COUNCIL OF THE CITY OF PHILADELPHIA COMMERCE AND ECONOMIC DEVELOPMENT Room 400, City Hall Philadelphia, Pennsylvania Monday, May 13, 2024 X:XX a.m. PRESENT: COUNCIL CHAIR MARK SQUILLA COUNCILMEMBER JAMIE GAUTHIER COUNCILMEMBER KATHERINE GILMORE RICHARDSON COUNCILMEMBER RUE LANDAU BILLS 240118, 230408 - - - 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. COUNCIL CHAIR SQUILLA: Please take your seats. Good morning, everyone. The hour has come and we are ready to start our committee on Commerce and Economic Development today, Monday, May 13th. There and I note that a quorum is present. To my left, Councilmember Gauthier, Councilmember Gilmore Richardson, and newly appointed by the council president, Councilmember Landau. The hearing is now called to order. This is a public hearing on the Committee of Commerce and Economic Development regarding bill 14 number 240118. Mr. Monacle (phonetic), please read the title of the bill.
Bill number 240118, amending Title 9, Regulation of Business, Trades, and Professions of the Philadelphia Code, to add a new chapter concerning protections for consumers against unfair methods of competition in unfair or deceptive acts or practices, and providing remedies, all under certain terms and conditions. COUNCIL CHAIR SQUILLA: Thank you. Now please call the first panel that will be 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. available to testify.
Can we please have Renee Garcia, Lydia Furst, and William Hall, please? COUNCIL CHAIR SQUILLA: Good morning. Well, you could testify in that order, Ms. Garcia, if you would like to state your name for the record and then proceed with your testimony.
Doing a little shimmy over here. Good morning, council person. Sorry, Chairperson Squilla today. And committee members, thank you for having me today to testify in support of bill number 240118, the Consumer Protection Ordinance. My name is Renee Garcia, city solicitor of the City of Philadelphia Law Department. I'm here with the chief of our Affirmative and Special Litigation Unit, Lydia Furst. Our department proudly represents employees, departments, agencies, boards, and commissions of the city of Philadelphia in the interest of Philadelphia residents and taxpayers. Through laws, long-standing code enforcement work, as well as the more recent affirmative 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. litigation efforts, the law department regularly acts to protect the rights and interests of Philadelphia residents. This important piece of legislation, introduced by Councilmember Rue Landau on behalf of the administration, protects consumers from the threat of deceptive business practices and provides tangible relief by holding repeat offenders of fraudulent activities accountable at the local level. Philadelphia currently depends on the Pennsylvania Unfair Trade Practices and Consumer Protection Law, which allows enforcement through either the attorney general or the district attorney. The absence of specialized local mechanism within the mayor's purview exposes Philadelphians to the adverse effects of frauds and scams. As the city does not currently have standing for enforcement under Pennsylvania law, the Consumer Protection ordinance empowers the law department to investigate potential violations, working alongside an agency designated by the mayor. 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. If violations are found, the law department would be able to take swift action in the Philadelphia Court of Common Pleas, seeking remedies such as injunctive relief, civil penalties of up to 2000 per violation, and compensatory damages, and restitution for affected consumers. When Philadelphia residents are victims of consumer fraud. It hurts the city. It hurts our neighborhoods, it hurts our common economy. It hurts our people. This ordinance gives the law department the ability to address and combat that fraud in a timely manner and obtain relief for those directly impacted. The law department looks forward to continuing our work with city council and the Parker administration to promote a secure, equitable, and vibrant economy, and we are greatly deep -- we are deeply grateful for your consideration of the implementation of the Consumer Protection ordinance. And now I will turn it over to my colleague, Ms. Furst.
Good morning. My name is 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. Lydia Furst. I'm the chief deputy city solicitor of the Affirmative and Special Litigation Unit in the city's law department. I'm here today to advocate for the implementation of the Consumer Protection Ordinance, which will further the mayor's goal of making the city safer with economic opportunity for all by protecting Philadelphia consumers from scams and fraud. The Consumer Protection Ordinance is intended to specifically target businesses that knowingly and repeatedly engage in fraudulent practices. Under the ordinance, the law department will have the authority to directly address harms caused by these businesses when they exploit Philadelphia consumers. Examples of the fraudulent business behaviors that this ordinance seeks to address include false advertising practices such as passing off goods or services as those of another, causing likelihood of confusion or misunderstanding about the material facts of a product or service, representing that goods are original or new, if, in fact, they are not making false or misleading 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. statements about price reductions. Other fraudulent business behaviors that the ordinance will seek to address include certain pyramid schemes, businesses that ignore or fail to grant a consumer's legitimate request for a refund or to cancel a service or product subscription, and businesses that use a document related to a consumer transaction which waives the consumer's right to assert a legal defense to an action. The Consumer Protection Ordinance will be good for Philadelphians who can be assured that businesses that exploit and mislead consumers will be held accountable. It will also be good for local businesses that do business lawfully, which are greatly impacted by the unfair practices of competitors acting in bad faith. Thank you for your time and your consideration of this important legislation. I'm happy to take any questions about the ordinance 24 along with Solicitor Garcia.
Thank you 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. very much for your testimony. Please state your name for the record and proceed with your testimony.
Good morning, Chair Squilla and other members of the Committee on Commerce and Economic Development. Again, my name is Will Hall. I serve as the deputy executive director for policy and programs in the Office of Community Empowerment and Opportunity, or CEO. I'm testifying in support of bill number 240118. CEO is the city's community action agency. We provide leadership on issues of economic justice by advancing racial equity and inclusive growth to ensure that all Philadelphians can share in the city's prosperous future. Our economic mobility strategy focuses first on wealth creation in the form of workforce development, benefits, access, and financial empowerment, and second, on preventing wealth extraction, which is what happens when predatory 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. financial products and practices are able to proliferate. In 2022, American consumers reported losing $8.8 billion to fraud. Last year, consumers in the Philadelphia metro area reported over 97,000 instances of fraud. CEO's wealth creation efforts are undermined by financial fraud and other wealth extraction, which is why we work together with the solicitor and the treasurer to launch the Consumer Financial Protection Task Force in 2022. The task force has brought together local consumer financial protection entities such as the Attorney General's office, the DA's office, CLS clarify, Philadelphia legal assistance, and others. From 2022 to 2023, the task force worked with council, the Department of Records, Planning and Development, and others to address the MV Realty Mortgage scam. This scam led to approximately 500 predatory 40-year mortgages being placed on Philadelphians homes. Even if each home was only worth $100,000, this scam threatens $50 million in 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. local home values. The task force participated in council hearings and conducted community information sessions, and the attorney general ultimately brought a lawsuit against MV Realty. This has curtailed MV Realty's operations in Philadelphia, and they have since sought bankruptcy protection. Scams like MV Realty, unfortunately, are not a one-time thing. While the task force and its members are working hard and effectively, we need more tools to address threats and protect Philadelphia consumers. For this reason, CEO supports this bill, which would give the solicitor expanded ability to address predatory financial products and practices. Thank you for the opportunity to testify. And I'll also be happy to answer any questions.
Thank you. Thank you so much to panel one. Colleagues, do you have any questions? Okay. The acting chair is pleased to recognize our colleague, Councilmember Landau.
Thank you so 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. much. Thank you all for being here today. This is a very, very important addition to our code. I'm so happy to give the law department and the city the powers of consumer protection that we so desperately need. A couple of questions that I have for Solicitor Garcia. Can you tell us a little bit about what implementation of this bill 10 will look like?
Thank you, Councilmember. A little bit depends on if I get any support for staff.
That's my second question, so let's pull them in together. What support and resources do you need to implement them?
Yeah. Ideally, I'd like to hire an attorney, investigator, and a paralegal, and if I could get a little more money to hire a more seasoned attorney who's been doing this work on the outside, that would make it run a little bit faster. We do have to figure out from here how we're going to do intake in a way that's not overwhelming. I can't handle like 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. 10,000 emails so Mr. Hall can talk about the email inbox that we already have and how he's gotten some information through that. Obviously, we've got the task force too, and I did present this bill to the task force last time we met to say, I'm going to need your partnership. Right. Start looking for repeated schemes, because that's what I can break off from kind of a class perspective. And we have community legal service here. We also have the SeniorLAW Center. So these are really important partners. It is not going to be that we open the floodgates and we can take every single case. Right. So if I can get my core team and get the -- a more directed referral system going with our community partners who are on the ground, then it would be the investigator who goes out, who finds victims, who interviews and builds our case. Then we would file in the Court of Common Pleas and look for injunctive and sort of class-wide compensatory relief.
Do you ever see 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. a time where we could open more of a consumer protection office, where we could take individual complaints as well? It's what they do in New York. They're helping folks on an individual level as well as a class level.
Yeah, that is my hope. Obviously, I don't know what the mayor's vision is, but that is my hope. Because like you said, in New York, they do have, they -- I don't know or 30 people working on this, and they bring 13 in tens of millions of dollars. So it is the 14 kind of thing that will pay for itself. So my 15 vision is, let's see how this goes in a year, and 16 maybe for the next budget cycle for FY 26, we can 17 think about building out internally. 18 I don't know where it would live 19 internally, but I think that kind of 20 sustainability, like we're building with the Office of Worker Protection, is the way to ultimately go.
Right. Can you tell us more about how it pays for itself?
Yes. Well, sorry, the 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. mayor is calling me. Oops, can somebody -- New York brings in tens of millions of dollars a year because we can -- sorry, I lost my train of thought. New York brings in money because, in addition to the compensatory damages, there are fines and penalties. So that money would come into our general fund. So if we start getting a practice where we're getting a lot of money coming in, then, like I said, like, enough money is coming through the general fund that's paying for the personnel that are -- that are working on the cases.
Great. And then can you tell us a little bit more for any of you, about which particular industries you think this will?
Which particular industries that will be -- that you -- we could address the wrongdoings with this?
Yeah, well, I think, as you see by our friends here, obviously there's going to be a lot in the space of housing. 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. Right. And that's where we saw MV Realty. Certainly -- where's the SeniorLAW Center? Certainly, there's a lot involving elders. But, you know, I'll turn it over to Mr. Hall to say what other types of matters that he's seen, either through the task force or through the inbox that we have.
Yeah, sure. So, you know, I think starting with examples like MV Realty, the sort of innovation that you see in the predatory lending space is something that I think certainly an office of Consumer Protection or dedicated individuals in the law department would want to spend a lot of time sort of like mining. And I appreciate the solicitor's comment about, like, working with the task force, because that really is where this grew up. That example in particular was a lawyer at CLS who had, you know, a handful of clients come in with this really innovative and terrible- looking financial product. Some of our task force members will be quick to point out it's not just the fly-by-night financial actors that 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. mainstream financial actors like big banks and multinational sort of financial institutions, can oftentimes run afoul. Of course, the Wells Fargo litigation that the law department participated in years ago is a great example of that. You know, examples of financial institutions opening up accounts, whether it's credit lines or depository accounts, without express authorization from consumers. I think are really good examples of the sort of consumer protection issues that can grow up in the sort of like mainstream financial institutions. And then last but not least, it's consumer issues that are not around lending and banking, and finance. One of the -- there's a -- there's an auto repair company that's been complained about at least a half a dozen times into our consumer protection inbox over the year and a half that we've had it open. And it's very clear that the issues that folks are complaining about are meant to enrich the auto repair franchise while not providing adequate service to consumers. And doing so in a way that leaves consumers without a 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. lot of options. The best advice that we can often give to them is you could contact the bar association and the lawyers of the law referral service, but they're only out a few hundred bucks and nobody's putting down a retainer to fix something like that. And so oftentimes those shops just get away with it.
One more question. Is that okay? Last question is, do you see any use for this law in the landlord- tenant context, particularly when tenants are assured by landlords that repairs had already been made or the condition of the property is in a good state and tenant finds out that it's in very poor condition and or any misleading -- any misleading causes of a lease.
I see space if it is a landlord with multiple properties or multi, multi-tenants. Right. Because individuals already have standing under the state law, this is meant to give us. So I'm really looking at sort of a class-wide basis. So if you've got 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. like a Brith Shalom, I know you're all following that. So that's the kind of thing that I would use this against, not the one-on-ones, you know, if it's a mom-and-pop and have one level, really that's taken care of through landlord- tenant or through the state law with individual standing. But the bigger, again, like looking for repeated class-type harm.
Thank you. Thank you so much, Councilmember Landau, for your work. The acting chair recognizes Councilmember Gauthier.
Thank you, madam chair. And thanks to the sponsor for such an important piece of legislation. I wanted to ask more about the industries where we're seeing this the most. Am I to understand that the 97,000 reports of fraud came to the city? Is that -- who collected that?
No apologies. Those are -- 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC.
-- on the number of instances of fraud and they'll break those down by metro area.
Have we peered into that to see about common themes?
So about three months ago, I received a call from a lawyer from the Federal Trade Commission who offered to provide us with a unique link that -- so that when folks do complain to us and we suggest that they reach out to the FTC for their resources and to activate their complaint system, it would go through a Philadelphia specific URL. So we only have about three months of that information. 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. The other source of information, that's not the FTC, but the Consumer Financial Protection Bureau, their complaint database can be broken down by geographic area. And we have done some looking in there and reviewed with the task force what some of the significant issues that come out of those complaints are, I will say, over 90 percent of them are identity theft related.
Oh, okay. This -- that activity might be hard to kind of go after, or would we be poised to go after identity theft as well?
Yeah, I would refer to the folks in the law department for how they see that being addressed going forward. That said, historically, I have referred those folks over to the FTC that has lots of resources around identity theft, as well as the Attorney General's office and their consumer complaint system.
Great. 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC.
Yeah. To the question about identity theft, I think that's an industry or an activity that is going to be primarily covered by other jurisdictions, like federal and -- both federal and state. It's always possible that something could come up that's -- that we're seeing locally on a large scale or repeated scale that would apply to the ordinance. But that is one of those issues that is pretty well taken care of by other jurisdictions.
Okay. Thank you so much. We're just curious about how that data breaks down and what it's telling us.
Okay. Thank you. Are there any other questions or comments for this panel from the committee?
Okay. Seeing none. Thank you all for your testimony and for your service. We truly appreciate you being here. We will now recognize panel two.
Yes, can we please have Michael Froehlich, Timothy Calhoun, and Lucy Qiu? 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC.
Thank you. Thank you all so much for being here. Please state your name for the record and proceed with your testimony. And please pull the mic up directly so that we can hear you. Thank you.
Good morning, Councilmembers. Thank you for having me. My name is Lucy Qiu. I'm a senior attorney at the SeniorLAW Center.
Good morning, Councilmembers, and thank you for having me. My name is Timothy Calhoun. I'm a resident of the city of Philadelphia.
And good morning. Michael Froehlich with Community Legal Services. Good morning.
Morning. Okay, please proceed with your testimony.
Thank you, Councilmember. Thank you for this opportunity to submit testimony regarding the consumer protection or nurse bill number 240118. As I stated before, I am a senior staff attorney serving older victims of crime at SeniorLAW Center. At SeniorLAW 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. Center, we seek justice for older adults by using the power of the law, educating the community, and advocating on local, state, and national levels. We are the only non-profit organization in Pennsylvania whose mission is dedicated solely to providing legal services to older people and one of few in the nation. We provide free legal assistance to thousands of older people each year, including victims of elder abuse and financial exploitation -- financial exploitation, older homeowners, or tenants facing housing crises, homelessness, and grandparents raising grandchildren. We serve on Philadelphia's collaborative Financial Exploitation Prevention Task Force for older Pennsylvanian -- older Philadelphians, which includes representation from the police and the district attorney's office. We also serve on other diverse coalitions addressing victims needs here in Philadelphia and Harrisburg and across the nation. We bring the voices of older victims we 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. serve to those tables. Now, we are in the midst of a crisis of elder abuse and exploitation in our city and in our nation. According to the US Department of Justice, elder abuse, which includes elder financial exploitation, among other forms of abuse, affects at least percent of older 10 adults each year in the United States, with millions of older adults losing more than 3 billion to financial fraud annually as of 2019. In 2014, the Pennsylvania Uniform Crime Reporting System listed over 7,400 persons over the age of 60 as victims of fraud, forgery, or counterfeiting. These numbers reflect only those crimes which were reported. National research reveals that underreporting is vast in the area of elder abuse. Recent data indicates only 1 in 44 cases of elder financial exploitation are reported. These older adults often suffer in silence. They remain anonymous. The exploitation has left them living in shocking conditions. Now, as to bill number 160646, we 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. support this measure to protect all Philadelphians, especially older Philadelphians, from bad actors whose deceptive business practices cause significant harm to consumers in Philadelphia, we believe that the proposed enforcement measures and remedies will help address this growing need. We hope that it will deter businesses and other bad actors from engaging in unscrupulous and deceptive practices against older Philadelphians at SeniorLAW Center receive hundreds of calls each year regarding exploitation. I would like to share just two stories to highlight some of the issues we face from our clients. SeniorLAW Center was contacted by a 71- year-old US Army veteran. He was a victim of unfair and deceptive practices by a construction company notorious for deceptive practices. This bad actor construction company has been sued nearly a dozen times in Philadelphia County by similarly situated consumers alleging breach of contract, fraud, home improvement, consumer violation protections, among others. 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. The client reported to us that he saw a commercial on television where the bad actor construction company promised remodeling work done for $59 per month with no down payment. The client wanted to remodel his bathroom to make it more accessible for him, and he wanted a shower installed in the basement. As a US Army veteran, he had applied for and received in November 2020 a home improvements and structural alterations grant from the Department of Veteran Affairs. The amount of the grant was $3,400.
The proposed cost of the remodel was about $20,000. The client believed he would be paying dollar 59 a month to the construction company directly to pay for the $20,000 that he agreed upon as the estimate to the contract he had signed. After the work was completed, the client started receiving billing statements from a loan company for a $20,000 loan over 12 years. 24 percent interest rate and monthly payments of $259. The client does not recall signing any loan payments or own documents and believes he 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. was deceived. He disputed this with the bad actor construction company to no avail. The client, in his words, stated he did not want to get in trouble and started making monthly payments. However, he also reported that he was unhappy with the quality of the work and that the newly installed shower was already leaking. Construction workers had damaged other parts of the house and his carpet when performing the renovations. SeniorLAW Center is working to refer this client to one of our pro bono partners for potential litigation. In another instance of contract or fraud, SeniorLAW Center assisted a 72-year-old Philadelphia homeowner. In the summer of 2022. The floor and subfloor of her kitchen needed repair. Her granddaughter helped her find a contractor. The contractor came to her house and asked the client to sign a document allowing him entry to the home. She did not look at the paperwork closely and she was not provided a copy of what she signed. After walking through the house, the contractor said he would do the work. The client 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. told him that she had very limited funds and would not be able to pay him right away or in one payment. He told her not to worry about it and that he would help her out because she was a senior citizen, that he would accept payment as became available to her, and will accept whatever she was able to afford. The work was partially completed and the contractor left. The client was not able to reach him after to return to finish the job. He put new flooring down but not a new subfloor. So to this day, her floor still sinks. A few months later, she started getting notices from a home improvement finance company seeking monthly payments. The client ignored these notices because she never agreed to take out a loan or finance any home improvement project and thought they were being sent to her by mistake or some sort of junk mail. In the fall of 2023, a finance company sued her for $32,000. After reviewing the documents associated with the lawsuit, the client believed that the contractor forged her signature 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. on loan documents. We defended this client in this lawsuit and the finance company eventually withdrew the lawsuit against her. These two cases highlight very common issues that our clients face and the vulnerability of older Philadelphians to unfair and deceptive practices and the need for more legislation to prevent such instances of fraud and hold bad actors accountable. We are happy to support at large Councilmember Rue Landau with this bill. We look forward to working with the city to make Philadelphia a safer home for older population and to empowering older adults in their fight against exploitation. Thank you for considering our testimony.
Thank you. Thank you very much for your testimony and for your work. The chair now recognizes Mr. Calhoun.
Councilmember, why don't I go first, if that's okay? My testimony will lead into Mr. Calhoun's.
That's fine 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. -- that's fine. Please proceed with your testimony.
Great. Thank you so much. Good morning, members of the committee. My name is Michael Froelich, as I mentioned earlier, and I am the managing attorney of the Homeownership and Consumer Rights Unit at Community Legal Services. And I am very pleased to testify in support of Councilmember Landau's bill to create a consumer protection ordinance. This bill will newly provide the city law department with the authority to address unfair and deceptive consumer practices and level the playing field for all in the marketplace. As the committee knows, CLS is a non-profit legal aid office that provides free legal representation to low-income Philadelphians. We represent clients with a variety of civil legal matters, including consumer rights issues. Clients frequently come to Community Legal Services after they have been victimized by predatory salespeople, ripped off by fly-by-night scammers, and preyed on by sweet-talking 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. grifters. Often these bad actors violate our state and federal consumer protection laws. But CLS and our legal aid partners, such as the SeniorLAW Center, just do not have enough lawyers to represent everyone who has been defrauded. And the Pennsylvania Attorney General's office and the Federal Trade Commission, the Federal Consumer Financial Protection Bureau, they do very important and very useful work, but they are also constrained by their limited resources and understandably focused on consumer issues and abuses that occurred, state or nationwide. This bill will allow the city of Philadelphia to step into the gap and address the most important consumer issues facing us, facing Philadelphians by enacting our own consumer protection ordinance that can be enforced by the city law department. Under this proposed ordinance, Philadelphia will now become one of the few cities in the country with its own consumer protection law. The city will then, on its own, be able 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. to address unfair methods of competition or deceptive acts or practices that swindle Philadelphians each year. New York City has a similar local law. In just the last few months, they have used their local authority to sue a network of funeral homes for taking money from grieving loved ones without providing the paid- for services and mishandling remains. 5 million settlement with six used car dealerships that used false advertising to lure consumers into buying defective vehicles and forcing consumers into predatory financing schemes. With this new authority, Philadelphia can do the same and Philadelphia can ensure that our consumers are treated fairly. In addition, Philadelphia will be able to pursue justice on behalf of consumers who may be locked out of courts due to forced arbitration clauses. When a consumer purchases a good or 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. service, the seller often requires that they sign away their right to sue in court or to join in a consumer class action lawsuit. This waiver is often buried in small print in multidocuments that the seller hides from the consumer. But while a consumer may be bound by the forced arbitration clause, the city will not be bound and may be able to bring these claims on the consumer's behalf under this new law. With me today is CLS client, Mr. Timothy Calhoun. Mr. Calhoun will testify in a moment about how he was deceived into signing a so-called homeowner benefit agreement with a national outfit called MV Realty. Several years ago as Will Hall mentioned a moment ago, MV Realty trolled low- income Philadelphia neighborhoods, tricking over 500 Philadelphia homeowners into entering 40-year agreements to use MV Realty as their real estate agent in exchange for payments of just $500 to $1,000. When CLS brought this practice to the city's attention, it wanted to act immediately. 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC.
But the city lacked the legal authority to pursue MV Realty. Now, eventually, the state Attorney General's office was persuaded to pursue litigation. But with this new law, the next time a company like MV Realty comes to town, Philadelphia will be prepared to address it on its own. Again, thank you for the opportunity to testify at today's hearing.
Thank you. And thank you again for your testimony. Mr. Calhoun, please proceed.
Yes, good morning, members, and thank you again for allowing me to testify. I'm going to be reading my statement. I thank the committee for the opportunity to testify today. My name is Timothy Calhoun. I live in North Philly. I purchased my home, I rehabbed it, and now I own it, free and clear, without a mortgage, which is something I was very proud to have accomplished. In 2022, an advertisement popped up on my phone from MV Realty. Homeowner benefit 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. agreement. That's what it was called. So I got a little curious and I called them and to see what they were talking about. So they said to me that they were trying to set up new business for the future and that what they were doing was giving homeowners certain amounts of money. Different people got different amounts to use them in case they wanted to sell their property in the future. And that was it. Nothing more, nothing less. But it turned out to be a lie. I didn't know when MV Realty sent someone to my house with documents for me to sign, he did not leave me with copies of the papers. I had to call MV Realty several times to get the documents. Later, I learned through a notice from the City of Philadelphia Department of Records that a mortgage was recorded against my property. I was shocked. They never told me that I was signing a mortgage. If I would have even heard the word mortgage, I would have hung up that phone like any other of their victims. I'm sure. I went to 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. CLS to see the lawyers down there after the city of Philadelphia notified me about what was going on. So I also learned that this company overestimated the value of my home. The contract requires for me to pay them a fee based on an estimated home value of 213,000. But my home is not worth nowhere near 213,000. The city has it at $79,500. Redfin has it at 89.1. I think the value may be a bit more than those estimates, but nowhere near the 213. Because they overestimated the value of my property I will have to pay the company at least $6,399 for any action on my property. Any -- anything. Any action that I do with my building. If I add names to it, they want to get paid. If I add names to my deed, they want to get paid. I understand the law that is being discussed today will create a -- will create a consumer protection ordinance in Philadelphia that will make it illegal for companies to commit fraud or lie to people when doing business. If a company violates this law, the city of Philadelphia could then sue the company to 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. protect people like me. I'm surprised that there's not something in place right now for this exact situation. I can't believe that we're open to this. For somebody to come in and swoop in and make all these false promises to citizens of the city and not stand by their promises. If the law existed two years ago, maybe I could have sued MV Realty for what they did to me and other homeowners. If this law pass today, companies like MV Realty would think twice before they tried to rip off people in the future. I support this law because I do not want people to be scammed in the future by fraudulent companies. Thank you for listening to my testimony and if any questions I'm here to answer them.
Well, thank you so much for your testimony and I'm just so sorry that that happened to you. I mean, I'm just exacerbated listening to some of the details that you shared. I just have very quick questions before I turn it over to my colleagues. 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. But you stated that they recorded a mortgage on your property.
Yes, they did. City Hall called me and said get down here right now. And I ran down there. Down here, I'm sorry.
I got down here and they said, listen, this company just put a mortgage on your property. Go get a lawyer. That was city hall's advice to me. Go get a lawyer. So I ran from there to CLS and I spoke with Kerry, Kerry Smith. And she's been guiding me through this and she, you know, she's a very good lawyer and she's really looking out for the people in the community now with this. This law should be passed. It should be a no-brainer.
Right. And let me ask you a question not relative to sort of the resolution if there is one. But where are you in process?
In process. I'm still in the mix. They still have their hands around my throat. Only thing that's happening now is it's 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. in court in Florida.
And they're trying to make moves from Florida to Pennsylvania.
It's all in the Feds hands now. So the city can't help me at all.
Understood. But which is why we're trying to get this all in place in Philadelphia so that in the future the city would be able to address this issue.
Right. Okay. And you said you can't make any changes to your property now is it that -- and help me understand. They recorded a mortgage.
So they own your property? 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC.
Pretty much. They have their hands in it. Where if I make any kind of moves, for example, I want to add names to my deed --
-- I will have to pay them 6,000 semi-odd dollars. If I wanted to refinance I got to pay them 6,700 semi dollars. No matter what I do with the property. They're stand in there saying you owe us. The $640 that I got from them I sent it back directly so I couldn't possibly owe them anything. And for them to be saying that we tied together for 40 years. Everybody know that's a lie and illegal. You can't -- that's just, you know, it's not supposed to go probably, I think, over a year where you could be bound to a real estate company. So that 40-year stuff, everybody know this is all fake it's just we're -- find out a way to stop them and get them off of people's properties.
They like bugs. You just 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. got to get them off of you.
Well, thank you for being here today, and thank you for your testimony. I'm sorry that you were going through that, and I really pray that you were able to preserve your generational wealth for you and for your family. The chair now recognizes the bill's sponsor, Councilmember Landau.
Thank you. Thank you all so much for your testimony. It's so important, including hearing client stories of real issues that are happening out there every single day. It's so important. So from Mr. Calhoun to the SeniorLAW Center, thank you for sharing those stories with us. I just wanted to tell the acting chair the reason, why Mr. Calhoun and others got a phone call from the city, is because of our excellent deed fraud protections that I believe you put into place here in our records department. It's a provision that if there's something that someone's trying to file paperwork 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. for a new deed, you automatically give notice to the homeowner. Had that not happened, we would not be able to stop at 500 people who were harmed here in Philadelphia. Had we not had that in place, it could be thousands of Philadelphians who would be in the mix of MV Realty's bankruptcy that will -- unfortunately, possibly, you know, not give as much relief as we'd want for folks who are as harmed as you were in this process. So I'm glad that Philadelphia is trying to get ahead of the -- is trying to get ahead of the game and is trying to make sure that we can stop these scams before they start. I believe one of you said it. One of the things to me that is so great about this law is that hopefully it's -- I think you said it, Mr. Calhoun, that it's a deterrent. Right. Hopefully, when these scam businesses come out there and want to start preying on folks they know don't come to Philadelphia, because we have excellent lawyers in our law department who are watching, who want to come after them, who are here to protect Philadelphians, and this will 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. be the line in the sand. Don't you come to Philadelphia. It's always shocking to me how many of these companies keep popping up and how they keep finding tricky new ways to prey upon people. We see it in the press all the time. It's really amazing to me that folks go out of their way to make businesses about scamming people and stealing from them. You know, this is really so harmful to so many people. And a lot of times they go without getting caught. So we also know that folks are -- so many people in Philadelphia are one scam away from falling back into poverty, or from losing their home, or losing their car, or losing their livelihood. You know, losing their home could mean their children are taken away. There are so many ways in which we are working now to make economic opportunity for everybody in Philadelphia. But there's just one scary issue away from potentially sliding right back into poverty, into unfortunately, living without a home, and ways in which that we can fix this now. 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. So again, this law is so great. This bill will empower our law department to go make the changes that we need so we can protect seniors, limited English speakers, you know, anybody who is falling prey to a lot of these scams, a lot of whom are low income, because technology is tricky. And these things look shiny and they look good and they look like if you need $60 today, you need $600 today, you might go for it, not knowing what's on the other side. So sorry what happened to you. Thank you for sharing your story. And I could not be happier that, you know, Mayor Parker has pushed us through with the law department to have us introduce this bill to make sure that we are here to protect Philadelphians. And the message will be clear, don't prey on Philly, because we're coming after you.
Ms. Landau, I know you're a big part of this. Thank you so much. COUNCIL CHAIR SQUILLA: Thank you. Thank you so much for your testimony. Mr. 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. (indiscernible) is there anybody else to testify on bill number 240118?
We have no further people to testify. COUNCIL CHAIR SQUILLA: All right. Hearing that any other questions? Seeing none, thank you so much. I want to thank all the panelists and witnesses for the participation today. We will now go into our public meeting. Chair recognizes Councilmember Gilmore Richardson for a motion on the amendment to bill number 230408.
Thank you, Mr. Chairman. I offer an amendment to bill 17 number 240118. A copy of the amendment has been circulated to all members of the committee. I move that the amendment to bill number 240118 be approved. COUNCIL CHAIR SQUILLA: Is there a second?
Second. (Duly seconded.) COUNCIL CHAIR SQUILLA: Second -- the 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. motion seconded by Councilmember Gauthier. The amendment to bill number 240118 be approved. All those in favor signify by saying aye. (Chorus of ayes.) COUNCIL CHAIR SQUILLA: Those opposed? (No response.) COUNCIL CHAIR SQUILLA: The ayes have it and the amendment carries. Councilmember Gilmore Richardson can -- have a motion for bill 12 number 240118 as amended.
Thank you, Mr. Chairman. I move that bill number 240118 as amended, be reported from this committee with a favorable recommendation, and further move that the rules of council be suspended as to permit first reading of this bill at the next session of council.
Second. (Duly seconded.) COUNCIL CHAIR SQUILLA: Bill second -- motion seconds by Councilmember Gauthier, has been moved and properly seconded that bill number 240118 be reported from this committee with a 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. favorable recommendation, and further move that the rules of council be suspended as permit this reading of this bill at the next session to council. All those in favor will signify by saying aye. (Chorus of ayes.) COUNCIL CHAIR SQUILLA: Ayes have it. Any nays? (No response.) COUNCIL CHAIR SQUILLA: Ayes have it. And the motion carries. That will conclude our meeting for today. Thank you all for -- very much for your attendance and great job. Looking forward to working with you in the future.
Thank you, Mr. Chair. COUNCIL CHAIR SQUILLA: Thank you.
Congratulations, Rue. (Committee of the Whole adjourned at X:XX p.m.) 5/13/24 - COMMERCE AND ECONOMIC DEVELOPMENT - BILL 2 240118, ETC. CERTIFICATE OF TRANSCRIPTIONIST I, STEPHEN OMONDI, Legal Transcriptionist, do hereby certify: That the foregoing is a complete and true transcription of the original digital audio recording of the proceedings captured in the foregoing matter. IN WITNESS THEREOF, I have hereunto set my hand this 26th day of May, 2024. ______________________________________ Stephen Omondi