CT consumers receive a refund from the payday loan collection agency
CONNECTICUT — The State Department of Banking has reached a settlement with a consumer collection agency that was trying to collect payday loans that cannot be enforced in Connecticut.
Connecticut-licensed consumer collection agencies cannot collect small loans (under $15,000) made by unlicensed, non-tax-exempt lenders, including those affiliated with tribes. Small consumer loans in Connecticut from licensed or exempt lenders charging more than 12 percent interest are illegal.
Connecticut DOB entered into a consent order agreement with TruAccord Corp that will reimburse a total of $44,000 to 103 Connecticut consumers.
Sovereign tribal immunity protects federally recognized tribes and 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 is commonly known as ‘payday loans‘ here in Connecticut, we still see some unlicensed foreign companies engaging in the practice and consumer collection agencies doing so trying to collect that debt,” Banking Commissioner Jorge Perez said in a statement. “I want to make it clear that any company making loans in this state that violates Connecticut law, with inflated interest rates and collection agencies trying to collect these debts, will be investigated by the department.”