have personal knowledge, and they're attesting to the truth of the information in that statement. And then that statement is corroborated through either something like a police report, or a sworn statement of a third party professional, that third party professional being subject to any penalties or licensure, you know, revocation risks for lying in a sworn statement. And certainly, if someone were to commit fraud, it appeared that a sworn statement was false, that might be the kind of situation where a creditor would choose to bring an action. And if they had proof of that, certainly, that would be the type of case where a court might determine it's not coerced debt. But again, I think the risk of someone going through this process and committing that level of fraud is fairly unlikely.

[Michael Marcotte (Chair)]: Thank you. Yeah.

[Herb Olson (Member)]: Thanks. So looking to on the statement of statement of course debt, does that need to be a sworn statement or does not have to be a sworn statement?

[Maria Royal (Legislative Counsel)]: I have to look back at that section.

[Herb Olson (Member)]: I I just remember that in your testimony, it sounded like you were saying it was a sworn statement, but I I just

[Grace Pazden (Vermont Legal Aid)]: third party professional statement is a sworn statement. I don't believe that the statement of coerced debt is a sworn statement. Okay.

[Herb Olson (Member)]: I have one other question. So the in the definition of debtor, they're citing, you know, a few statutes there, abuse and neglect, domestic abuse, human trafficking, are those also crimes in some fashion, If you're aware?

[Grace Pazden (Vermont Legal Aid)]: Yes, I believe all of those are subject to criminal.

[Herb Olson (Member)]: Okay, thank you.

[Grace Pazden (Vermont Legal Aid)]: Although I can't cite the provisions of the criminal code.

[Herb Olson (Member)]: I couldn't find

[Maria Royal (Legislative Counsel)]: it for you. I'm sure.

[Michael Marcotte (Chair)]: Thank you, Grace.

[Grace Pazden (Vermont Legal Aid)]: Alright. Thank you very much.

[Michael Marcotte (Chair)]: Good

[Carrie Allen (President, Association of Vermont Credit Unions)]: afternoon.

[Charlie Gliserman (Policy Director, Vermont Network Against Domestic and Sexual Violence)]: I'm Charlie Glisserman. I'm the policy director at the Vermont Network Against Domestic and Sexual Violence. And thank you again to the committee for your time and careful consideration of this bill. We support many changes in the latest draft. I did wanna note a few, including a couple kind of questions I had and things for the committee to consider as it's evaluating its options within the bill. And I also was able to take a brief look at the suspicious transaction holds language. And if the committee would like to hear a comment from the network on that piece, we'd be happy to offer that as well. So again, as Grace noted as well, we greatly appreciate the revised language relevant to identity theft within the context of domestic abuse, human trafficking, and abuse, neglect, and exploitation of a vulnerable adult. As we really feel, existing identity theft laws were designed to address fraud committed by strangers, not by abusive partners or family members or caregivers as part of a pattern of coercive control. And as a result, the criminal definitions of identity theft can be really difficult to apply in abuse related identity theft, like the circumstances that are addressed in our core stat bill right here. And so we see that the vast majority of states that have core stat bills include this type of abuse related identity theft within their system of relief, And they do so so that survivors can access several reliefs without being forced to pursue criminal identity theft charges that may be applicable to them, ineffective, or risk their safety for filing. The next piece I wanted to note is similar to legal aid. We appreciate the revised language around a final judgment. I am seeing right here that despite printing this only a couple hours ago, it is not even the draft you're looking at today with that language. But what we see is that survivors of course debt often lack legal counsel. They don't know how to identify or raise concerns about course debt during a divorce. Many face ongoing fear or abuse in the course of a divorce. And we see divorce arrangements all the time that are very, very disadvantageous for survivors of abuse because they are trying to seek safety. And so the proposed language would support finality in appropriate cases where court set claims have been meaningfully considered by a court, but it would also provide victims who haven't had that meaningful opportunity to pursue relief under the bill. The biggest piece that I wanted to address in my testimony today is on page six, where the committee is presented with two options for a process of taking in a coarse debt claim and evidence at accreditors and either the ability to recommence debt collection at the creditor's discretion, or to cease debt collection until there is an external review and judgment in the court. So let me just explain a little bit about what these two different options look like for victims who are pursuing relief. So the process outlined in the veil as introduced in drafts prior to 1.9, and also in this kind of option one here, provide really meaningful checks and balances throughout the process. So this both deters fraudulent claims by debtors by having these documentation requirements in their statement. It also deters creditors from dismissing valid core stat claims because there is an external review process, their ability to bring a court action, as opposed to just at their discretion decide, is this debt coursed or not? And so this process, Option one, is based on the National Consumer Law Center's model bill, and that is aligned with the national best practices for coarse debt relief. And it also has the bonus of when this process works well, neither the victim nor the creditor has to go to court. Option two would allow a creditor to recommence collection at their discretion. So this would force a victim to continue paying on debt that they've already disputed without any external review, without any court judgment. This would leave the victim in the position where they would have to proactively file a suit to stop collection and access relief. And unfortunately, that is basically the path that victims have to relief that's available to them today. And that relief is almost entirely inaccessible. Victims do not have legal representation. They don't have other resources to initiate a case. They don't feel safe initiating that kind of case. And that's why this bill is so desperately needed for survivors like Katie, who you heard from last week. And so I wanted to make sure you really understood the policy position that is in front of you between this option one and option two, because if the committee moves forward with option two, a victim's ability to seek relief through the process of design in this bill would be really significantly compromised. I have one comment that I'd like to note on suspicious transaction holds. So I have just done an initial review, and I'm more than happy to follow-up with additional comments or review subsequent drafts. But there's one piece of language that stuck out to me that I just wanted to bring to the committee's attention. On page two, line lines nine through 12 of the suspicious transaction hold language notes that an associated third party that will receive notification when a suspected suspicious transaction takes place could be a parent, spouse, adult child, sibling, or other family member of a customer whom a covered entity reasonably believes is associated with the customer. The dynamics of family and personal relationships are very, very complex.

[Maria Royal (Legislative Counsel)]: And

[Charlie Gliserman (Policy Director, Vermont Network Against Domestic and Sexual Violence)]: whether a person is believed to be closely associated with a customer doesn't necessarily reflect whether they should be notified of the customer's financial activity, whether they're the most appropriate person in that person's life to intervene in a suspected exploitation if they aren't authorized by that customer. And so the scenario that came to mind for me was a victim of domestic violence who's preparing to escape abuse and attempts to withdraw a large sum of money from their account so that they are able to flee, and then having their spouse notified of that large withdrawal. That is the most dangerous time in a survivor's life, before and after trying to seek safety. And so we would just have real concerns about no authorization for a third party other than just their relationship with the customer being notified here. And it just has great potential to do more harm than good. I took a look at the Department of Financial Regulation's off session report on this, and they did note their support to have a trusted contact be that associated third party. And I don't necessarily have any concerns with B, c, or d in that associated third party list. But I I would have concerns about the language in a. So I wanted to note that for the committee. I also wanted to note that there are staff at the Vermont Network who support training for financial institutions, service providers, and survivors on issues of financial exploitation. And if this language passed, we would be more than happy to explore some training opportunities to support implementation of both the suspicious transaction holds language and the coarse debt language. That is all I have to share with y'all today. I would be happy to answer any questions and just, again, really appreciate you making the time to discuss this issue.

[Michael Marcotte (Chair)]: Questions for Charlie? Charlie, this last part you were talking about on the suspicious transaction. When I look at the list, that could happen to anyone that's on that list.

[Charlie Gliserman (Policy Director, Vermont Network Against Domestic and Sexual Violence)]: You're absolutely right.

[Michael Marcotte (Chair)]: You have a joint account with your spouse, and your spouse would be the individual authorized to contact. You're still gonna have that problem. I don't know how you'd get away from that.

[Charlie Gliserman (Policy Director, Vermont Network Against Domestic and Sexual Violence)]: You're absolutely right. There is coercion, potential for coercion, in almost every system that we interact with.

[Michael Marcotte (Chair)]: But I think another piece to this is the dialogue that happens between the bank and the financial institution and the person.

[Herb Olson (Member)]: And

[Michael Marcotte (Chair)]: I think that in that dialogue, I'm hoping that that come that would come out where they would know not to contact an abuser that is either a relative or is the authorized contact. Mhmm. Or, you know, could be partner that you have in a business. So I hear what you're saying, and I worry about that, but I don't know how else we can I think that dialogue is what's most important between the financial institution and the person?

[Charlie Gliserman (Policy Director, Vermont Network Against Domestic and Sexual Violence)]: I think that's exactly right. For me, the distinction between the language in A versus B through D is that there is some kind of authorization, some kind of legal permission to have access to the customer's financial activity, as opposed to simply a personal relationship with the customer. And so while there's potential for exploitation in all of those situations, I feel that that distinction is quite important. And that, say in my scenario, the potential victim giving authorization to a person to access their financial information, they have a different level of authority over over that financial information, and I think they have a different right to that notification. And you are exactly right, Chair Marcotte, about the institution and a victim of exploitation or potential exploitation. And that's why we're really happy to help with training and stay in touch with our financial institutions and support these conversations and the nuance of domestic relations being properly reflected in these processes. And we have really great training relationships right now with financial institutions. I know the same goes for AARP Vermont. And this is just, I see an opportunity to continue those relationships and continue building on that work. Thank you very much.

[Todd Hilliard (Advocacy Director, AARP Vermont)]: Todd Hilliard, advocacy director for AARP Vermont. I wanted to thank the committee for the opportunity to testify on H-three 85 again. I wanted to start, if that's all right, with the committee, with the possible amendment concerning the suspicious transaction holds. We haven't gotten a chance to weigh in on that yet, and AARP was a part of the study committee for the DFR report and want to thank all the partners in DFR for putting that together. We are generally really supportive this bill of this central amendment. A recent AARP survey noted that about half of all adults report being the target of financial exploitation, and one of the ways to combat financial abuse is to stop criminals from getting the money that they're seeking, of course. So these report in hold. Laws allow financial institutions to put a temporary hold. And while the institution reports their concerns from regulators, APS or law enforcement, Vermont has already adopted the North American Securities Administrators Association Senior Model Act, which applies to the investment advisors and broker dealers to enact these holds. We feel it's really important that where most households have their transactions at banks, we also protect folks there. So also just wanted to note additionally that the Federal Senior Safe Act provides the immunity for reporting suspected exploitation, but it doesn't authorize holds on transactions. That's why state action here is so important. We I wanted to call it one thing that we're specifically really supportive of and just flag a couple areas that the draft is silent on, one of which is the bill covering customers regardless of age. We think that this is really good policy. Everyone can be targeted with scams and frauds and be financially exploited. And so when we make protections for for everyone, you know, it it's it it goes a long way. I want to remind folks that younger younger individuals are actually more likely to be the victim of scams, but they lose less money. Older folks, because they have a lifetime of savings built up, lose substantially more money. But if you look at the most recent FBI Internet Crimes Report and a number of other reports, younger folks are actually more likely to be the victim of the scam. We did want to raise a few flags on areas where we thought that the draft was silent and just wanted to point some things out. Training, there's no mandate of training or anything like that in draft. A number of states that have recently passed bills on report and hold transactions have mandated that. AARP is very supportive of training. What exactly that looks like is something we're very open to. We have a number of resources I know Charlie mentioned as well. And we think especially around how trusted contacts and third parties are contacted, that's an area where training can be really valuable. Also wanted to mention that we would be supportive of some clarifying language that explicitly notes that it allows banks to harm to law enforcement or APS. That's something that we've seen, and a number of other states have included that explicit language. I just wanted to note it's not in the draft right now, but also the DFR report also made that recommendation. Lastly, on the kind of reporting side as well, anonymous reporting from the institutions to state authorities like DFR. We think that this is something that could be really valuable to identify trends, help improve training. This is another recommendation that was also in the DFR report. And so we know that underreporting for scams is very substantial, and we think that this is a way that we can help get some more data and, again, improve training on that front. I'll pause there before moving to the the kind of original bill on on coerced that if there's any questions on that.

[Michael Marcotte (Chair)]: On the activity?

[Todd Hilliard (Advocacy Director, AARP Vermont)]: On the so we've gotten a chance to look at the latest draft of, I believe, one ten that was released for for Coercedet, and we are generally really supportive of a lot of the changes made here. I want to call out two critically that others have mentioned, one being the addition of identity theft in the context of Coercedat. We feel that that's a really important inclusion because we know that that is a tool that is so often used when folks are know, perpetrators are engaging in this behavior. I'll remind people also that coerced debt and identity theft are the most frequent complaint and call to our fraud watch hotline. Additionally, the final judgment portions on page two, we feel that the latest draft, we're happy with that language and feel that addressed some of our concerns around, you know, not having victims accessible to having access to any sort of recourse if a final judgment was ruled and they, you know, under circumstances where, I think that has been mentioned already, you know, someone was dissolution of a marriage and someone is trying to get out of a victim of abuse and trying to get out of that marriage as soon as possible. And there was not the opportunity to raise those concerns then. So we feel that the draft really, this latest draft addresses those concerns. And lastly, I think as others have said, the biggest policy decision for you all before you is that page six page six regarding the recommencing collection. AARP feels very strongly about option number one. We feel that that is really kind of the heart of this bill and providing a path for victims that is different from what we have now. We think that option two is kind of how things are at at current, and so this is all about if if the intention here is to provide more accessibility to victims, option one is is, we feel, a really critical part of this bill.

[Michael Marcotte (Chair)]: And I will close there. Questions for Paul? Thank you. Thank you.

[Carrie Allen (President, Association of Vermont Credit Unions)]: Thank you to the committee for welcoming me back to testify on H385. My name is Carrie Allen, and I am the president of the Association of Vermont Credit Unions. I want to begin by thanking Vice Chair Graning for her commitment to ensuring the stakeholders have a seat at the table on this deeply sensitive issue. I also want to extend my sincere appreciation advocates for their courage in bringing forward the lived experiences of their clients and the collaboration we have shared in working towards a responsible path forward. Thank you as well to the legislative council, Maria Royal, and this committee for the time, care, and resources devoted to crafting a bill that serves Vermonters. Vermont credit unions strongly support providing meaningful relief to victims of domestic violence, human trafficking, and exploitation. We see firsthand the lasting financial harm these crimes cause. And today, we already work within the existing law to support members as they rebuild their financial lives. Credit unions are member owned, not for profit financial cooperatives. Our responsibility is not only to each individual member, but to the collective membership whose shared resources sustain these financial institutions. That responsibility requires us to ensure that any relief provided is fair, sustainable, and protected from misuse so that victims are helped without shifting undue burden onto other Vermonters. While we recognize that no draft can fully satisfy all parties, We remain concerned about potential operational and financial impacts of retroactive relief, particularly in the absence of clear mechanisms to hold perpetrators accountable. When losses fall solely on credit unions that acted in good faith, the result is that neither justice nor deterrence is meaningfully advanced. Still, credit unions want to be clear. We support debt relief for victims of domestic violence, human trafficking, and exploitation. We encourage this committee to consider legislation that provides accessible, reasonable relief for victims while also including real deterrents for perpetrators and safeguards for member owned Vermont credit unions. Although we had concerns in the most recent draft of 1.9, the reality is we could live with them, and we would support moving forward on draft 1.9 as we believe it represents a good faith effort to strike a balance, and we are prepared to support the committee in moving forward with that draft. In 1.1, although there are additional language that we would certainly consider, we have some real concerns as it relates to moving forward, particularly on adjudication of perpetrators and the role that it puts member owned credit unions in in seeking, you know, their own adjudication of that relief. I welcome any questions that the committee may have, but certainly want to thank you for including credit unions in this conversation.

[Michael Marcotte (Chair)]: Take care.

[Herb Olson (Member)]: Yeah. Thank you very much for your test. It's always seemed to me that this bill it's a couple of concepts, it's a lot of pages, but a couple of concepts. And the first concept is something that, geez, I think a lot of people agree with. And it's the statement, I can't remember the section of it. Of course, that should not be enforceable. It's just long standing kind of legal principles. You sign a contract, but it shows somebody they had a gun to you or something. And you get before a court, it wouldn't be enforceable. So that's core principle. Do you agree with that core principle?

[Carrie Allen (President, Association of Vermont Credit Unions)]: I do agree that victims should receive relief.

[Herb Olson (Member)]: Yeah. In my sense, so that you got that simple sort of basic core statement, principle mark on a sort of legal principle. And the rest of it is really, how to effectuate that right or that principle without having to go to court. So I guess what I'm thinking is, what are their And so a court will make a statement, they'll adjudicate with it, right? The facts, make a determination, hey, what's this course about? Or is there any other way that you can think of to I mean, so the bill proposes a way, a substitute way, rather than going to court to make sure it's a valid point. And I'm trying to understand what you're proposing, how you, what you're proposing would do that.

[Carrie Allen (President, Association of Vermont Credit Unions)]: I'm not sure I'm clear on your question. I want to be clear that credit unions are not questioning, the current recommendation for how to create a prima facie. We are not. We believe that the statement of course debt as well as the, different ways in which people can claim that outlined in this this proposed language would be agreeable to credit unions. That we have no argument there.

[Herb Olson (Member)]: Alright. But then you don't get to really at that point, if that's all there is, you don't get to the next point of making it the Allowing the principle of force debt not being unforceful, you never get to that point if it's just some staples, right? So I'm wondering how do you get to that point of it being unforceful?

[Carrie Allen (President, Association of Vermont Credit Unions)]: Our concern is around really this statue has no real teeth in it for the perpetrator, that there there is relief, and we certainly are supportive of that relief. Our concern is that we have even in 1.1, we're clawing back some of the ability to seek relief from the perpetrator who in reality is the criminal in this. Credit unions and banks and financial institutions are in good faith extending real dollars, that they will assume those losses. And although the reality is we expect, we won't have opportunity to adjudicate many of these cases. There just won't be enough information, and the return on the cost to go to court won't be there. And so we'll assume those losses, but we also wanna make sure that the bill is as favorable to our opportunity to adjudicate against a perpetrator as possible.

[Herb Olson (Member)]: Thank you for the answer. Yeah.

[Anthony "Tony" Micklus (Member)]: Instead of a court process, thinking of like union stuff and maybe arbitration, Would that be more possible? I don't even know if that's something that could be done, but go through some sort of arbitration process.

[Edye Graning (Vice Chair)]: Judiciary is going to see this after us. So we might not be the committee that Final arbiters. Final.

[Anthony "Tony" Micklus (Member)]: If we pass it over there with that idea, if that's something that would

[Edye Graning (Vice Chair)]: Yeah, so I think, but I think you're asking about something different from what Carrie's talking about. Carrie's talking about how do we make sure that the lender can go after the perpetrator of the coerced debt?

[Anthony "Tony" Micklus (Member)]: Okay, right, okay.

[Edye Graning (Vice Chair)]: Is that what you're thinking? No,

[Anthony "Tony" Micklus (Member)]: that's not what I was thinking about. So I was thinking of the court process too.

[Herb Olson (Member)]: Okay, never mind. But if you

[Edye Graning (Vice Chair)]: have a question about that.

[Herb Olson (Member)]: Nope. Okay. No.

[Michael Marcotte (Chair)]: Jonathan? And then I I think

[Jonathan Cooper (Member)]: maybe I'm trying to sort of stay there as well. In the statement of coerced debt as described on page four, we have an identification of the debts, description of circumstances under which it's allegedly incurred, information known by the debtor. Would adding is there more to be added to that that provides, in this instance, like, that would be helpful to, say, a credit union and having the appropriate picture of where to go and to whom for this restitution, or is that is that an inadequate amount of information or something that's simply not? You mentioned wanting to have the perpetrator be held accountable. And I'm just curious if so I think I'm getting a sense that so this list of what would be known to a credit union based on what's included in this sort of statement is lacking for that next step?

[Carrie Allen (President, Association of Vermont Credit Unions)]: So in the way most, but certainly not all, for example, earlier, chairman Marcotte talked about a cosigned position. In that case, a perpetrator could potentially also be party to the loan. But in many of the cases that we anticipate, seeking relief, the perpetrator may not have any legal party to the to the debt, and therefore, there would be no legal ramifications for a lender to seek, you know, restitution unless they were to know the perpetrator, first of all, and then seek adjudication identifying them, one as the criminal of the course debt and then assignment of that debt to them.

[Jonathan Cooper (Member)]: But when it's a scam and it was you know, it turns out that she wasn't really my girlfriend after all or something like that, you're left not knowing really anything about the individual who Of course. Paid off. Yeah. Of course. That's that's and that's kind of what I'm trying to understand. Who matters. Okay. Thank you. Do you Question. That is what you're those are the issues that you foresee being the most common kind? Or what you sound you seemed like you had a sense of here's what we're gonna be getting. And I just was on well, a feel for what that

[Carrie Allen (President, Association of Vermont Credit Unions)]: We don't and I think everybody we don't know what we're gonna be getting, honestly. We

[Michael Marcotte (Chair)]: Can't tell. Thank you. Any questions? So to get to the one of the big issues of the two options. Right? Mhmm. When I play this when I look at the requirements for someone to claim coerced death. So, are a lot of steps that they have to take, the person has to take. They have to provide the information, give them an account. If there's any police involvement, they have to provide that. If there isn't, but even so, they still have to get a third party sworn statement. Right? So, a third party sworn statement, these third parties are licensed individuals who are putting their license on the line by swearing that this debtor, in their opinion, is telling the truth, and that this is And so they present that to credit union or the bank, and should After thirty days, credit union or bank has found evidence that that was a that's a false statement, that it was all false and that that person who is licensed and sworn, write a sworn statement, has also provided a false statement, then bank or the credit union or financial institution then can restart the clock and go to court. Right? I don't understand how a professional with a license is going to put their license on the line and sign an affidavit that says that I'm just trying to follow the steps. So, I'm not overly concerned about bank or credit union restarting something that just because they wanna restart it. They I think they're gonna have to have extremely good evidence to show that that it was all fault. And

[Carrie Allen (President, Association of Vermont Credit Unions)]: there is a way in which there I apologize. I don't have it in front of me, but where we took out the FTC identity thank you. Thank you so much, Charlie. So it would be on page one b, a copy of an official valid report filed with federal or state or local law enforcement. And then it would include the statement for stat. So imagine this through that a person who wanted to somehow fraudulently get relief from their debt went to a police department and said that somebody used their credit card without their knowledge and they were in a relationship and they are filing a police report, the police are not verifying that. They're taking the report and then the statement of debt. Now, do I think that will happen often? No. But there will have been no investigation. And I think, although I wouldn't classify, I guess it's number two as arbitrary. I I don't think any financial institution is arbitrarily or or certainly, I'm only gonna speak on behalf of Vermont credit unions. Vermont credit unions are not going to arbitrarily deny the effort gone to create a prima facie. Our intent was identified that this does not meet the standards as defined by statute, then we would still fall back on the original loan contract and follow debt collection. And if, in fact, the victim said, nope, you may be misunderstood, well, then there are alternatives for them to continue the process. And, you know, they could go to court or they could produce additional documentation and come back. But I think I wouldn't have classified it as arbitrary that banks and credit unions are just denying the validity of any of these statements and moving forward with collection as originally intended? Because, again, this bill does provide you know, there will be ramifications legally if proven that it, in fact, was core stat.

[Michael Marcotte (Chair)]: So when we we look at the definitions again, and we talk about adequate documentation, and it says means at least one of the following. And so we have a, b, c, d. But what if one of the following was a, b, c, and you also have to provide d?

[Carrie Allen (President, Association of Vermont Credit Unions)]: Which I believe in some states, that is how the law is written.

[Michael Marcotte (Chair)]: I think that that would really help everybody take less so you have a third party swearing, and you might have a police report or a valid report filed with this local state, local agency, or a court order. So, maybe if you got a court order that's saying it's for his death, then I don't think you need d. So maybe we need a, b, and d, one of the at least two factors except for C. And C could stand on its own.

[Carrie Allen (President, Association of Vermont Credit Unions)]: And I think we are very sensitive, and I don't want to speak on behalf of the advocates, would be better to answer this, but we're sensitive about not creating so many hurdles that it becomes inaccessible. We recognize this will be the most traumatic time in anyone's life, and financial stress, even on the best days, causes significant impact in consumers' lives. And we want to be sensitive to that. I think what we're asking is that by by treating it as option one as opposed to option two, what you're really suggesting is that banks and credit unions not only have the burden of proof to say that it wasn't, in fact, Corus debt, but they are also now fully responsible for all costs associated with adjudication and moving forward. There is no mechanism for us to identify, hey. This is fraud. We're raising a red flag. The only way for us would be to proceed with court.

[Michael Marcotte (Chair)]: And I think the more information you have, the easier it is for you to make that determination. If you have a police report, it doesn't mean that it's been investigated, but you get a sworn statement from someone that's kind of looked at the totality of what's going on and say, we believe this is recourse debt. It kind of gives you, I think in a credit union or a bank, a better understanding of, and a better feeling of, yes, this is probably legit and not fraud. I think the I don't want people having to jump through a whole bunch of hoops because they're not gonna do it then. But if you can create something that gives you more better feeling of what you're seeing when someone claims course debt. Makes it easier for everybody to have to stay away from the court system. It makes it faster for everyone. So,

[Abbey Duke (Member)]: as we've been working on this, and I keep coming back to noodling on this idea of the written certification from a qualified third party professional. And I don't know if this is a question for you or just a general question. It's just if I summarize this better, is that a lot of the positions we have listed as qualified third parties, some I think of as their job is to advocate for the client. So is it a, like, how can we know the person is a sort of somewhat A neutral third party. A neutral third party who is applying judgment to the situation? Because we don't want to, we want to find a balance of protecting victims of forced debt and also making sure that

[Herb Olson (Member)]: Do I have to

[Abbey Duke (Member)]: say it stopped mid sentence, but I think you understand what I'm saying.

[Edye Graning (Vice Chair)]: And I'll answer this as a question for you.

[Abbey Duke (Member)]: No, it's not. I don't

[Edye Graning (Vice Chair)]: think it is either, but I just I'll just talk because I've been trying to work on this bill. They were all chosen because they have a license that they can lose if they commit fraud. And so every one of them, even while their job, not in every situation, but in most of the situations is to support their client, right? Right. They also have another thing that is holding them accountable. And so they can't, it's not me with my best friend saying, I know this happened to my best friend. This is me who has gotten a license for something that somebody who I don't know saying, yeah, I looked into this and said, oh, yeah, this person has been through the ringer and has all of these things that has happened to them. And this part scores the debt part. I can validate and say, I'm willing to risk my license to be able to help all the other people that I've got this license for to help in order to help this person. But it also, it's not just that, right? It's not just this policy, it's other things too.

[Abbey Duke (Member)]: Ready to I struggle with it still. I guess I do have, I could come up with a question for you, which is

[Maria Royal (Legislative Counsel)]: what would be provisions in it

[Abbey Duke (Member)]: that could help you feel more comfortable in terms of being able to go after perpetrators?

[Carrie Allen (President, Association of Vermont Credit Unions)]: That is a great question, and I'm not sure at this point I know what the answer is. I certainly think we have some questions that judicial will need to weigh in on around this. As you all mentioned, there's some question about what if the collateral isn't returned and and where would we stand on that? Is there even a possibility for us to shift liability to a perpetrator? Certainly, what would be proof that would be substantiated in a court of law for this type of actual criminal activity? And could we automatically assume that, an affirmative criminalization, you know, a perpetrator identified would then automatically be liable for that? At this point, in this language, it's civil liability, but we still need to go through adjudication. So so there's just some questions for us at this point that we don't know.

[Anthony "Tony" Micklus (Member)]: In your original statement, you had mentioned it sounded like some concern about the retroactiveness. Would you mind just

[Herb Olson (Member)]: dialing up on that?

[Carrie Allen (President, Association of Vermont Credit Unions)]: I think part of our concern is around that we don't really have any perception at this time what the impact could be. And although some states, and we know this through the study that was presented from DFR, have included the retroactivity. Many states have also not and said that it would be, debt moving forward. And so I I just think we have some real concerns about what the impact could potentially be. Because, again, as it relates to Vermont credit unions, we are member owned financial cooperatives with and this is real money that has already gone out, and we'll be accepting these operational losses to our bottom line. And without an understanding of what that impact could be, it could be very significant.

[Michael Marcotte (Chair)]: There's a lot of questions I think judiciary will have to answer as well. I think if there can be a criminal element to this, the perpetrator, right? I hope so. I think there's some things that we can deal with here and there's other things we're gonna have to lead to the future to figure out. They're the experts in some of those stuff more than we are. Any more questions for Carrie? Carrie, thank you.

[Carrie Allen (President, Association of Vermont Credit Unions)]: Thank you.

[Chris D'Elia (President, Vermont Bankers Association)]: Ending the day, I guess. Good afternoon. For the record, Chris Delia, president of Vermont Bankers Association. Thank you for the opportunity to come back in and testify on March. I would also like to start with a word of thanks to the vice chair for her work on this and for, I'm sure, the countless hours that Maria has put into coming up with these drafts. I wanna reiterate what I said to you folks last week in that we are supportive of coming up with a process that addresses the debtor's concern. We've not wavered from that since we began these conversations a year and a half ago. And I would say when I was here last week and looking at draft 1.9 or I was on Zoom last week, I thought we were making progress with that. I thought there were positive changes that have been incorporated, suggestions to strengthen the bill, guardrails, if you will, without in any way making it more difficult for a debtor to raise a claim, of course. Yeah. Many of those changes, which were on a document that I had submitted to you, this committee, came from New York and the developments in New York. After our review of 1.9, we had some additional suggestions, and there was a meeting this past Wednesday with the interested parties to discuss those. And I walked away from that mailing meeting feeling like it was going backwards in our conversations. And items being put back on the table that had been taken out in 1.9, retroactive discussions, ID theft, editors to, who have already gone to court to raise this claim under this statute and more. And then we had a press conference yesterday. And then we had draft 1.1, which I think was released yesterday afternoon, and then we have a, perhaps, a slightly different version that is time stamped nine o'clock this morning, which I have not looked at. So with that as background, I'm trying to figure out where we are. And I'd like to find a solution because it's an important issue from a policy perspective for the debtors. We feel there is a path forward, but I will tell you it's not the NCLC model or their language. It could be New York. It could be Minnesota. I would even take Connecticut off the table, and I'll tell you why in a minute. But at this point, I guess, to cut to the chase, you do not have a bill that I can support at all. My industry has significant concerns of the policies that would be put in place around this issue, And I'm not sure that you've heard those issues, so I wanna step back and tell you why. So the concepts that you're talking about allow the debtor to raise a claim of coarse debt by submitting certain documentation. You've just had a good discussion about what you might be able to do with that documentation to give us some level of assurance that, in fact, it is course debt. That's great. I'm not worried about legitimate claims of core's debt. I'm worried about the potential fraud that could occur. So that's it for the debtor. Get us the documentation, whatever it is within a through d. And from that point, the burden shifts to the financial institutions of creditors. We have to accept as fact the claim that's raised. And now we're talking about in a draft that we don't even have the option to come to our own conclusion and dispute that. We're talking about taking that out of the bill. We could have argued early on in this process that the debtor should go to court. And with a court order, that's what we would follow. But we didn't argue that, did we? We heard the debtors loud and clear, the advocates loud and clear saying that they would not have the ability to do that. So we didn't sit here and hammer on it time after time. But that sure would make it easier for all of the parties involved absent the ability to go to court because we would respond to that. We didn't sit here and hammer on secured versus unsecured. We could, and I'm thankful and appreciative you took houses off the table and commercial off the table. But secured is a problem, but we've kinda let that go in the discussions, and we've moved on from that. Creditors receive the claim, and within ten days, we have to notify the credit and reporting agencies before we've even completed a review. After the review, if we agree, we write off the debt. We tell the credit reporting agencies to remove any negative reporting. If we don't agree, it sounds like that may not be an option depending on which way you go in draft one point o. But, ultimately, we would potentially go to court, conversation as you just said, mister chairman, across law, and we're in the position of disproving the claim of Corus debt. We are in the position of disproving it. Our burden, our expense. Let's go back to writing off the debt. Everyone's in agreement that we should be able to go after perpetrator. Again, issues for your judiciary, We can't compel the debtor to give us the name of that individual. And I understand the safety concerns and agree with those safety concerns. But if we don't know who the per perpetrator is, who are we going after to recover the losses that we are absorbing? If the perpetrator is not on any of the applications, any of the loan documentation, again, for your judiciary committee, what legal right do we have to go after that? It is not clear whether we can do that or not if they are not part of any contract that was addressed with the debtors in the course debt. As miss Allen alluded to, we have the assets that are involved. And how do we reclaim those assets if it's a car, a boat, an RV, or whatever it may have been to use to secure the loan. We face the challenge of, one, where is that asset? Two, do we even know who the perpetrator is to go get that asset and then go through the process of reclaiming that asset? And we can't come up with a deficiency, which gets to page two parenthesis e. We can't come up with a deficiency because we have no idea until we actually are able to go through that process successful. And I forgot to mention, if you will, that these challenges, the writing off of losses and the potential liability under title nine, if we don't do this right, Fall on us when please help me to understand what we did wrong. So what's the outcome of this? Debtors get relief from the debt and the negative credit reporting. We all agree that's important. We want that to happen. Creditors have to comply with the proposed steps in the bill, write off the losses, and be open to liability if there's a misstep along the way. Let's use the language discussion that you had earlier as an example of that. Communications in writing, email or mail. I never see you, mister chairman. I never speak to you on the phone. Do I know what your language of preference is? How do I draw that conclusion? And if I can't draw that conclusion, am I opening myself up to a risk under title nine? It's a it's a simple question that we want to try and avoid as an example. So what's gonna happen in the marketplace as I talk to my creditors out there? If we see over time with this implemented that there are a growing number of losses, and keep in mind that we have not heard what the potential number or scope of the issue is here, aside from data put on the table from Dallas, Texas, If we don't if we see these losses rise, if we see our expenses rise with these, with this bill, creditors are gonna have to figure out what they're gonna do in the marketplace because we will never ever ever know whether somebody's gonna walk in the door tomorrow or ten years from now or five years from now and claim course debt. And those are costs and risks that we have to keep in mind as we're making credit available in the marketplace. It does raise the issue of retroactivity. I think the draft talks about if the debt is still valid, if you will, or in existence. I need to think about that because we charge off debt, but the debt doesn't disappear in the sense that if the individual were crazy enough to come back into the institution and try and get a loan or open an account and put money into it, we have a right to go after them for the debt that we had written off. But what's a reasonable time frame? Because you have some states that say no look back as I've checked, not correct on Wednesday when we talked about it, have no look back, and others that have various provisions for allowing a look back. So with all of this in mind, I just wanna again leave you with, I can't support this bill, and I wanna get there. Each and every one of you know how I operate in this committee in trying to find solutions, but 1.1 is not it for us. And I will commit to you, and I will share with you by Monday a list, and it will be a short list, of the issues that we would need to see resolved in order for us to agree to a bill. If we can get there, great. If we can't, then I will go back to my comment early this morning. I would ask you to take the transaction whole language out because I think we all like that. But I will work through the rest of this process, as you know, in the building to make changes to this bill, unless we can find something that we agree to here. This is not an issue that we take lightly for the debtors or for our institutions that the that the burden and losses are shifting to. And, again, what did we do? With that, I'll take your questions, and I will give you that list by Monday.

[Michael Marcotte (Chair)]: Thank

[Emily Carris Duncan (Member)]: you. Hi. Thanks, Chris. I appreciate that we got a little work to do here. My question for you is about the front end kind of application process. In the kind of know your customer process, is there anything that that bankers do to think about, like, the mental health relationship status of folks that they're potentially giving loans to?

[Chris D'Elia (President, Vermont Bankers Association)]: We are no. Knowing your customer procedures, focus on the identity of the individual and collecting documentation to, if you will, verify that identity. We are not mental health experts. The the the way let's use the fraud examples, Emily, in the transaction hold. If we know Mary Jones who comes into the bank every week and does her typical banking business, and we've gotten to know Mary over the years, but then she comes in one week and is in and is exhibiting unusual behavior around the transaction. That's when we have an opportunity to have that conversation with them and will with the transaction whole language go beyond that. But when we do the initial know your customer procedures, there's nothing in those procedures that focus on mental health, and that would be far beyond the expertise of and I would say inappropriate for a banker to try and draw a judgment on that.

[Emily Carris Duncan (Member)]: That's I mean, that's definitely that's definitely fair. Thank you. I appreciate that. Thank you.

[Herb Olson (Member)]: Yep. So I appreciate, you know, counselor forthright. And and I appreciate that you're gonna offer a list Yep. Of issues that you think would be capable, you know, to have the ability to move forward with your your support.

[Chris D'Elia (President, Vermont Bankers Association)]: Issues with language.

[Michael Marcotte (Chair)]: What's that?

[Chris D'Elia (President, Vermont Bankers Association)]: Issues with language, not just English.

[Herb Olson (Member)]: That's even better. And I would hope that you include in that list consideration of if you're not satisfied with some of the ways that the bill tries to make sure that that claim, of course, debt is credible, such that you would be able to look at it and say, that's a credible claim, of course, that if there's any ways that you think that could be enhanced Yep. I'd I'd appreciate it. Yeah.

[Chris D'Elia (President, Vermont Bankers Association)]: And I'm listening listening to all of you, but in particular, when the chairman said we don't wanna put so many obstacles in the way of trying to raise the claim, I also wanna make sure we're raising valid claims and not claims that the bar is so low you can run the risk of greater fraud because there will be people who figure this out. Absolutely will be people who figure this out and not the valid debtors, but others who will look at any opportunity they can.

[Herb Olson (Member)]: Yeah. And so just to follow-up on that, you know, that's why I focused on what sort of initiative you have

[Michael Marcotte (Chair)]: to have

[Herb Olson (Member)]: to make it so that they can look at it and say, that's a credible plan for Kerrestat. Right? Yep. Thank you.

[Michael Marcotte (Chair)]: Sorry.

[Anthony "Tony" Micklus (Member)]: Yeah. Yeah. I'm thinking that through about, you have to make up for the losses, and you have to. That's a difference. I am curious, would it be losses that you can spread out for not necessarily is that

[Chris D'Elia (President, Vermont Bankers Association)]: Customers, not necessarily Vermont.

[Anthony "Tony" Micklus (Member)]: Okay. So it it would I'm just thinking I was just wondering if if some like, you know, you I'm thinking of insurance. Right? You know, issue states might depending on the issue state, it might be more expensive. Mhmm. So know if the would negatively affect our affordability in the state of Vermont, which we are already struggling.

[Chris D'Elia (President, Vermont Bankers Association)]: And it will be looked at in a way and implemented if something is implemented in a way that is consistent with fair lending practices so that we are not treating one group differently than another.

[Anthony "Tony" Micklus (Member)]: Shouldn't have said what I said about the insurance because I don't know if it costs more in each state. I just assumed that's the case, but

[Chris D'Elia (President, Vermont Bankers Association)]: it might not be. There's some states you might even struggle to get some insurance and like homeowners, when you're dealing with other nature disasters, it becomes a challenge, I think, sometimes. But we digress. Thank you. All set.

[Edye Graning (Vice Chair)]: I want to thank everybody who's been coming to the table and meeting with me over and over and over again and try to find middle ground. We have two options on the table. They may not be the only two options. There may be option C, which is or 8.5, I don't know, somewhere in between. The notes that I'm taking are, the needle we're trying to thread here is how do we make sure that the banks can call out fraud and don't have to write off debts if they aren't coerced? How do we make sure that the banks are held responsible if they deny coerced debt when it's accurate, when it truly is coerced debt. And it's that balance. How do we make sure that we don't have people taking advantage and we don't have debtors taking advantage, we don't have lenders taking it back. How do we make sure that those two things are in balance? I appreciate the question you brought up about the debt being discharged. We haven't talked about that at all yet. And so how do we handle that is important for us to figure out. And again, keep talking about how do we go after the perpetrator? Is there a way to give the lenders the ability to go after the perpetrator? I don't know what the answer is there. We're still trying to figure that out.

[Chris D'Elia (President, Vermont Bankers Association)]: I have faith in Eric Fitzpatrick. If if I heard Maria earlier, Eric knows some great things in judiciary.

[Edye Graning (Vice Chair)]: I do, too. But not something we've figured out. But think that is the concern, right, from your perspective. How do we make sure that the lenders aren't taken advantage of? And I think from the advocate's perspective, it's how do we ensure that the banks are being fair to the debtors. And is that you're looking at me with a blank look, and I'm just trying to make sure. I know there are other details, but I think those are the two big questions.

[Chris D'Elia (President, Vermont Bankers Association)]: I understand what you're saying and appreciate it. But I'm also I don't like the word fair because what do we do? It it we we didn't set up the debtor. If we if we had set up the debtor in this way, I would say that would be completely unfair. But you're coming to us with a request. We have a valid reason to look at that request and say, you know what? Yeah. It meets the threshold. It doesn't or it doesn't meet the thresholds in our mind for whatever we can't predict all of the reasons that it might not. Is that unfair? I don't think it is if a if an institution draws a conclusion that we believe it's not core's debt.

[Edye Graning (Vice Chair)]: But that, I think that threshold and understanding clearly what it is and what could be interpreted as meeting it and not meeting it is where the discomfort comes in. Think that the advocates have concerns that the institutions, the lending institutions have all the power. And if they don't understand that if we have victims, right, who are really fighting for getting their lives back And the power imbalance is so great that even passing whatever law we pass, it doesn't tick the scales in their favor just a little bit more. That's the concern. And so I fully, fully, fully understand that our lenders, we beat them, we value that. We need to be partners in this. But it's those thresholds that have to be so clear here. And that's really where we're, I guess, where we're struggling.

[Chris D'Elia (President, Vermont Bankers Association)]: I guess, again, I appreciate that. If if we had a system where it was easy for the the debtors to go to court up front and deal with this in in some way, a no brainer. It's a no brainer. We're gonna respond to what the court tells us. But the the the notion of an imbalance of power, I I I I I don't share your view of that because we're not looking to use an imbalance of power in a in a negative way. We every one of my members every one of my members is very conscious and sensitive when I have conversations about the victims of coerced death. If the if the network wants to come out and educate all our bankers, great. We've we're we're it's not that we are blind to the issue, but I don't like the use of an of an imbalance of power. It it's I'm sorry. I'll I'll stop that. I just don't like

[Edye Graning (Vice Chair)]: not a negative for me. It's just an is, right? I have more power than my kids. Do.

[Chris D'Elia (President, Vermont Bankers Association)]: It's just is. I get it, and I'm sorry, I'm taking it the negative way. Yeah.

[Maria Royal (Legislative Counsel)]: Thank you.

[Herb Olson (Member)]: Appreciate the Thank you.

[Edye Graning (Vice Chair)]: Continued conversation.

[Michael Marcotte (Chair)]: Me as well. Other questions for Chris?

[Chris D'Elia (President, Vermont Bankers Association)]: Thank you. Thank you. Look forward to hearing. Can I start your Tuesday morning off or

[Michael Marcotte (Chair)]: think we actually have this on for next Friday afternoon? Right? Do this one more time. Perfect. I want everybody to know one more time.

[Edye Graning (Vice Chair)]: Yeah. It's gonna be fun.

[Michael Marcotte (Chair)]: We have one more person that wants to talk to us. Don?

[Donald Maurice (Outside Counsel, RMAI)]: Yes. Good afternoon, respected members of the committee. My name is Donald Maurice. I am outside counsel to the Receipt Bulls Management Association International. It's a trade association of over 600 members composed of banks, nonbank lenders, debt purchasers, and the companies that serve them. Thank you for the opportunity, to address you. A bit about me. I'm an attorney licensed in various state and federal jurisdictions. I've been practicing in the area of consumer financial services law for more than thirty seven years. I formerly chaired the American Bar Association's Debt Collection and Bankruptcy Subcommittee and have been inducted as a fellow of the American College of Consumer Financial Services lawyers. RMAI shares the sponsor's desire to protect the victims of coarse debt, but we must oppose H three eighty five version 10 as currently drafted. We appreciate the current amendments in 10 to strengthen h three eighty five, but believe there's still work to be done. And that means preventing consumer and creditor confusion. We have worked on similar legislation across the country and most recently in New York with its latest adoption of a course debt protection for consumers. We recognize this issue is of significant local concern, so I'm gonna limit my comments to what may cause confusion for those who operate nationally and credit report. As you may know, federal regulations govern how creditors must respond to consumer claims of identity theft when credit reporting. To this end, the more uniformity we see from state to state means creditors are able to better build compliance systems to address harms. It is necessary to clearly distinguish between identity theft arising from coerced debt and other forms of identity theft. This avoids consumer confusion and enables creditors to properly address the correct consumer harm. I've provided a red line which points this out, and I could take you to it right now, and and you've already raised it. And that's in the definition of adequate I'm sorry. It is it's called adequate documentation. In sub b, you'll see a difference from sub a, c, d, and I'm gonna check beyond that. Yeah. You'll see the difference between a, c, and d. A, c, and d all refer to course debt, something arising from course debt. It doesn't appear in b. So b would allow any valid report to be filed to trigger the course debt provisions. We believe this is a technical omission and that, there, you can add after agency regarding the debtor's claim of course debt so that it's clear that the trigger event is any type of coerced debt rather than just anything else, like a common form of identity theft where the consumer doesn't even know who the perpetrator of the harm is. It could have resulted from a data breach, for example. And this would have to align later on on page 12 where the same sub b is repeated, again. That, I think, would clarify, at least for credit reporting purposes, what is a trigger event. Are we dealing with, run of the mill ID theft? I hate to say it that way, but I think you know what I mean. Are we dealing with ID theft arising from worse debt? And finally, I I have to tell you, I really enjoyed listening to the discussion here. I think the points raised by all parties are are excellent. We're prepared to assist stakeholders, all the stakeholders and the committee, whichever way we can. But I just wanna bring something to your attention that I think is important, because the discussion here focused largely on banks and credit unions. This bill is not limited to credit extensions. It's not limited to debt that arises or is owed to a bank or credit union. It applies to all noncommercial debt. And as I read this, that can include an unpaid bill, even a bill owed to a small business. So the scope is broader than extensions of credit. It is encompassing all noncommercial debt. That's all I have for you today. It was a pleasure. Thank you for the time. And if you have any questions, I could take them.

[Michael Marcotte (Chair)]: Any questions for Don?

[Herb Olson (Member)]: Thanks very much. Yeah. I think you made a reference to the New York statute. And I can't remember whether that was a positive or negative reference. Is that was that something that that you think does a trick or or that has faults too?

[Donald Maurice (Outside Counsel, RMAI)]: We in the end, we supported the legislation in New York. Okay. So we worked we worked with the sponsor, and we also worked with governor's council on that.

[Herb Olson (Member)]: Thank you.

[Michael Marcotte (Chair)]: Other questions for Don? Don, thank you. Yep. I think we'll do our best to stay in contact with you so that we can run things by you as well if need be. I appreciate you reaching out to us and thank you.

[Donald Maurice (Outside Counsel, RMAI)]: My pleasure. Thank you all. Have a great day.

[Michael Marcotte (Chair)]: You too. So I think that's the end of our week. So I want everyone to know we have one week to get this into a place where we can move it. So I would ask that we, everyone that's working on this, not concentrate so much on what judiciary needs to do, but what so that we can pass it over to them, I'll talk to the chair, but I think he'll need to take possession of this bill as well. It's more than a drive by as far as I'm concerned. And I know everybody's been working hard and working in good faith, and I I just have people to continue to do that. I know everybody has their advocates have a position. I know that the creditors have a position as well. And like everybody has said already, we're trying to thread that needle so that we can help people that are victims of coerced death. And we also help people that are being taken advantage of in these suspicious transaction activities that are going on too. So this is important, This may not be playing out there in the world of Vermont as being, but this is an important, really important bill, I think, for Vermonters. So let's keep working and I think we can come to a place where everyone can support this bill next Friday. So with that, again, thank you everyone for working on this and thank you committee for your work this week. We have a packed week next week. We have H639 scheduled for Thursday after the floor, so that we can move that. That's the genetic data privacy bill. We have two zero five scheduled, I think, Tuesday? Wednesday. And then Wednesday. So we're hoping I think we're really, really close with that one. So I think I think we can move that. And Friday Five to twelve. At five to twelve. We have the Thursday on or Friday. Yes. Yeah. For Thursday or Friday. Yep. Thursday. Yeah. And then Friday, we we're doing this. In the meantime, while we have all this other time, we'll be working on budget. We have a packed week on that. We'll start working our letter. We're hoping that this subject, we can we can get this done on Friday afternoon. Hopefully, it's really in a position where it's ready to go, and then we'll start working on our budget letter. If not, then we'll appropriations if she can hold on till Tuesday so that we could finish writing that letter. So that's what next week looks like. And then the week after that, it's gonna be even more fun filled and packed.

[Herb Olson (Member)]: Is there any good way I mean, I've sort of been keeping a list of budget items, but have we kind of aggregated or, you know, it'd be helpful for me to get in my head what the

[Michael Marcotte (Chair)]: list of Well, we'll be bringing in people that are asking that are outside the budget. We want to hear from DZAC, UVM, We're going to hear from Boric, and we want to hear from There's Schirler and a whole host of people that are asking. That that's I understand that. I'm just trying to get the list to my head. It'll be in it'll be on the agenda. It'll be posted tonight. Any

[Herb Olson (Member)]: questions?

[Michael Marcotte (Chair)]: Okay. So with that, we're going to sign off for the week. We'll be back here Tuesday morning at 09:00. Committee, have a good weekend. Everybody else here too, have a good weekend. Hope you have downtime and can enjoy the weekend. That's gonna be warmer.