Omnibus commerce law beefs up fraud bureau, allows pre-application for licenses

In part, a new law expands jurisdiction of the Commerce Department Fraud Bureau and offers additional funding for enforcement staff.

Sponsored by Rep. Zack Stephenson (DFL-Coon Rapids) and Rep. Gary Dahms (R-Redwood Falls), the law takes effect July 1, 2022, unless otherwise noted.

The bureau’s jurisdiction no longer is limited to insurance fraud; its primary jurisdiction is offenses with a “nexus to insurance related or financial crimes.” For example, the bureau can investigate financial crimes such as wage theft.

The legislation includes a supplemental budget appropriation of $870,000 from the General Fund in fiscal year 2023 for five additional peace officers in the Commerce Fraud Bureau.

More financial institutions will be assessed a fee to support the Commerce Department work.

A pre-application process called for in the law will “permit an individual to submit a preliminary application for a determination … as to whether a criminal record or conviction that may be considered by the state licensor under state law would make the individual ineligible to receive an occupational or professional license, registration, or certificate issued by the state licensor.” This takes effect July 1, 2023.

It does not apply to education or health and human services licenses.

The new law also:

• has financial institutions file articles of incorporation with the Department of Commerce instead of the Office of the Secretary of State;

• changes language from “husband and wife” to “married couple;” in a section pertaining to safety deposit boxes;

• sets a time limit of nine years from the date of the violation for the Commerce Department to start enforcement action unless the violation is in a contract that remains in force; the limit is two years from the date of discovery of the violation in that case;

• effective Aug. 1, 2022, prohibits the state from participating in a multistate examination at the same time as it is conducting its own, separate examination;

• requires the Commerce Department inform companies in writing of specific instances of lack of cooperation in enforcement action;

• requires the department first attempt informal remedies, such as a consent order or nonpublic letter of reprimand, for any alleged violation of law discovered during an examination or investigation;

• requires the Commerce Department annually report to the Legislature about pending and completed market exams by Feb. 1;

• effective June 3, 2022, establishes rights of federally chartered home loan banks with regards to collateral when lending to a Minnesota-based insurance company;

• makes a library of equipment available to all law enforcement agencies to combat car theft and makes a onetime $522,000 appropriation in fiscal year 2023 for it;

• specifies vehicle manufacturers may require their dealers “to comply with reasonable requirements for the sale and service of an alternative fuel vehicle or to serve an alternative fuel vehicle customer;” and

• clarifies what is a prohibited rebate with regards to insurance companies. This takes effect Jan. 1, 2023.

HF3255*/SF3243/CH93

HF3255* / SF3243 / CH93