CONNECTICUT — The state Department of Banking has reached a settlement with a consumer collection agency that was trying to collect unenforceable payday loans in Connecticut.
Licensed consumer collection agencies in Connecticut cannot collect small loans (less than $15,000) made by unlicensed, non-exempt lenders, including those affiliated with tribes. Small loans made to Connecticut consumers by licensed or exempt lenders that charge more than 12 percent interest are illegal.
The Connecticut DOB has reached a consent order settlement with TruAccord Corp that will reimburse a total of $44,000 to 103 Connecticut consumers.
Tribal sovereign immunity protects tribes and federally recognized entities that are “arms of the tribe” from certain enforcement actions under state law, but does not apply to consumer collection agencies.
“While the Department has done an excellent job of minimizing what are widely known as ‘payday loans‘ here in Connecticut, we still see some unlicensed out-of-state companies participating in this practice and consumer collection agencies “I want to make it clear that any company that originates loans in this state that violates Connecticut law with excessive interest rates and collection agencies that attempt to collect on this debt,” Banking Commissioner Jorge Perez said in a statement. collecting this debt will be investigated by the Department.