In 2017, Alex Carter created a business called Otmo, which sought to provide vehicle owners with a more equitable form of extended warranties by using a cooperative method like some health care sharing services do.
Alex went to the regulators originally trying to figure out how his business should operate. But they did not know how to regulate Alex’s company and gave him a cease-and-desist order. Ultimately he had to close his business.
The Libertas Utah team stepped in to help and developed an innovative new policy: a regulatory sandbox. This legal reform shields innovative businesses from punitive actions for up to two years, letting them bypass certain regulations and laws that would impede their innovative product, service, or business model.
Wealthy business owners can hire the lobbyists and lawyers needed to fight political battles and change the law to allow them to continue. But what about the little guy—the would-be business owner whose lacks the resources needed to muscle through such a system? Now the regulatory sandbox levels the playing field, allowing anyone to find a path to success.
In the process, regulators and lawmakers are given real-world data, showing how the company’s product or service is operating in a deregulated environment for a limited period of time This enables them to make smarter decisions about reforming (or repealing) outdated regulations to allow companies to safely offer their products and services to the market over the long term.
After first helping Utah create sandboxes in the financial technology sector and the insurance industry, as well as the court system, Libertas Utah got the legislature to pass the country’s first universal sandbox—a program that applies to any and all industries and businesses.
Our national team at Libertas Institute has then helped over a dozen states pass sandbox laws, spreading this program across the country. We continue to work on the national expansion of this policy, to enable entrepreneurs of all kinds to innovate while avoiding outdated and conflicting regulations.