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[Music] consumer protection to order today is monday january 25th we do have a quorum today we will have uh acting commissioner miss arnold will be presenting to us today on behalf of the department of commerce so ms arnold if you would like to go ahead and do your presentation would you have would you have a preference as to if we ask questions as you go or if we just wait and ask them in the end what would you prefer why don't we wait and ask them for uh at the end i think that's easiest we have quite a bit to cover so i want to make sure we do all of our areas justice okay so uh members if you have questions just kind of keep track of them and then we'll ask the questions at the end of the presentation miss arnold if you please go ahead and do your presentation great thank you chair names and members as chair james mentioned i'm grace arnold i'm the temporary commissioner of the department of commerce and i have with me today assistant commissioner for government and external affairs peter brickwitty our government affairs director megan verdeja and our cfo tim janke megan has some slides so i'll just wait a minute to get those up and then we'll go through our presentation all right and if i can get my computer to do what i would like it to do there we go uh all right so so today i'll walk you through what commerce does and where you would see us and i've brought along a few of my colleagues virtually so you'll see some short video clips that will allow you to get to know who we are the work of the department is focused on minnesotans everyday financial transactions this can mean anything from purchasing insurance to filling up the gas tank to do that our teams investigate and evaluate those transactions and advocate those services to be fair accessible and affordable this is our leadership team we have a wonderful team i'm proud to lead them i i'll just make one quick note that i'm listed here twice because i'm currently serving in two roles this is an overview of the services within commerce we have three major divisions financial institutions insurance and energy resources the common theme for each of these services is that commerce evaluates financial transactions and we investigate those transactions the department of commerce is in a unique position of serving at the intersection of consumers and businesses we want to create a fair and equitable marketplace which benefits consumers and businesses we provide consumer protection and assistance we conduct investigations of suspected insurance and senior financial fraud and we license about a quarter million professionals and businesses i'll explain more about these services as we go through the presentation so where would you see the department of commerce we like to see that say that commerce is with you every day when you're filling up with gas you would rely on commerce's weights and measures division to have the gas pumps check for accuracy when purchasing a home you would have a realtor licensed by commerce your mortgage could be from a state regulated finance financial institution and your homeowner's insurance policy would be reviewed by commerce if you find yourself rebuilding after a disaster you will likely be contacting your insurance company whether health insurance homeowners business auto variety of insurance com products your insurance would be overseen by commerce you can also be assured that the professionals you interact with your agent your appraiser your investment advisor are all qualified to assist you because they are all licensed by the department if you need financing to rebuild one of the financial institutions regulated by commerce could be involved and finally this is largely outside of the purview of this committee but many minnesotans and minnesota businesses are working to reduce their energy consumption and those efforts involve a variety of aspects in commerce's energy so i'd like to introduce you to mary otto with a short video explaining who works at commerce and how we work with various communities across minnesota i think mary is muted yep i was just gonna ask let's see if we can try that again commissioner i think we're gonna switch presenters uh if committee just bear with us for one second so we can get that audio to work sure [Music] i mean hello my name is mary otto i'm the tribal liaison at commerce my role is strengthening relations between the commissioner and tribal leadership in the following ways to understand the impact commerce has an indian country to delineate the effects on each tribal nation and to coordinate consultation with commerce and tribal leadership when decisions are being made on policy and program issues [Music] so as you'll see in this slide commerce has a presence in communities across the state our statewide reach through commerce's pro is through commerce's programs services staff and partners and that includes state chartered banks and credit unions which are located across the state the map here shows locations of minnesota's state chartered banks those are the banks overseen by the department and our oversight staff that oversee those banks are also located throughout the throughout the state commerce's energy assistance program contracts with energy service providers that are located throughout the state our weights and measures staff are located in all regions and they're there to check the scales at gas stations grocery stores agricultural and other industry our licensing division offers over 2 000 examination locations across the state for professional licensing exams one of commerce's functions is to protect consumers and one way we do that is by investigating reports of financial exploitation or fraud against seniors and vulnerable adults so these are some real life questions that have come into our department you can't make these things up so one was does my granddaughter really need a thousand dollars wired to her did i really win the lottery and this is a personal favorite although not because of the outcome but just because of the circumstances someone was uh soliciting money uh pretending to be an oil worker in love with a particular constituent so in our work on senior financial fraud protection we've found that the covet 19 pandemic has created what we call a perfect storm seniors are more isolated they don't have family and friends around to ask questions such as did i really win the lottery and they're more susceptible to fraud since the expansion of the senior financial fraud protection law went into effect on august 1st commerce's senior financial fraud ombudsman has invest has opened 43 investigations and assisted in preventing approximately 700 thousand dollars in funds belonging to minnesota seniors from being lost to fraudulent scams the ombudsman has conducted 20 presentations and training for more than a thousand attendees across the state in partnership with minnesota financial institutions and organizations like the aarp now i will introduce you to our ombudsman who would like to thank legislators for giving us some new tools to fight senior financial fraud hi i'm marty fleischer the senior financial fraud ombudsman at the minnesota department of commerce there's been a frightening increase in consumer fraud among our older more vulnerable minnesotans nationally it's estimated that fraud losses are 50 billion dollars a year our efforts at the department of commerce are to investigate senior financial exploitation and to identify and prevent senior fraud we were given new tools under the 2020 revisions to the safe senior act which allows our department to work with more financial institutions including banks credit unions financial advisors investment advisors and broker dealers to put holds on funds or delay transactions when we suspect someone may be the victim of a scam in the past our only option had been to close the customer's account i received these suspected financial exploitation reports and then we investigate and do our best to stop the fraud the number of cases is overwhelming that's why prevention is key we do prevention outreach around the state including virtual presentations studies show that when someone knows about a specific scam they are significantly less likely to become a victim another area where commerce works on financial transactions is within our division of financial institutions we work to ensure the safety and solvency of minnesota's banks credit unions and other financial institutions in order to protect consumers and promote a fair and competitive marketplace within our securities unit we register examine and regulate thousands of investment professionals and have oversight of investment advisors who manage about 9.5 billion dollars in minnesota's money minnesotans money and life savings we want to ensure consumers have access to registered reliable investors the department also licenses examines and regulates banks credit unions non-depository financial institutions and certain mortgage companies you can see here that we have quite a quite a large number of assets and deposits under our regulatory authority and a large number of companies as well so i'll now introduce you to mark hasty he's one of the experts in our financial institutions division hi i am mark hastie the director of non-depository financial institutions here at commerce we have a number of people who are subject matter experts in our industries i am involved in leadership roles for a number of national regulator associations there are three major reasons why these national associations are important number one it allows us to be more efficient in what we do number two we can adopt best practices from states around the country and third and most importantly we can coordinate with multiple states for the oversight of large national corporations example of these companies include quicken loans paypal and sofi lending state regulators are trying to do a better job of having network supervision to coordinate our regulation in both licensing and examinations we have a seat at the table to drive forward how this network supervision will work especially for the largest companies we regulate i will end with one good example of our efforts in 2021 we will be part of a pilot for a new initiative called one company one exam for one of our largest mortgage companies and you can see there the work that we're doing in coordinating with other states really is in part to make regulation easier for companies the one mortgage or the one company one exam is an example right one company one exam not a bunch of exams from different states all right so i'll turn now to our division of insurance our staff works to ensure consumers have access to reliable insurance so we examine analyze and license insurance companies to ensure they have the ability to pay claims if consumers have them and that these carriers are financially reliable we also review form and rate filings that ensure that the products offered are fair and reasonable i've listed here the few line insurance lines that commerce has oversight over the insurance division also administers and oversees the reinsurance program in health insurance licenses and licenses pharmacy benefit managers and oversees business practices in that area collaborates with other state agencies and stakeholders to identify new health policy options and solutions for consumers and through a variety of providers of last resort we help ensure that there is insurance coverage for minnesotans who cannot otherwise purchase it we also monitor markets and make policy recommendations to maintain market health and stability so i'll turn next to our enforcement division this has this division has four functions the consumer service center the civil investigations unit the criminal investigations area and market conduct examinations i'll go into more detail in each of these four areas but the core work of the enforcement division is to create a fair marketplace and encourage responsible business conduct the consumer service center is where consumers or businesses can ask questions or file complaints about commerce regulated industries and licenses our staff within the enforcement division in 2020 responded to over 11 000 calls the civil enforcement area works to protect consumers in a variety of areas listed here i'm going to introduce you now to jackie olsen who leads our multi-industry team and we'll explain more my name is jacqueline olsen and i am an audit director at the minnesota department of commerce in their enforcement division enforcement work at commerce involves contact on a day-to-day basis with businesses and consumers we want to make sure that the market is fair but we also want to protect minnesotans from unscrupulous businesses and business practices in addition to the enforcement actions that we take we also help businesses and consumers understand the regulatory and legal requirements to operate in the industries that they care about if there's an issue that may harm their liveliness or business we want them to know about it we want to raise red flags and educate the minnesota both consumers and businesses to protect them their families and the businesses for example we've recently become aware of an increasing number of scams involving gold and bullion products an investment in gold so we sent out a consumer alert to make sure that people are aware of what they should look like so to make sure they're not losing their money another example that we're dealing with is is toxic toys we're trying to make a policy change to make sure that commerce has the enforcement capabilities and the tools necessary to keep unsafe toys off the shelves and allow families to to have better choices for their children when it comes to toys so i'll pick up on two things that jackie mentioned so one will be back to to talk with you about the legislative proposal she mentioned but she also mentioned businesses quite a bit in her um in her video and you know i think it's important to note that we hear from businesses with complaints about other businesses quite often and that that's because one of our jobs is to ensure a fair marketplace and we want to make sure that there is responsible business conduct so we often hear from not just consumers but businesses as well because they also want a fair marketplace so the two other functions of the enforcement division are the commerce fraud bureau in 2020 our investigators initiated about 3 600 cases so that's 70 cases each week of the year in 2019 the overall economic impact of cases and that resulted in prosecutions was about 29 million dollars and um you know an example would be auto insurance fraud there may be a staged accident and the idea is to um you know make a claim when there isn't actually one the market conduct examination is the last function of our enforcement division that i'll talk about we do a formal review of a company's policies and practices and this is an investigative tool that we have for companies where there are numerous or habitual complaints now that i've covered how commerce investigates financial transactions let me explain how we evaluate financial transactions our weights and measures division is the oldest unit within commerce this is a fun fact for me when i was learning about some of our divisions it was established in 1885 and that division works to ensure consumers get what they pay for at the gas station or grocery store we also evaluate scales and measures for bulk plants green elevators mines terminals airports and other businesses and we have an accredited metrology calibration service i'll talk now about our licensing division which licenses professionals in the areas of insurance real estate property appraisal and debt collection we license over a quarter million professionals and approve about 2 000 continuing education courses every year in our unclaimed property program commerce serves as the safeguard for abandoned property turned over to the state by financial institutions former employers real real retailers and others we conduct outreach to return lost property to minnesotans and in fiscal year 2019 we returned about 35 million dollars to minnesotans you'll see here commerce's new unclaimed property website hich was launched in october 2020 so we're very grateful for the partnership with the legislature and providing the funding for this website and the system that that backs the website it's a best-in-class system and it really improves our ability to reunite minnesotans with lost property and makes the the claims process much smoother so last i'd like to highlight some of the contributions that the department has made in responding to the pandemic so we've worked with our state health insurance providers to waive co-pays and deductibles for covent testing and treatments that's given peace of mind for a number of folks we've also worked with our state chartered banks and credit unions to instill consumer trust and safety in the funds held in the financial institutions and to present prevent a widespread bank run or an uncertainty that was more toward the beginning of the pandemic we worked with the state's utilities to get a voluntary pause on shutoffs ensuring families have reliable power and heat while they're asked to stay home to combat the pandemic and we've worked with the legislature on authority to extend regulatory guidelines and provide relief to our industries where it's needed one thing that i'd like to point out in all of these is that we've really tried to work with the industries to to come up with solutions or options that are mutually agreed upon so i'd like to turn now to a couple of brief slides about commerce's budget so you'll see here our revenue by program so you can see that the department brings in over 700 million dollars per year we've highlighted the the services that are under the purview of this committee we get quite a bit of money from the federal government particularly in our energy program but that's um outside of this committee's jurisdiction i will note just that the largest portion of the energy resources is for energy assistance and weatherization which are federal grants directly to individuals revenue in the enforcement division is primarily related to securities insurance fraud prevention and auto theft prevention and in the admin services primarily comes from licensing fees and unclaimed property here you'll see our expenditures by program they follow a pattern similar to revenue the federal funding commerce receives in energy assistance and weatherization are passed directly to service providers and then on to individuals excluding the premium security plan the division of energy is the biggest expenditure in the agency the premium security plan is in part federal money so the last slide we have here shows revenue commerce brings in versus the expenditures from the general fund for commerce on a biennial basis we bring in about 240 just under 245 million dollars to the general fund and our base appropriation is about 52 million dollars the remainder is sent to the general fund so i'll leave with a couple of slides about who to contact at commerce if you have a consumer complaint or a question concern then the consumer service center is here for you that could be a complaint about auto insurance or workers compensation medical if you have a medical claim you're wondering about or your family member is worried about a potential scam all of those questions can be can be directed here next i'll give you the contact information for our fantastic government affairs team megan is on the zoom with me today and sergio is her legislative assistant so thank you chair james thank you members i'm happy to take questions now well thank you very much uh uh miss arnold for this presentation members are there any questions if there are please raise your hand um senator franzen thank you mr chair and thank you commissioner i just have a few questions uh from the presentation and overall uh trends that we're seeing because of the pandemic thank you for that presentation to give us an overview i'm i'm curious on one piece that we've seen reflected as early on in the pandemic when we were talking about house price gouging why haven't we had a legislation or a law on that that would be something i'd like to know because i know it's going to come up this session also um trends in the in the marketplace there has been some a lot of business have been obviously active and affected by the pandemic and one of the rules you mentioned is a fair marketplace can you give us an example or or maybe um help us understand what the trends you've seen lately with regard to covet earlier on i've received a lot of business inquiries about how businesses were treated differently depending whether they were shut down or not by the executive orders can you give us a little light into what you guys saw at commerce and maybe some trends from that and and lastly my last question will be on reinsurance can you just quickly talk about or maybe we can take this off a line because i'm sure it'll come up again what uh what's the balance in reinsurance right now and what's the status of the reinsurance program sure so thank you chad ames and senator franzen uh so let me make sure if one is price gouging two is trends and then three is reinsurance all right so so price gouging i think you know a lot of what you've seen as the the attorney general's office has is primarily responsible for that we have been monitoring um the potential for price gouging related to testing covet testing there's a federal law that kind of provides the outlines for how that works and so you know we're monitoring it i don't know that there's anything in particular that we've seen so trends in the marketplace i think is you know the businesses we oversee other than being designated essential services at the very beginning of the pandemic and so being allowed to stay open have had kind of variable impact it kind of depends in general we've seen claims lower than usual so fewer people are driving uh you know there was laws on certain kinds of health insurance uh or health services and so in general we've seen claims be lower um than expected but that's not a hundred percent true kind of depends but those are those are the types of things that we're watching for and um we'll watch the impact on the market over time the third one of the friends and you follow up miss arnold go ahead sure so i just want to make sure so the third one was reinsurance i think that's one that we can you know talk about separately the governor's budget isn't isn't out yet um and so we can we can talk about that imminently senator friends and a follow-up thank you mr chair and thank you commissioner i guess the follow-up would be on the fair marketplace is there is because there's overlap with department of economic development and the work and the role of what they do but if someone has a complaint a business has a complaint about unequal treatment uh under potentially executive orders or how those were and i'm asking because this has come up in my constituents and i want to make sure i understand how to help them navigate where do they go do they go to you in commerce or do they go and file a complaint through department i mean i know there's some processes that are also being developed in terms of um having appeals but uh a typical complaint about this gas station's being treated differently than my other gas than this other gas station would that be something uh commerce would have an oversight and and uh how would that go about sure that's not something we have thank you chair names and uh center friends and that's not something that commerce has oversight over we can follow up maybe with some specif and direct you direct you to the right place if that's helpful senator howellsley thank you mr chair and commissioner i was just wondering the role of the senior financial fraud ombudsman is that a new role at the department of commerce ms arnold thank you chair james and senator housley yes that is a newer role um and you know as uh as marty mentioned in his video you know one of the things that he's responsible for is um working on the senior financial fraud legislation that we you know now have more of so thank you for championing that um so you know we're kind of it's new so we're watching how that develops and and trying to understand you know what we need to be thinking about next um that is great i am senator oh thank you mr chair um and commissioner if i could get some of the data i know he gave us some data that there are 48 ongoing investigations right now but i'm just wondering if i could get the data and you can send it to us later of how many complaints there are how many cases that are actually going to this office and then secondly if the public is watching this right now and they think that you know the guy at the oil rig is in love with them where is the website that they can go to or what phone number can they call sure thank you chair chair dames and senator housley so uh we can send the slide that we had up before that had the phone number and website is the right place to go um and we can provide you with with some of the stats on that um in follow-up to this uh mr chair follow-up senator housley thank you mr chair my printout didn't didn't get it so i got i got marty but i didn't get that so um thank you yeah if you could if you could get me that that would be great thank you mr chair commissioner thank you senator housley uh i miss arnold i'm talking about following up a little more on the senior fraud i think there was an a number in the billions that uh was talked about fraud is that a nation is that number i think it was in mr fleishecker probably can reiterate what that number was in the in fraud but i was curious if that was a nationwide number that there seemed to be a quite a high number so the number that marty referenced in his video was a nationwide number and do you know miss arnold what percent of that is actually for seniors is that all senior fraud is that fraud in general including senior fraud that is a great question i think so so chair james i think that's something we'll follow up on i believe it's senior fraud but i don't want my team to come chasing after me and tell me that i right give you the wrong information do you know about what the number would be in minnesota for senior fraud that's something else so chair names that's something else we can follow up on the national estimate i think is not broken down by states but we could probably give you what that might be and then another question miss arnold on the number of fraudulent cases that are filed it was like 36 000 do you know what percent of those were people are actually found uh guilty and are prosecuted any idea so chair james i think you're referencing that um the insurance fraud and yes it was 3 600 cases 3 600. uh so that is also something we can get back to you on um so we have the economic impact so that's the overall you know how much money we've you know sort of prevented going or got back into the system but um prosecution rate i think we'll have to get back to you on okay and then switching subjects a little on the uh the dollars that we're giving back to the public the money that is is being given back to the public because it's uh say a company goes out of business or something or they can't find somebody to put the money into that fund at the department of commerce and i think it was like 35 million has been refunded to the public uh is that number a couple of years ago we made some changes there and not only did we make some changes in the law but we also increase the spending to advertise to the public of this on claim property fund has that driven the number of dollars up are we getting to the people and are more people getting their money back or is it kind of static any idea so chair names that's a good question i think so i'm going to answer it by saying that we had a new system put in place in october and so compare i think it'll be a little bit difficult to compare numbers because we have you know smoother processes now my suggestion would be to see that and wait for the impact of the unc the actual system investments and will i think then have quite a bit better idea of how effective that money was thank you uh senator franz and senator housley do you have other questions you just forget to take your hands down oh mr chair sorry senator howe thank you mr chair and uh uh commissioner arnold is that money that's in that unclaimed is that just for monies that are unclaimed in minnesota or some of that unclaimed minnesota citizens that have uh accounts in other states that it has gone unclaimed does that money ever find its way back to minnesota miss arnold thank you chair james and senator howe there's an unclaimed property program in every state and so each state's laws govern what is returned and in what way um under the you know under the statute so it's unclaimed property from minnesota and returned in minnesota senator howell can you follow up yes thank you chair james is there is there then do you provide a link for those uh minnesota citizens to get to those other states websites so they can look for because i i just know that uh having family members that have moved throughout the country uh whether that that's available to [Music] ms arnold chaired ames and senator howe yeah yes if you go to our website you can uh you can access other states websites and you can search across multiple states so that's one of the benefits of the investment the technology investment we made members any other questions again members any other questions seeing none miss arnold if you or your staff want to make any final comments i'll just thank the uh thank the committee and look forward to working with you well thank you miss arnold and thank you for your your members of your team that came with you today and presented uh we certainly do appreciate it and look forward to working with you uh one last question maybe this is an unfair question but uh do you know miss arnold any timelines as far as the appointment of the new commissioner thank you chair james i don't thank you well again thank you for your presentation we certainly appreciate it and members of this concludes the business in front of the senate commerce and consumer protection committee our next meeting will be next monday february 1st there being no other business come before the committee we are adjourned you