It's been clear for a long time that the California Money Transmission Act (MTA) is crazy. It purports to regulate private universities, real estate agents, construction companies, escrow services, law firms, payroll companies, and startups, such as my own. In my company's lawsuit against the State, we've made this point to the judge.
What I didn't realize was that the very people who passed the MTA—the legislators—are in many cases completely dependent upon companies that break it in order to keep their jobs. That's because political campaigns rely on aggregator services that round up political donations and cut a check to each campaign every week or month. Before that check is cut, the aggregator holds onto the money—a key aspect of money transmission. Under California Financial Code § 2003(o)(3) (and likely other state laws), this constitutes money transmission. And the campaign services that these politicians use most definitely do not have licenses.
There's no exemption in the MTA for political campaigns, which are independent of government. That means that companies and organizations like ActBlue and Click&Pledge are breaking state and federal law, and that they and their investors and directors could be liable under 18 U.S.C. § 1960.
At first glance, it looks like California State Senator Joe Simitian's campaign vendor might be breaking the law...
...and State Senator Fran Pavley's...
...and Assemblywoman Joan Buchanan's...
...and State Senator Jim Beall's...
...not to mention candidates for Congress in the forty-six-ish states that have similar laws on the books.
Wouldn't it be a shame if some of the same elected officials who voted the MTA into existence without reading it couldn't raise enough money to get back into office because of the very same overly broad and unconstitutional law?
Yes, it would.