Senate committee advances bill to create consumer fraud restitution fund capped at $1 million

The Minnesota Senate State and Local Government Committee on March 11 recommended Senate File 447, as amended, move forward after testimony from victims, AARP and the attorney general's office on legislation to create a consumer fraud restitution account.

The bill would direct 50% of certain non-restitution recoveries obtained in attorney general consumer enforcement actions, up to $1,000,000 per year, into a new consumer protection restitution account to pay restitution to identified consumers when the defendant is insolvent or otherwise unable to satisfy court-ordered restitution. The measure also treats awards from the fund as nontaxable income and excludes them from calculations for renter and homeowner tax credits, and contains an amendment fixing an effective date to “taxable years beginning in 2025.”

Supporters said the fund would give victims a path to monetary relief when criminal prosecutions or defendant insolvency leave consumers uncompensated. Thomas Elnis, state advocacy director for AARP Minnesota, said the fund “recognizes the impact of fraud and scams on individual Minnesotans” and would incentivize reporting of fraud to the attorney general’s office. Prentice Cox, a University of Minnesota law professor and former assistant attorney general, explained the mechanics: money placed in the fund would come from civil penalties, fee recoveries and other money now deposited to the general fund when restitution cannot be distributed to victims. “This bill takes 50% of those funds up to a million dollars a year and puts it into the restitution fund,” Cox said.

Victims described the financial and emotional toll of scams. Dennis Anderson said a 2023 impersonation scam left him $20,000 short and that a restitution fund “would have been a lifesaver.” Dawn Patton testified about a tech-support scam that nearly cost her $19,800, saying the experience “was incredibly stressful and deeply upsetting.”

Jessica Whitney, deputy attorney general for large consumer protection, said the office supports the bill and noted fraud affects all age groups, adding that the fund would allow the attorney general to provide compensation in cases where defendants have no assets or cannot be located. Whitney also said subdivision 8 of the proposed new section 8.37 would require an annual attorney general report identifying cases that put money into or out of the fund.

Committee members discussed fiscal and technical issues. Senators asked whether expected deposits would be reflected in the fiscal note; a fiscal analyst said potential awards are treated as a secondary cost and the fiscal note assumes no predictable recurring deposit. The committee adopted an oral amendment (A1) to update dates in the statutory effective-date language. Senator Carlson moved that the bill, as amended, be recommended to pass and be referred onward; members approved by voice vote and the measure was sent on for additional review.

The bill will be considered next in the Judiciary and Taxes committees as noted during the hearing. Supporters and witnesses urged continuing work on administrative details and the fiscal estimate as the bill advances.