CHAPTER 669*
REGULATED ACTIVITIES

PART I*
CREDITORS' COLLECTION PRACTICES

      Sec. 36a-645. (Formerly Sec. 36-243a). Definitions. As used in sections 36a-645 to 36a-647, inclusive, unless the context otherwise requires:

      (1) "Consumer debtor" means any natural person residing in this state who owes a debt to a creditor.

      (2) "Creditor" means (A) any person to whom a debt is owed by a consumer debtor and such debt results from a transaction occurring in the ordinary course of such person's business, or (B) any person to whom such debt is assigned. "Creditor" shall not include a consumer collection agency, as defined in section 36a-800, or any department or agency of the United States, this state, any other state, or any political subdivision thereof.

      (3) "Debt" means an obligation or alleged obligation arising out of a transaction in which the money, property, goods or services which are the subject of the transaction are for personal, family or household purposes, whether or not such obligation has been reduced to judgment.

      (P.A. 77-418, S. 1; 77-614, S. 161, 587, 610; P.A. 78-303, S. 85, 136; P.A. 80-482, S. 252, 345, 348; P.A. 87-9, S. 2, 3; P.A. 91-357, S. 53, 78; P.A. 92-12, S. 70; P.A. 94-122, S. 293, 340; P.A. 97-207, S. 1; P.A. 04-69, S. 23; P.A. 05-288, S. 208.)

      History: P.A. 77-614 and P.A. 78-303 replaced bank commissioner with banking commissioner and made banking department a division within the department of business regulation, effective January 1, 1979; P.A. 80-482 restored banking division as independent department with commissioner as its head and abolished the department of business regulation, thereby allowing revision of commissioner's title to omit reference to that department; (Revisor's note: Pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the Revisors to "commissioner of banking"); P.A. 91-357 made a technical change in Subsec. (c); P.A. 92-12 redesignated Subdivs.; P.A. 94-122 deleted the definitions of "person" and "commissioner" and alphabetized the remaining definitions, effective January 1, 1995; Sec. 36-243a transferred to Sec. 36a-645 in 1995; P.A. 97-207 redefined "consumer debtor", "creditor" and "debt", and deleted definition of "credit"; P.A. 04-69 amended Subdiv. (2) to insert clause (i) and (ii) designators and add "any person to whom such debt is assigned" as clause (ii); P.A. 05-288 made technical changes in Subdiv. (2), effective July 13, 2005.

      Annotation to former section 36-243a:

      Cited. 231 C. 707.

      Sec. 36a-646. (Formerly Sec. 36-243b). Prohibited acts. No creditor shall use any abusive, harassing, fraudulent, deceptive or misleading representation, device or practice to collect or attempt to collect any debt.

      (P.A. 77-418, S. 2.)

      History: Sec. 36-243b transferred to Sec. 36a-646 in 1995.

      Annotations to former section 36-243b:

      Cited. 216 C. 458. Cited. 231 C. 707.

      Sec. 36a-647. (Formerly Sec. 36-243c). Enforcement powers of commissioner. Regulations. (a) The commissioner may adopt such regulations in accordance with the provisions of chapter 54 as may be necessary to carry out the purposes of sections 36a-645 to 36a-647, inclusive, including, but not limited to, specifying those acts which are deemed to be in violation of section 36a-646.

      (b) The commissioner may receive and investigate complaints and may receive assurances of voluntary compliance with the provisions of sections 36a-645 to 36a-647, inclusive, or forward such complaints to the appropriate prosecuting officials at the commissioner's discretion. No action taken by the commissioner against a creditor in accordance with section 36a-50 relieves the creditor from civil liability.

      (c) Whenever the commissioner has reason to believe that any person has violated, is violating or is about to violate any provision of sections 36a-645 to 36a-647, inclusive, or any regulation adopted under this section, the commissioner may take action against such person in accordance with section 36a-50.

      (d) Nothing contained in sections 36a-645 to 36a-647, inclusive, shall be construed as a limitation upon the power or authority of the state, the Attorney General or the commissioner to seek administrative, legal or equitable relief as provided by other statutes or at common law.

      (P.A. 77-418, S. 3; P.A. 82-174, S. 3, 14; P.A. 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 94-122, S. 294, 340.)

      History: P.A. 82-174 amended Subsec. (b) by authorizing the commissioner to issue, after notice, cease and desist orders, unless a hearing is requested, and authorizing him to bring an action to enforce any such order; P.A. 88-230 replaced "judicial district of Hartford-New Britain" with "judicial district of Hartford", effective September 1, 1991; P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-243c transferred to Sec. 36a-647 in 1995.

      Secs. 36a-648 to 36a-654. Reserved for future use.

PART II
DEBT ADJUSTERS

      Sec. 36a-655. (Formerly Sec. 36-364). Definitions. As used in sections 36a-655 to 36a-665, inclusive, "bona fide nonprofit organization" means any organization that is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended; "debt adjustment" means receiving, as agent of a debtor, money or evidences thereof for the purpose of distributing such money or evidences thereof among creditors in full or partial payment of obligations of the debtor; and "debtor" means any individual who has incurred indebtedness or owes a debt for personal, family or household purposes.

      (1967, P.A. 882, S. 1; P.A. 77-614, S. 161, 610; P.A. 79-160, S. 1; P.A. 80-482, S. 258, 345, 348; P.A. 87-9, S. 2, 3; P.A. 94-122, S. 295, 340; P.A. 95-79, S. 135, 189; P.A. 02-111, S. 40.)

      History: P.A. 77-614 replaced bank commissioner with banking commissioner within the department of business regulation and made banking department a division within that department, effective January 1, 1979; P.A. 79-160 defined "bona fide nonprofit organization" and deleted reference to receipt of fee or compensation in definition of "debt adjustment"; P.A. 80-482 restored banking division as independent department and abolished the department of business regulation, allowing revision of commissioner's name to omit reference to abolished department; (Revisor's note: Pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the Revisors to "commissioner of banking"); P.A. 94-122 deleted the definition of "commissioner", effective January 1, 1995; Sec. 36-364 transferred to Sec. 36a-655 in 1995; P.A. 95-79 redefined "bona fide nonprofit organization" to include a limited liability company, effective May 31, 1995; P.A. 02-111 redefined "bona fide nonprofit organization" and added definition of "debtor".

      Sec. 36a-656. (Formerly Sec. 36-365). Debt adjustment limited to nonprofit organizations. License application, requirements and fees. Authority of commissioner to deny application for license. Automatic suspension of license or renewal license. Notice. Opportunity for hearing. (a) No person, other than a bona fide nonprofit organization, shall engage in the business of debt adjustment in this state. No bona fide nonprofit organization shall engage in the business of debt adjustment in this state without a debt adjuster license. Any bona fide nonprofit organization desiring to obtain such a license shall file with the commissioner an application under oath, setting forth such information as the commissioner may require. Each applicant for a license and each licensee shall notify the commissioner of any change in the applicant's business from that stated in the application for the license.

      (b) If the commissioner finds, upon the filing of an application for a debt adjuster license, that: (1) The financial responsibility, character, reputation, integrity and general fitness of the applicant and of the partners thereof if the applicant is a partnership, of the members if the applicant is a limited liability company or association, and of the officers, directors and principal employees if the applicant is a corporation, are such as to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a-655 to 36a-665, inclusive; and (2) the applicant is solvent and no proceeding in bankruptcy, receivership or assignment for the benefit of creditors has been commenced against the applicant, the commissioner may thereupon issue the applicant a debt adjuster license. If the commissioner fails to make such findings, the commissioner shall not issue a license and shall notify the applicant of the reasons for such denial. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80.

      (c) Each applicant for an original debt adjuster license shall, at the time of making such application, pay to the commissioner an application fee of two hundred fifty dollars. Each such license shall expire at the close of business on September thirtieth of the odd-numbered year following its issuance unless such license is renewed. Any license issued prior to October 1, 2002, shall expire on September 30, 2003, unless renewed. Each licensee shall, on or before September first of the year in which the license expires, file such renewal application as the commissioner may require.

      (d) If the commissioner determines that a check filed with the commissioner to pay an application fee has been dishonored, the commissioner shall automatically suspend the license or a renewal license that has been issued but is not yet effective. The commissioner shall give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51.

      (e) No abatement of the license fee shall be made if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was issued. The fee required by subsection (c) of this section shall be nonrefundable.

      (1967, P.A. 882, S. 2; P.A. 79-160, S. 2; P.A. 94-122, S. 296, 340; P.A. 02-111, S. 41; P.A. 04-69, S. 24.)

      History: P.A. 79-160 made provisions applicable to bona fide nonprofit organizations rather than to persons, firms or corporations generally, replaced detailed provisions re contents of application with statement re information required by commissioner, added provisions re notification of changes in business, location, number of offices, etc. and specified that license continues in effect as long as licensee continues in debt adjustment business, deleting former Subsecs. (b) to (e) which had required informing commissioner of contract intended to be used and any changes thereto, which had set June thirtieth as annual expiration date, which had required appointment of commissioner as applicant's agent for service of process and which had required that application contain names of persons, firms and corporations with financial interest in the business; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-365 transferred to Sec. 36a-656 in 1995; P.A. 02-111 designated existing provisions as Subsec. (a) and added reference to "debt adjuster" license, deleted reference to Secs. 36a-655 to 36a-665, inclusive, replaced "material changes" with "change", deleted provisions re changes in location or additional locations and re effective period of license and made technical changes and added Subsecs. (b), (c) and (d) re requirements for obtaining debt adjuster license, licensing fees and renewal requirements and abatement and nonrefundability of license fee, respectively; P.A. 04-69 added new Subsec. (d), requiring commissioner to automatically suspend license or renewal license if commissioner determines that a check filed to pay application fee has been dishonored and requiring commissioner to give notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing in accordance with Sec. 36a-51, and redesignated existing Subsec. (d) as Subsec. (e).

      Sec. 36a-657. (Formerly Sec. 36-369). Suspension, revocation or refusal to renew license. Enforcement powers of commissioner. (a) The commissioner may suspend, revoke or refuse to renew any license, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for a license under sections 36a-655 to 36a-665, inclusive, or if the commissioner finds that the licensee or any proprietor, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee has done any of the following: (1) Made any material misstatement in the application; (2) committed any fraud or misappropriated funds; (3) violated any of the provisions of sections 36a-655 to 36a-665, inclusive, or any other law or regulation applicable to the conduct of its business; or (4) failed to perform any agreement with a debtor.

      (b) Whenever it appears to the commissioner that any person has violated, is violating or is about to violate the provisions of sections 36a-655 to 36a-665, inclusive, or any licensee or any proprietor, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee has committed any fraud, misappropriated funds or failed to perform any agreement with a debtor, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.

      (1967, P.A. 882, S. 6; P.A. 79-160, S. 3; P.A. 82-174, S. 11, 14; P.A. 94-122, S. 297, 340; P.A. 02-111, S. 42; P.A. 05-46, S. 13.)

      History: P.A. 79-160 rephrased provisions, added in Subdiv. (3) ground of material error if licensee was not at time of application entitled to obtain license and remains unentitled to do so, inserted new Subdiv. (4) and renumbered former Subdivs. (4) and (5) accordingly; P.A. 82-174 replaced the provision that the commissioner may revoke or suspend a license after notice and hearing with provisions concerning the form and manner of the notice and authorizing the commissioner to revoke or suspend a license "after allowing the licensee a reasonable opportunity to be heard"; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-369 transferred to Sec. 36a-657 in 1995; P.A. 02-111 replaced former provisions re denial, revocation or suspension of a license by the commissioner with new provisions re suspension, revocation or refusal to renew license; P.A. 05-46 designated existing provisions as Subsec. (a) and added Subsec. (b) re commissioner's authority to impose civil penalty or issue cease and desist order against person or licensee.

      Sec. 36a-658. (Formerly Sec. 36-370). Posting of license. Responsibilities of licensee. License nontransferable. Each license shall state the location at which the business is to be conducted and shall state fully the name of the licensee. If the licensee desires to engage in the business of debt adjustment in more than one location, the licensee shall procure a license for each location where the business is to be conducted. Each license shall be maintained at the location for which the license was issued and shall be available for public inspection. Such license shall not be transferable or assignable, provided any change of location of a licensee shall require only prior written notice to the commissioner. No licensee shall use any name other than the name stated on the license issued by the commissioner.

      (1967, P.A. 882, S. 7; P.A. 79-160, S. 4; P.A. 02-111, S. 43.)

      History: P.A. 79-160 rephrased prior provisions, authorized conduct of business which does not conflict with interests of clients or business of debt adjustment and deleted provision prohibiting change in office location unless authorized by commissioner, but see Sec. 36-365 for similar prohibition; Sec. 36-370 transferred to Sec. 36a-658 in 1995; P.A. 02-111 replaced former provisions with provisions re license to specify location at which business is conducted and name of licensee, procurement of license for each business location, license maintenance and availability for public inspection, license not transferable or assignable and licensee's use of stated name.

      Sec. 36a-659. (Formerly Sec. 36-372). Separate bank account for benefit of debtors. Books and records. Each licensee shall maintain a separate bank account for the benefit of debtors in which all payments received from debtors who are residents of Connecticut for the benefit of creditors shall be deposited. Every licensee shall keep and use in its business, books, accounts and records which will enable the commissioner to determine whether such licensee is complying with the provisions of sections 36a-655 to 36a-665, inclusive, and with the regulations adopted pursuant thereto. Every licensee shall preserve such books, accounts and records for at least seven years after making the final entry on any transaction recorded therein.

      (1967, P.A. 882, S. 9; P.A. 94-122, S. 298, 340; P.A. 02-111, S. 44.)

      History: P.A. 94-122 changed "his" to "the licensee's", effective January 1, 1995; Sec. 36-372 transferred to Sec. 36a-659 in 1995; P.A. 02-111 changed "payments received from debtors" to "payments received from debtors who are residents of Connecticut", deleted provision re payments to remain in bank account until remittance made to a debtor or creditor, and made technical changes.

      Sec. 36a-660. (Formerly Sec. 36-375). Licensee's duties. Each licensee shall: (1) Keep complete and adequate records during the term of the contract and for a period of seven years from the date of cancellation or completion of the contract with each debtor, which records shall contain complete information regarding the contract, extensions thereof, payments, disbursements and charges, and shall be open to inspection by the commissioner during normal business hours; (2) make remittances to creditors within a reasonable time after receipt of any funds, less prorated fees and costs, unless the reasonable payment of one or more of the debtor's obligations requires that such funds be held for a longer period so as to accumulate a sum certain; and (3) furnish the debtor a written statement of the debtor's account within a reasonable time after the debtor may request it and within ninety days after the completion of the adjustment of the debtor's debts, and shall furnish the debtor a verbal accounting at any time the debtor may request it during normal business hours.

      (1967, P.A. 882, S. 12; P.A. 79-160, S. 6; P.A. 94-122, S. 299, 340.)

      History: P.A. 79-160 required that remittances to creditors be made "within a reasonable time" rather than within ten days, required that statement of account be likewise made within reasonable time after debtor requests it and in all cases within ninety days after adjustment completed rather than made each ninety days and deleted former Subsecs. (b) and (c) which required that budget analysis indicate debtor can meet requirements and that debtors have full benefit of any compromise of debt arranged by a licensee with any one or more creditors; P.A. 94-122 deleted "and his duly appointed agents" from Subdiv. (1) and changed "his" to "the debtor's" in Subdiv. (2), effective January 1, 1995; Sec. 36-375 transferred to Sec. 36a-660 in 1995.

      Sec. 36a-661. (Formerly Sec. 36-376). Prohibited acts. No licensee shall: (1) Purchase from a creditor any obligation of a debtor; (2) operate as a collection agent and as a licensee as to the same debtor's account; (3) execute any contract or agreement to be signed by the debtor unless the contract or agreement is fully and completely filled in and finished; (4) pay any bonus or other consideration to any person for the referral of a debtor to the licensee's business or accept or receive any bonus, commission or other consideration for referring any debtor to any person for any reason, or (5) advertise, display, distribute, broadcast or televise or permit to be displayed, advertised, distributed, broadcast or televised the licensee's services, rates or terms in any manner whatsoever wherein any false, misleading or deceptive statement or representation is made with regard to the services to be performed by the licensee or the charges to be made therefor.

      (1967, P.A. 882, S. 13; P.A. 79-160, S. 7; P.A. 94-122, S. 300, 340.)

      History: P.A. 79-160 deleted former Subdiv. (4) prohibiting receipt or charge of fee in form of promissory note or other promise to pay or receipt or acceptance of wage assignment, mortgage or other security for any fee, renumbering remaining Subsecs. accordingly; P.A. 94-122 changed "his" to "the licensee's", effective January 1, 1995; Sec. 36-376 transferred to Sec. 36a-661 in 1995.

      Sec. 36a-662. (Formerly Sec. 36-377). Regulations. The commissioner may adopt such regulations, in accordance with chapter 54, as the commissioner deems necessary to administer and enforce the provisions of sections 36a-655 to 36a-665, inclusive.

      (1967, P.A. 882, S. 14; P.A. 94-122, S. 301, 340.)

      History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-377 transferred to Sec. 36a-662 in 1995.

      Sec. 36a-663. (Formerly Sec. 36-378). Exceptions. The provisions of sections 36a-655 to 36a-665, inclusive, shall not apply to the following: (1) Any attorney admitted to the practice of law in this state, when engaged in such practice; (2) any bank, fiduciary or financing or lending institution authorized to transact business in this state or any other state, which performs debt adjustment in the regular course of its principal business; (3) any title insurance or abstract company authorized to transact business in this state or any other state, while doing an escrow business; and (4) any person acting pursuant to any law of this state or of the United States or acting under the order of a court.

      (1967, P.A. 882, S. 15; P.A. 73-357; P.A. 79-160, S. 8; P.A. 92-67, S. 8, 9.)

      History: P.A. 73-357 added Subsec. (b) exempting bona fide nonprofit cooperative organizations offering debt adjustment services exclusively for members from chapter provisions except Secs. 36-364, 36-371, 36-372, 36-374, 36-375, 36-376, 36-377, 36-379 and 36-381; P.A. 79-160 deleted exemption from bona fide nonprofit, religious, fraternal or cooperative organization (Subsec. (a)(5) and Subsec. (b)) and exemption for employees of licensees when acting in the regular course of employment; P.A. 92-67 added exception for banks, fiduciaries or financing or lending institutions authorized to transact business in any other state; Sec. 36-378 transferred to Sec. 36a-663 in 1995.

      Sec. 36a-664. (Formerly Sec. 36-380). Surety bond or insurance policy required. Form of surety bond. Cancellation of bond or insurance policy. Notice. Automatic suspension of license. Notice. Opportunity for hearing. (a)(1) Except as provided in subdivision (2) of this subsection, no such license, and no renewal thereof, shall be granted unless the applicant has filed a surety bond with the commissioner written by a surety authorized to write such bonds in this state, provided any applicant that files applications for licenses for more than one location shall file a single bond. For every applicant, the principal amount of the bond shall be the greater of (A) forty thousand dollars, or (B) twice the amount of the highest total payments received by the applicant from Connecticut debtors in connection with the applicant's debt adjustment activity in any month during the preceding twelve months ending July thirty-first of each year. Each licensee shall submit to the commissioner evidence that the bond complies with the provisions of this subdivision by September first of each year.

      (2) If a licensee or applicant for renewal of a license establishes that such licensee or applicant is unable to comply with the bond required by subdivision (1) of this subsection, it may submit to the commissioner, by July first, a request for an alternative to such requirement. If the commissioner finds that the financial responsibility, character, reputation, integrity and general fitness of the applicant so warrant, the commissioner may permit the applicant or licensee to supplement the maximum surety bond that it can obtain, provided the principal amount of the surety bond shall be a minimum of forty thousand dollars, with such other bonds or insurance policies, in such amounts, for such period and subject to such conditions as the commissioner may approve. Any such bond or insurance policy shall be written or issued by a surety or insurance company authorized to write such bonds or sell such insurance in this state.

      (3) The form of any surety bond submitted pursuant to this section shall be approved by the Attorney General. Any surety bond filed under this section shall be conditioned upon the licensee faithfully performing any and all written agreements with debtors, truly and faithfully accounting for all funds received by the licensee in the licensee's capacity as a debt adjuster, and conducting such business consistent with the provisions of sections 36a-655 to 36a-665, inclusive. Any debtor who may be damaged by failure to perform any written agreements, or by the wrongful conversion of funds paid to a licensee, may proceed on any such surety bond against the principal or surety thereon, or both, to recover damages. The commissioner may proceed on any such surety bond against the principal or surety thereon, or both, to collect any civil penalty imposed upon the licensee pursuant to subsection (a) of section 36a-50. The proceeds of any bond or insurance policy, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the licensee in the event of bankruptcy of the licensee and shall be immune from attachment by creditors and judgment creditors. Any bond or insurance policy required by this section shall be maintained during the entire period of the license granted to the applicant, and the aggregate liability under any such bond or insurance policy shall not exceed the principal amount of the bond or the limit of liability of the insurance policy.

      (b) The surety or insurance company shall have the right to cancel any bond or insurance policy written or issued under subsection (a) of this section at any time by a written notice to the licensee, stating the date cancellation shall take effect. Such notice shall be sent by certified mail to the licensee at least thirty days prior to the date of cancellation. No such bond shall be cancelled unless the surety or insurance company notifies the commissioner in writing not less than thirty days prior to the effective date of cancellation. The commissioner shall automatically suspend the license on the date the cancellation takes effect, unless the bond or insurance policy has been replaced or renewed. The commissioner shall give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51.

      (c) No licensee shall use, attempt to use or make reference to, either directly or indirectly, any word or phrase which states or implies that the licensee is endorsed, sponsored, recommended, bonded or insured by the state.

      (1967, P.A. 882, S. 17; P.A. 94-122, S. 302, 340; P.A. 02-111, S. 45; P.A. 04-69, S. 25; P.A. 06-35, S. 10.)

      History: P.A. 94-122 changed "he" to "the licensee", effective January 1, 1995; Sec. 36-380 transferred to Sec. 36a-664 in 1995; P.A. 02-111 added new Subsec. (a) re surety bond, designated existing provisions as Subsec. (b) and, in said Subsec., changed "bonded, approved, bonded by the state or approved by the state" to "endorsed, sponsored, recommended or bonded by the state"; P.A. 04-69 amended Subsec. (a) by designating existing provisions as Subdiv. (1) and amending same to add exception for provisions of Subdiv. (2) and reference to "surety" bond, to delete provision re approval of form by Attorney General, to replace "July thirty-first" with "March thirty-first" and provision re submission of bond or renewal thereof with provision re submission of evidence that bond complies with subdivision, to delete former requirements for bond and proceeding thereon and to make technical changes, and by adding Subdiv. (2) re supplemental bond or insurance policy and Subdiv. (3) re requirements for bond or insurance policy and proceeding thereon, added new Subsec. (b) re cancellation of bond or insurance policy and automatic suspension of license, redesignated existing Subsec. (b) as Subsec. (c) and amended same by adding "or insured"; P.A. 06-35 amended Subsec. (a)(1)(B) to substitute July thirty-first for March thirty-first of each year as date marking end of twelve-month period, effective May 8, 2006.

      Sec. 36a-665. (Formerly Sec. 36-381). Penalties. (a) Any person who engages in debt adjustment without a license as required by sections 36a-655 to 36a-665, inclusive, shall be fined not more than one thousand dollars or imprisoned more than one year, or both, for each violation. Each day on which a person engages in debt adjustment without a license as required by said sections shall be construed as a separate violation.

      (b) Any person who violates any other provision of sections 36a-655 to 36a-665, inclusive, shall be fined not more than one thousand dollars for the first offense, and for each subsequent offense shall be fined not more than one thousand dollars and imprisoned not less than thirty days nor more than one year.

      (1967, P.A. 882, S. 18; P.A. 79-160, S. 9.)

      History: P.A. 79-160 made no change; Sec. 36-381 transferred to Sec. 36a-665 in 1995.

      Secs. 36a-666 to 36a-674. Reserved for future use.

PART III*
TRUTH-IN-LENDING ACT

      Sec. 36a-675. (Formerly Sec. 36-416). Short title: Truth-in-Lending Act. Sections 36a-675 to 36a-685, inclusive, shall be known and may be cited as the "Truth-in-Lending Act".

      (1969, P.A. 454, S. 24.)

      History: Sec. 36-416 transferred to Sec. 36a-675 in 1995; (Revisor's note: In 1997 the Revisors editorially reinstated the word "shall" before the words "be known and may be cited" to correct a clerical error in the preparation of the 1995 revision).

      Sec. 36a-676. (Formerly Sec. 36-393). Definitions. (a) As used in part II of chapter 668, sections 36a-675 to 36a-685, inclusive, 36a-770 to 36a-788, inclusive, 42-100b and 42-100c, unless the context otherwise requires:

      (1) "Consumer" means "consumer" as defined in Section 103 of the Consumer Credit Protection Act (15 USC 1602);

      (2) "Consumer Credit Protection Act" means Title I of Public Law 90-321 (82 Stat. 146), as from time to time amended, and includes regulations adopted by the Federal Reserve Board pursuant to that act;

      (3) "Credit" means "credit" as defined in Section 103 of the Consumer Credit Protection Act (15 USC 1602);

      (4) "Credit card", "cardholder" and "card issuer" mean "credit card", "cardholder" and "card issuer" as defined in Section 103 of the Consumer Credit Protection Act (15 USC 1602);

      (5) "Creditor" means "creditor" as defined in Section 103 of the Consumer Credit Protection Act (15 USC 1602), but does not include any department or agency of the United States;

      (6) "Credit sale" means "credit sale" as defined in Section 103 of the Consumer Credit Protection Act (15 USC 1602);

      (7) "Lessor" means "lessor" as defined in Section 181 of the Consumer Credit Protection Act (15 USC 1667), but does not include any department or agency of the United States; and

      (8) "Open-end credit plan" means "open-end credit plan" as defined in Section 103 of the Consumer Credit Protection Act (15 USC 1602).

      (b) Any word or phrase in sections 36a-675 to 36a-685, inclusive, which is not defined in said sections but which is defined in the Consumer Credit Protection Act (15 USC 1601 et seq.) shall have the meaning set forth in the Consumer Credit Protection Act.

      (1969, P.A. 454, S. 1; P.A. 76-169, S. 1; P.A. 77-614, S. 161, 610; P.A. 80-482, S. 260, 345, 348; P.A. 81-158, S. 1, 17; P.A. 82-18, S. 2, 4; P.A. 83-136, S. 1, 2; P.A. 85-613, S. 104, 154; P.A. 87-9, S. 2, 3; P.A. 88-65, S. 40; P.A. 90-230, S. 55, 101; P.A. 92-12, S. 81; P.A. 94-122, S. 303, 340.)

      History: P.A. 76-169 redefined "creditor" to include credit card issuers and to specify credit "payable by agreement in more than four installments"; P.A. 77-614 replaced bank commissioner with banking commissioner within the department of business regulation, reflecting incorporation of banking department as division within that department, effective January 1, 1979; P.A. 80-482 abolished department of business regulation and restored banking division to prior status as independent department, thus allowing omission of reference to business regulation department in commissioner's title; P.A. 81-158 redefined the terms to make them conform to the definitions in the Consumer Credit Protection Act, effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to "the effective date of Title VI of Public Law 96-221, as contained in Sec. 625(a) of Public Law 96-221, as amended", i.e. October 1, 1982; P.A. 83-136 corrected reference to public law in Subsec. (i), substituting "97-320" for "96-221"; P.A. 85-613 made technical changes; (Revisor's note: Pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the Revisors to "commissioner of banking"); P.A. 88-65 made a technical change by adding U.S. code citations; P.A. 90-230 made technical changes; P.A. 92-12 redesignated Subsecs. and Subdivs.; P.A. 94-122 deleted the definitions of "commissioner", "organization", and "person" and alphabetized the remainder, effective January 1, 1995; Sec. 36-393 transferred to Sec. 36a-676 in 1995.

      Annotations to former section 36-393:

      Cited. 33 CS 203. Sections 36-393 through 36-417 cited. 36 CS 506.

      Subsec. (b):

      Nonstock corporation falls within definition of organization. 36 CS 158.

      Subsec. (c):

      Cited. 36 CS 158.

      Subsec. (f):

      Cited. 158 C. 543.

      Subsec. (g):

      Since party to whom credit was offered was a nonstock corporation and not a "natural person", transaction was not a consumer credit transaction subject to provisions of chapter. 36 CS 158.

      Sec. 36a-677. (Formerly Sec. 36-393a). State policy. (a) It is the policy of this state to promote increased competition among the various businesses engaged in the extension of consumer credit or in the leasing of consumer goods and to serve the interests of consumers of credit and leased goods by requiring meaningful disclosure of credit and lease terms so that prospective debtors and lessees have the opportunity to compare more readily the various credit and lease terms available to them and the opportunity to avoid the uninformed use of credit and leases.

      (b) It is also the policy of this state to provide that this state administer and enforce the requirements for such disclosures of credit and lease terms for transactions in this state.

      (c) It is also the policy of this state to avoid duplication between the federal government and the government of this state in the administration and enforcement of statutes which are designed to accomplish an identical purpose, and therefore to obtain an exemption from the Consumer Credit Protection Act by subjecting various classes of credit and lease transactions in this state to requirements which are substantially similar to those imposed under said federal act.

      (P.A. 81-158, S. 2, 17; P.A. 82-18, S. 2, 4; 82-472, S. 114, 183.)

      History: P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to "the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended", i.e. October 1, 1982; P.A. 82-472 made technical changes and corrections; Sec. 36-393a transferred to Sec. 36a-677 in 1995.

      Annotation to former section 36-393a:

      Subsec. (a):

      Cited. 27 CA 628.

      Sec. 36a-678. (Formerly Sec. 36-393b). Compliance with Consumer Credit Protection Act. Exempt transactions. (a) Except as otherwise provided in sections 36a-675 to 36a-685, inclusive, or regulations adopted by the commissioner, each person shall comply with all provisions of the Consumer Credit Protection Act (15 USC 1601 et seq.) which apply to such person.

      (b) Any transaction which is exempt from the provisions of the Consumer Credit Protection Act, as provided in Section 104 of said act, (15 USC 1603) is exempt from the provisions of sections 36a-675 to 36a-685, inclusive.

      (P.A. 81-158, S. 3, 17; P.A. 82-18, S. 2, 4; 82-174, S. 12, 14; P.A. 88-65, S. 41; P.A. 94-122, S. 304, 340.)

      History: P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to "the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended", i.e. October 1, 1982; P.A. 82-174 amended Subsec. (a) by deleting the provision that a person "who is a creditor or lessor" shall comply with all applicable provisions; P.A. 88-65 made a technical change by adding U.S. code citations; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-393b transferred to Sec. 36a-678 in 1995.

      Sec. 36a-679. (Formerly Sec. 36-395). Regulations. (a) The commissioner may adopt substantive regulations when authorized by sections 36a-675 to 36a-685, inclusive, and may adopt procedural regulations to carry out the provisions of said sections. Such regulations shall be consistent with the policy of this state as provided in section 36a-677. The commissioner may adopt regulations to carry out the provisions of sections 36a-567 and 36a-568, subdivision (13) of subsection (c) of section 36a-770, and sections 36a-771, 36a-774 and 36a-777. Such regulations shall be adopted in accordance with chapter 54 and shall not be inconsistent with the Consumer Credit Protection Act (15 USC 1601 et seq.).

      (b) No liability shall be imposed under sections 36a-675 to 36a-685, inclusive, for an act done or omitted in conformity with any provision of said sections, the Consumer Credit Protection Act (15 USC 1601 et seq.) or a regulation of the commissioner notwithstanding that after the act or omission the provision may be amended, repealed or determined to be invalid for any reason.

      (1969, P.A. 454, S. 3; P.A. 81-158, S. 4, 17; P.A. 82-18, S. 2, 4; P.A. 88-65, S. 43; P.A. 94-122, S. 305, 340; P.A. 96-109, S. 11.)

      History: P.A. 81-158 amended Subsec. (a) by replacing "prescribe" with "adopt" and by providing that the regulations be consistent with the policy of the state, deleted the language concerning the mandatory and optional provisions of the regulations, and redesignated Subsec. (c) as Subsec. (b) and added "any provision of this chapter, the Consumer Credit Protection Act or", effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to "the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended", i.e. October 1, 1982; P.A. 88-65 made technical changes by adding U.S. code citations; (Revisor's note: In 1991 the incorrect internal reference to section "42-83(2)(d)" was changed editorially by the Revisors to "42-83(3)(d)"); P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-395 transferred to Sec. 36a-679 in 1995; P.A. 96-109 made technical changes in Subsec. (a), deleting reference to Subsec. (c) of Sec. 36a-535 and substituting reference to Subdiv. (13) for Subdiv. (12) of Sec. 36a-770(c).

      Annotation to former section 36-395:

      Cited. 34 CS 154.

      Sec. 36a-680. (Formerly Sec. 36-398). Effect of inconsistent law. (a) If the commissioner finds that the requirements of any other law of this state relating to the disclosure of information in connection with consumer credit transactions are inconsistent with the provisions of sections 36a-675 to 36a-685, inclusive, or regulations adopted thereunder, the commissioner may exempt creditors who comply with said sections from compliance with such inconsistent law. For purposes of this subsection, disclosure statutes are inconsistent if both require disclosure of the same information even though the prescribed definition, method of calculation or manner of expression is different and, in case of such conflict or inconsistency, the provisions of sections 36a-675 to 36a-685, inclusive, shall control, provided sections 36a-746b to 36a-746g, inclusive, shall not be deemed inconsistent with the provisions of sections 36a-675 to 36a-685, inclusive, and shall control where applicable.

      (b) In any action or proceeding in any court involving a consumer credit sale, the disclosure of an annual percentage rate required by sections 36a-675 to 36a-685, inclusive, may not be received as evidence that the sale was a loan or any type of transaction other than a credit sale, and in any consumer credit transaction, the disclosure of an annual percentage rate required by said sections shall not in itself indicate that a transaction is usurious or that the rate of charge exceeds a statutory ceiling.

      (1969, P.A. 454, S. 6; P.A. 81-158, S. 5, 17; P.A. 82-18, S. 2, 4; 82-472, S. 115, 183; P.A. 94-122, S. 306, 340; P.A. 01-34, S. 12.)

      History: P.A. 81-158 deleted references to Secs. 36-97a, 36-235, 36-236, 36-254(c), 42-83(2)(d), 42-84, 42-87, 42-90 and 42-99, effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to "the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended", i.e. October 1, 1982; P.A. 82-472 made technical grammatical change in Subsec. (a); P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-398 transferred to Sec. 36a-680 in 1995; P.A. 01-34 amended Subsec. (a) by changing "shall by regulation exempt" to "may exempt" and added provision re applicability of Secs. 36a-746b to 36a-746g.

      Sec. 36a-681. (Formerly Sec. 36-399). Penalty. Any person who wilfully and knowingly (1) gives false or inaccurate information or fails to provide information which such person is required to disclose under the provisions of sections 36a-567, 36a-568 and 36a-675 to 36a-685, inclusive, subdivision (13) of subsection (c) of section 36a-770, and sections 36a-771, 36a-774, 36a-777 and 36a-786, or any regulation adopted thereunder, (2) uses any chart or table authorized by the Federal Reserve Board under Section 107 of the Consumer Credit Protection Act (15 USC 1606) in such manner as to consistently understate the annual percentage rate determined under said sections or (3) otherwise fails to comply with any requirement imposed under said sections shall be fined not more than five thousand dollars or imprisoned not more than one year or both.

      (1949 Rev., S. 6699, (a) 6; 1957, P.A. 361, S. 1 (a) 6; P.A. 94-122, S. 307, 340; P.A. 96-109, S. 12.)

      History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 42-94 transferred to Sec. 36a-681 in 1995; P.A. 96-109 made technical changes, deleting reference to Subsec. (c) of Sec. 36a-535 and substituting reference to Subdiv. (13) for Subdiv. (12) of Sec. 36a-770(c).

      Sec. 36a-682. (Formerly Sec. 36-400). Compliance of governmental instruments. Exemptions from penalties. (a) Any department or agency of the state or any political subdivision thereof which administers a credit program in which it extends, insures or guarantees consumer credit and in which it provides instruments to a creditor which contain any disclosures required by sections 36a-675 to 36a-685, inclusive, shall, prior to the issuance or continued use of such instruments, consult with the commissioner to assure that such instruments comply with said sections.

      (b) No civil or criminal penalty provided under sections 36a-675 to 36a-685, inclusive, for any violation thereof may be imposed upon this state or any other state, or any political subdivision thereof, or any department or agency of any such state or political subdivision.

      (c) A creditor shall not be held liable for a civil or criminal penalty under sections 36a-675 to 36a-685, inclusive, in any case in which the violation results from the use of an instrument required by any department or agency of: (1) The United States, with regard to any transaction which is part of a credit program administered, insured or guaranteed by such department or agency; or (2) this state or of any political subdivision of this state, with regard to any transaction which is part of a credit program administered, insured or guaranteed by such department or agency, provided that such department or agency has consulted with the commissioner to assure that such instrument complies with said sections as provided in subsection (a) of this section.

      (d) A creditor shall not be held liable for a civil or criminal penalty under the laws of this state for any technical or procedural failure, such as a failure to use a specific form, to make information available at a specific place on an instrument, or to use a specific typeface, as required by the laws of this state, which is caused by the use of an instrument required to be used by any department or agency of: (1) The United States with regard to any transaction which is part of a credit program administered, insured or guaranteed by such department or agency; or (2) this state or any political subdivision of this state, with regard to any transaction which is part of a credit program administered, insured or guaranteed by such department or agency, provided that such department or agency has consulted with the commissioner to assure that such instrument complies with sections 36a-675 to 36a-685, inclusive, as provided in subsection (a) of this section.

      (1969, P.A. 454, S. 8; P.A. 81-158, S. 7, 17; P.A. 82-18, S. 2, 4; P.A. 96-109, S. 13; 96-180, S. 118, 166.)

      History: P.A. 81-158 added Subsec. (a) to provide that any department, agency or political subdivision of the state consult with the commissioner to assure that the instruments it provides to a creditor comply with this chapter, clarified the governmental exemptions from penalties in Subsec. (b), and added Subsecs. (c) and (d) to provide that a creditor is not liable in certain cases where the violation results from the use of an instrument required by a federal department or agency or the state or a political subdivision of the state, effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to "the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended", i.e. October 1, 1982; Sec. 36-400 transferred to Sec. 36a-682 in 1995; P.A. 96-109 and 96-180 both substituted "36a-675 to 36a-685" for "36a-665 to 36a-675", where appearing, effective June 3, 1996; (Revisor's note: In 1997 the word "as" was reinstated editorially by the Revisors at the end of Subsec. (d) before the phrase "... provided in subsection (a) of this section." thereby correcting an omission which occurred in the preparation of the 1995 revision).

      Sec. 36a-683. (Formerly Sec. 36-407). Failure to disclose. (a) Liability of creditor. Except as otherwise provided in this section, any creditor who fails to comply with any requirement of sections 36a-675 to 36a-685, inclusive, including Section 125 of the Consumer Credit Protection Act (15 USC 1635), or of section 36a-771 or 36a-774, with respect to any person is liable to that person in an amount equal to the sum of (1) any actual damage sustained by such person as a result of the failure; (2) (A) (i) in the case of an individual action other than as provided in this subparagraph (A) (ii) and (iii) twice the amount of any finance charge in connection with the transaction, (ii) in the case of an individual action relating to a consumer lease under Chapter 5 of the Consumer Credit Protection Act (15 USC Sections 1667 to 1667E, inclusive) twenty-five per cent of the total amount of monthly payments under the lease, except that the liability under this subparagraph (A) (i) or (ii) shall not be less than one hundred dollars nor greater than one thousand dollars, or (iii) in the case of an individual action related to a credit transaction not under an open end credit plan that is secured by real property or a dwelling, not less than two hundred dollars nor more than two thousand dollars; (B) in the case of a class action, such amount as the court may allow, except that as to each member of the class no minimum recovery shall be applicable, and the total recovery under this subparagraph in any class action or series of class actions arising out of the same failure to comply by the same creditor shall not be more than the lesser of five hundred thousand dollars or one per cent of the net worth of the creditor; and (3) in the case of any successful action to enforce the foregoing liability, or in any action in which a person is determined to have a right of rescission under Section 125 of the Consumer Credit Protection Act (15 USC 1635), the costs of the action, together with a reasonable attorney's fee as determined by the court. In determining the amount of award in any class action, the court shall consider, among other relevant factors, the amount of any actual damages awarded, the frequency and persistence of failures of compliance by the creditor, the resources of the creditor, the number of persons adversely affected, and the extent to which the creditor's failure of compliance was intentional. In connection with the disclosures referred to in Section 127 of the Consumer Credit Protection Act (15 USC 1637) a creditor shall have a liability determined under subdivision (2) of this subsection only for failing to comply with the requirements of Section 125 or 127(a) of said act (15 USC 1635) or (15 USC 1637(a)) or of paragraph (4), (5), (6), (7), (8), (9) or (10) of Section 127(b) of said act (15 USC 1637(b)). In connection with the disclosures referred to in Section 128 of said act (15 USC 1638) a creditor shall have a liability determined under subdivision (2) of this subsection only for failing to comply with the requirements of Section 125 of said act (15 USC 1635) or of paragraph (2), insofar as it requires a disclosure of the "amount financed", or paragraph (3), (4), (5), (6) or (9) of Section 128 (a) of said act (15 USC 1638(a)). With respect to any failure to make disclosures required under Chapter 2, 4 or 5 of said act, liability shall be imposed only upon the creditor required to make disclosure, except as provided in Section 131 of said act (15 USC 1641).

      (b) Adjustment of error. A creditor or assignee has no liability under this section or section 36a-681 or 36a-684 for any failure to comply with any requirement imposed under sections 36a-675 to 36a-685, inclusive, if within sixty days after discovering an error, whether pursuant to a final written examination report or notice issued under subsection (d) of section 36a-684, or through the creditor's or assignee's own procedures, and prior to the institution of an action under this section or the receipt of written notice of the error from the obligor, the creditor or assignee notifies the person concerned of the error and makes whatever adjustments in the appropriate account are necessary to insure that the person will not be required to pay an amount in excess of the charge actually disclosed, or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower.

      (c) Bona fide errors. A creditor or assignee may not be held liable in any action brought under this section for a violation of sections 36a-675 to 36a-685, inclusive, if the creditor or assignee shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error. Examples of a bona fide error include, but are not limited to, clerical, calculation, computer malfunction and programming, and printing errors, except that an error of legal judgment with respect to a person's obligations under said sections is not a bona fide error.

      (d) Multiple obligors. When there are multiple obligors in a consumer credit transaction or consumer lease, there shall be no more than one recovery of damages under subdivision (2) of subsection (a) of this section for a violation of sections 36a-675 to 36a-685, inclusive.

      (e) Time limit for bringing action. Any action under this section shall be brought in any court of competent jurisdiction within one year from the date of the occurrence of the violation. This subsection does not bar a person from asserting a violation of sections 36a-675 to 36a-685, inclusive, in an action to collect the debt which was brought more than one year from the date of the occurrence of the violation as a matter of defense by recoupment or set-off in such action.

      (f) Good faith conformance. No provision of this section, subsection (d) of section 36a-684 or section 36a-681 imposing any liability shall apply to any act done or omitted in good faith in conformity with any provision of sections 36a-675 to 36a-685, inclusive, or with any rule, regulation, approval or formal interpretation thereof by the commissioner, or in conformity with the Consumer Credit Protection Act (15 USC 1601 et seq.), including any rule or regulation adopted by the Federal Reserve Board pursuant to said act, or in conformity with any interpretation of said act by the Federal Reserve Board or in conformity with any interpretation or approval by an official or employee of the Federal Reserve System duly authorized by the Federal Reserve Board to issue such interpretations or approvals under such procedures as said board may prescribe therefor, notwithstanding that after such act or omission has occurred, such statute, rule, regulation, approval or interpretation is amended, rescinded or determined by judicial or other authority to be invalid for any reason.

      (g) Multiple failure to disclose. The multiple failure to disclose to any person any information required under sections 36a-675 to 36a-685, inclusive, to be disclosed in connection with a single account under an open-end consumer credit plan, other single consumer credit sale, consumer loan, other extension of consumer credit or consumer lease, shall entitle the person to a single recovery under this section but continued failure to disclose after a recovery has been granted shall give rise to rights to additional recoveries. This subsection does not bar any remedy permitted by subsection (j) of this section.

      (h) Offsets. A person may not take any action to offset any amount for which a creditor or assignee is potentially liable to such person under subdivision (2) of subsection (a) of this section against any amount owed by such person, unless the amount of the creditor's or assignee's liability under sections 36a-675 to 36a-685, inclusive, has been determined by judgment of a court of competent jurisdiction in an action to which such person was a party. This subsection does not bar a consumer then in default on the obligation from asserting a violation of said sections as an original action, or as a defense or counterclaim to an action to collect amounts owed by the consumer brought by a person liable under said sections.

      (i) Duplicate recovery prohibited. Notwithstanding any other provision of sections 36a-675 to 36a-685, inclusive, (1) no person shall be entitled in any action to a recovery under this section for the failure to disclose any information required under said sections if a recovery is awarded in the same action under Section 130 of the Consumer Credit Protection Act (15 USC 1640) for the failure to disclose any information required under said sections; and (2) no person shall be entitled in any action brought under this section to a recovery if, prior to an award in any such action, a recovery has been awarded to such person in any action brought under Section 130 of the Consumer Credit Protection Act (15 USC 1640) in which the same act or omission was the basis of that action.

      (j) Rescission. (1) When an obligor exercises his right to rescind under Section 125 of the Consumer Credit Protection Act (15 USC 1635), he is not liable for any finance or other charge, and any security interest given by the obligor, including any such interest arising by operation of law, becomes void upon such a rescission. Within twenty days after receipt of a notice of rescission, the creditor shall return to the obligor any money or property given as earnest money, down payment or otherwise, and shall take any action necessary or appropriate to reflect the termination of any security interest created under the transaction. If the creditor has delivered any property to the obligor, the obligor may retain possession of it. Upon the performance of the creditor's obligations under this subsection and Section 125 of the Consumer Credit Protection Act (15 USC 1635), the obligor shall tender the property to the creditor, except that if return of the property in kind would be impracticable or inequitable, the obligor shall tender its reasonable value. Tender shall be made at the location of the property or at the residence of the obligor, at the option of the obligor. If the creditor does not take possession of the property within twenty days after tender by the obligor, ownership of the property vests in the obligor without obligation on his part to pay for it. The procedures described by this subdivision shall apply except when otherwise ordered by a court.

      (2) Notwithstanding any rule of evidence, written acknowledgment of receipt of any disclosures required under sections 36a-675 to 36a-685, inclusive, by a person to whom information, forms and a statement is required to be given pursuant to this subsection and Section 125 of the Consumer Credit Protection Act (15 USC 1635), does no more than create a rebuttable presumption of delivery thereof.

      (3) An obligor's right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs earlier, notwithstanding the fact that the information and forms required under this section and Section 125 of the Consumer Credit Protection Act (15 USC 1635), or any other disclosures required under sections 36a-675 to 36a-685, inclusive, have not been delivered to the obligor, except that if (A) the commissioner institutes a proceeding to enforce the provisions of this section, or Section 125 of the Consumer Credit Protection Act (15 USC 1635), made a part of said sections as provided in section 36a-678, within three years after the date of consummation of the transaction, (B) the commissioner finds a violation of this subsection or Section 125 of the Consumer Credit Protection Act (15 USC 1635), and (C) the obligor's right to rescind is based in whole or in part on any matter involved in such proceeding, then the obligor's right of rescission shall expire three years after the date of consummation of the transaction or upon the earlier sale of the property, or upon the expiration of one year following the conclusion of the proceeding or any judicial review or period for judicial review thereof, whichever is later.

      (4) (A) In any credit transaction in which an obligor has the right to rescind under Section 125 of the Consumer Credit Protection Act (15 USC 1635), and the obligor does not exercise that right, a finance charge may not begin to accrue in connection with such transaction until after midnight of the third business day following the consummation of the transaction. (B) Any obligor required to pay a finance charge, in violation of the provisions of this subdivision, may recover from the creditor twice the amount of such finance charge, costs and reasonable attorney's fees.

      (5) In any action in which it is determined that a creditor has violated subdivision (1), (2) or (3) of this subsection, in addition to rescission the court may award relief under other subsections of this section for violations of sections 36a-675 to 36a-685, inclusive, not relating to the right to rescind.

      (6) An obligor shall have no rescission rights arising solely from the form of written notice used by the creditor to inform the obligor of the rights of the obligor under this subsection and Section 125 of the Consumer Credit Protection Act (15 USC 1635), if the creditor provided the obligor the appropriate form of written notice published and adopted by the Federal Reserve Board, or a comparable written notice of the rights of the obligor, that was properly completed by the creditor, and otherwise complied with all other requirements of this subsection and Section 125 of the Consumer Credit Protection Act (15 USC 1635) regarding notice.

      (7) Notwithstanding the provisions of subsection (n) of this section, and subject to the time period provided in subdivision (3) of this subsection, an obligor shall have the rescission rights in foreclosure set forth in Subsection (i) of Section 125 of the Consumer Credit Protection Act (15 USC 1635(i)). This subdivision shall apply to all consumer credit transactions in existence or consummated on or after September 30, 1995.

      (k) Action against assignee. (1) Except as otherwise specifically provided in sections 36a-675 to 36a-685, inclusive, any civil action for a violation of said sections or proceeding by the commissioner which may be brought against a creditor, other than with respect to a consumer credit transaction secured by real property, may be maintained against any assignee of that creditor only if the violation for which such action or proceeding is brought is apparent on the face of the disclosure statement, except where the assignment was involuntary. For the purpose of this subdivision, a violation apparent on the face of the disclosure statement includes, but is not limited to, (A) a disclosure which can be determined to be incomplete or inaccurate from the face of the disclosure statement or other documents assigned, or (B) a disclosure not made in the terms required to be used by said sections.

      (2) Except as provided in subdivision (2) of subsection (j) of this section, in any action or proceeding by or against any subsequent assignee of the original creditor without knowledge to the contrary by the assignee when he acquires the obligation, written acknowledgment of receipt by a person to whom a statement is required to be given pursuant to sections 36a-675 to 36a-685, inclusive, shall be conclusive proof of the delivery thereof and, except as provided in subdivision (1) of this subsection, of compliance with Chapter 2 of the Consumer Credit Protection Act. This subsection does not affect the rights of the obligor in any action against the original creditor.

      (3) Any consumer who has the right to rescind a transaction under subsection (j) of this section or Section 125 of the Consumer Credit Protection Act (15 USC 1635) may rescind the transaction as against any assignee of the obligation.

      (4) (A) Except as otherwise specifically provided in sections 36a-675 to 36a-685, inclusive, any civil action against a creditor for a violation of said sections and any proceeding brought by the commissioner against a creditor, with respect to a consumer credit transaction secured by real property, may be maintained against any assignee of such creditor only if (i) the violation for which such action or proceeding was brought is apparent on the face of the disclosure statement provided in connection with such transaction pursuant to sections 36a-675 to 36a-685, inclusive, and the Consumer Credit Protection Act (15 USC 1601 et seq.), and (ii) the assignment to the assignee was voluntary. (B) For purposes of this subdivision, a violation is "apparent on the face of the disclosure statement" if (i) the disclosure can be determined to be incomplete or inaccurate by a comparison among the disclosure statement, any itemization of the amount financed, the note, or any other disclosure of disbursement, or (ii) the disclosure statement does not use the terms or format required to be used by sections 36a-675 to 36a-685, inclusive, and the Consumer Credit Protection Act (15 USC 1601 et seq.).

      (5) A servicer of a consumer obligation arising from a consumer credit transaction shall be treated as an assignee of such obligation to the extent provided in Subsection (f) of Section 131 of the Consumer Credit Protection Act (15 USC 1641(f)). This subdivision applies to all consumer credit transactions in existence or consummated on or after September 30, 1995.

      (l) Liability of credit card issuer. (1) Subject to the limitation contained in subdivision (2) of this subsection, a card issuer who has issued a credit card to a cardholder pursuant to an open-end consumer credit plan shall be subject to all claims, other than tort claims, and defenses arising out of any transaction in which the credit card is used as a method of payment or extension of credit if (A) the obligor has made a good faith attempt to obtain satisfactory resolution of a disagreement or problem relative to the transaction from the person honoring the credit card; (B) the amount of the transaction exceeds fifty dollars; and (C) the transaction took place wholly within this state, provided the mailing address previously provided by the cardholder was within this state and provided the state of billing of the transaction shall not be considered in determining where the transaction took place, or the transaction took place within one hundred miles from the mailing address within this state previously provided by the cardholder, except that the limitations set forth in subparagraphs (B) and (C) of this subdivision with respect to an obligor's right to assert claims and defenses against a card issuer shall not be applicable to any transaction in which the person honoring the credit card (i) is the same person as the card issuer, (ii) is controlled by the card issuer, (iii) is under direct or indirect common control with the card issuer, (iv) is a franchised dealer in the card issuer's products or services, or (v) has obtained the order for such transaction through a mail solicitation made by or participated in by the card issuer in which the cardholder is solicited to enter into such transaction by using the credit card issued by the card issuer.

      (2) The amount of claims or defenses asserted by the cardholder may not exceed the amount of credit outstanding with respect to such transaction at the time the cardholder first notifies the card issuer or the person honoring the credit card of such claim or defense. For the purpose of determining the amount of credit outstanding in this subdivision, payments and credits to the cardholder's account are deemed to have been applied, in the order indicated, to the payment of: (A) Late charges in the order of their entry to the account; (B) finance charges in order of their entry to the account; and (C) debits to the account other than those set forth in subparagraphs (A) and (B) of this subdivision, in the order in which each debit entry to the account was made.

      (m) Liability of lessor. (1) For the purpose of this subsection, the term "creditor" in this section shall include a lessor.

      (2) Any lessor who fails to comply with any requirement imposed under Section 182 or 183 of the Consumer Credit Protection Act (15 USC 1667a or 1667b) with respect to any person is liable to such person as provided in this section.

      (3) Any lessor who fails to comply with any requirement imposed under Section 184 of the Consumer Credit Protection Act (15 USC 1667c) with respect to any person who suffers actual damage from the violation is liable to such person as provided in this section.

      (n) Limitations on rights of creditors, assignees and consumers. In the case of any consumer credit transaction subject to the provisions of sections 36a-675 to 36a-685, inclusive, that is consummated before September 30, 1995, the civil, administrative and criminal liability of a creditor or any assignee of a creditor under sections 36a-675 to 36a-685, inclusive, and a consumer's extended rescission rights under subdivision (3) of subsection (j) of this section, shall be limited to the extent provided in and subject to the exceptions contained in Section 139 of the Consumer Credit Protection Act (15 USC 1649).

      (1969, P.A. 454, S. 15; P.A. 75-55; 75-436, S. 6, 7; P.A. 77-315, S. 1; P.A. 81-158, S. 8, 17; P.A. 82-18, S. 2, 4; P.A. 87-65; P.A. 88-65, S. 45; P.A. 96-40, S. 1, 2; 96-109, S. 14; 96-180, S. 119, 166.)

      History: P.A. 75-55 required that action be brought within three years, rather than one year, in Subsec. (e); P.A. 75-436 rewrote Subsec. (a) to distinguish between class actions and individual actions, returned time for bringing action to one year in Subsec. (e) and added Subsecs. (f) to (j); P.A. 77-315 specified applicability in Subsec. (a) to failure to comply with requirements of chapter 657a, this chapter and previously listed sections rather than to failure to disclose information required under this chapter and listed sections; P.A. 81-158 inserted new Subsecs. (i) to (m) and made extensive changes to the existing Subsecs. to make the provisions of the section conform to federal law, effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to "the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended", i.e. October 1, 1982; P.A. 87-65 amended Subsec. (j) by adding Subdiv. (4) re the accrual of finance charges during the rescission period; P.A. 88-65 made technical changes by adding U.S. code citations; Sec. 36-407 transferred to Sec. 36a-683 in 1995; P.A. 96-40 made technical changes, and made specific changes to conform with the federal Truth in Lending Act by amending Subsecs. (a) and (k) re consumer credit secured by real property, adding Subdivs. (j)(6) and (7) re obligor rescission rights, adding Subdivs. (k)(4) and (5) re assignments, and adding Subsec. (n) re consumer rescission rights and re liability of creditors and assignees for transactions before September 30, 1995, effective May 2, 1996; P.A. 96-109 and 96-180 both substituted "36a-675 to 36a-685" for "36a-665 to 36a-675" where appearing and substituted references to Subsec. (d) for Subsec. (g) of Sec. 36a-684, effective June 3, 1996.

      Annotations to former section 36-407:

      Cited. 183 C. 85.

      Cited. 3 CA 201.

      One-year limitation for bringing action under state truth-in-lending act is not bar to common law defense of recoupment. 33 CS 201.

      Subsec. (a):

      Subdiv. (2)(A) cited. 35 CS 508; 36 CS 629, 630; 37 CS 606.

      Subsec. (e):

      Statute of limitations does not bar defendant's counterclaim by way of recoupment. 35 CS 508.

      Subsec. (f):

      Cited. 37 CS 606.

      Sec. 36a-684. (Formerly Sec. 36-414). Enforcement. Disclosure errors and adjustments. (a) Compliance with the requirements of sections 36a-567, 36a-568 and 36a-675 to 36a-685, inclusive, subdivision (13) of subsection (c) of section 36a-770, and sections 36a-771, 36a-774 and 36a-777 shall be enforced by the commissioner and the commissioner shall, in addition to other powers granted by said sections or by other provisions of law, receive and act on complaints, take action designed to obtain voluntary compliance with said sections or commence proceedings on the commissioner's own initiative.

      (b) In order to accomplish the purposes of sections 36a-675 to 36a-685, inclusive, and the provisions of the general statutes referred to in subsection (a) of this section, the commissioner may (1) counsel persons and groups on their rights and duties under said sections and provisions, (2) establish programs for the education of consumers with respect to credit and leasing practices and problems and (3) make studies appropriate to effectuate the purposes and policies of said sections and provisions and make the results available to the public.

      (c) The commissioner may by regulation require the maintenance of records related to consumer credit sales, loans and leases sufficient to evidence the adoption of policies calculated to produce compliance with sections 36a-675 to 36a-685, inclusive, and the provisions of the general statutes referred to in subsection (a) of this section which shall be in addition to the record retention requirements imposed under the Consumer Credit Protection Act (15 USC 1601 et seq.).

      (d) (1) In carrying out enforcement activities under this section, the commissioner, in cases where an annual percentage rate or finance charge was inaccurately disclosed, shall notify the creditor of such disclosure error and may require the creditor to make an adjustment to the account of the person to whom credit was extended, to assure that such person will not be required to pay a finance charge in excess of the finance charge actually disclosed or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower. For the purposes of this subsection, except where such disclosure error resulted from a wilful violation which was intended to mislead the person to whom credit was extended, in determining whether a disclosure error has occurred and in calculating any adjustment, (A) the commissioner shall apply (i) with respect to the annual percentage rate, a tolerance of one-quarter of one per cent more or less than the actual rate, determined without regard to Section 107(c) of the Consumer Credit Protection Act (15 USC 1606(c)), and (ii) with respect to the finance charge, a corresponding numerical tolerance as generated by the tolerance provided under this subsection for the annual percentage rate; except that (B) with respect to transactions consummated after March 31, 1982, the commissioner shall apply (i) for transactions that have a scheduled amortization of ten years or less, with respect to the annual percentage rate, a tolerance not to exceed one-quarter of one per cent more or less than the actual rate, determined without regard to Section 107(c) of the Consumer Credit Protection Act (15 USC 1606(c)), but in no event a tolerance of less than the tolerances allowed under Section 107(c) (15 USC 1606(c)), (ii) for transactions that have a scheduled amortization of more than ten years, with respect to the annual percentage rate, only such tolerances as are allowed under Section 107(c) of the Consumer Credit Protection Act (15 USC 1606(c)), and (iii) for all transactions, with respect to the finance charge, a corresponding numerical tolerance as generated by the tolerances provided under this subsection for the annual percentage rate.

      (2) The commissioner shall require such an adjustment when the commissioner determines that such disclosure error resulted from a clear and consistent pattern or practice of violations, from gross negligence, or from a wilful violation which was intended to mislead the person to whom the credit was extended. Notwithstanding the preceding sentence, except where such disclosure error resulted from a wilful violation which was intended to mislead the person to whom credit was extended, the commissioner need not require such an adjustment if the commissioner determines that such disclosure error: (A) Resulted from an error involving the disclosure of a fee or charge that would otherwise be excludable in computing the finance charge, including but not limited to, violations involving the disclosures described in Sections 106(b), (c) and (d) of the Consumer Credit Protection Act (15 USC 1605(b), (c) and (d)), in which event the commissioner may require such remedial action as the commissioner determines to be equitable, except that for transactions consummated after March 31, 1982, such an adjustment shall be ordered for violations of Section 106(b) (15 USC 1605(b)); (B) involved a disclosed amount which was ten per cent or less of the amount that should have been disclosed and (i) in cases where the error involved a disclosed finance charge, the annual percentage rate was disclosed correctly, and (ii) in cases where the error involved a disclosed annual percentage rate, the finance charge was disclosed correctly; in which event the commissioner may require such adjustment as the commissioner determines to be equitable; (C) involved a total failure to disclose either the annual percentage rate or the finance charge, in which event the commissioner may require such adjustment as the commissioner determines to be equitable; or (D) resulted from any other unique circumstance involving clearly technical and nonsubstantive disclosure violations that do not adversely affect information provided to the consumer and that have not misled or otherwise deceived the consumer. In the case of other such disclosure errors, the commissioner may require such an adjustment.

      (3) Notwithstanding subdivision (2) of this subsection, no adjustment shall be ordered: (A) If it would have a significantly adverse impact upon the safety or soundness of the creditor, but in any such case, the commissioner may require a partial adjustment in an amount which does not have such an impact except that with respect to any transaction consummated after May 18, 1981, the commissioner shall require the full adjustment, but permit the creditor to make the required adjustment in partial payments over an extended period of time which the commissioner considers to be reasonable, (B) if the amount of the adjustment would be less than one dollar, except that if more than one year has elapsed since the date of the violation, the commissioner may require that such amount be paid to the commissioner, (C) except where such disclosure error resulted from a wilful violation which was intended to mislead the person to whom credit was extended, in the case of an open-end credit plan, more than two years after the violation, or in the case of any other extension of credit, as follows: (i) With respect to creditors that have been examined by the commissioner, except in connection with violations arising from practices identified in the current examination and only in connection with transactions that are consummated after the date of the immediately preceding examination, except that where practices giving rise to violations identified in earlier examinations have not been corrected, adjustments for those violations shall be required in connection with transactions consummated after the date of the examination in which such practices were first identified; (ii) with respect to creditors that have not been examined by the commissioner, except in connection with transactions that are consummated after May 10, 1978; and (iii) in no event after the later of (I) the expiration of the life of the credit extension, or (II) two years after the agreement to extend credit was consummated.

      (4) In addition to the enforcement powers authorized by the provisions of this section and section 36a-50, the commissioner may order any creditor to make an adjustment as provided in subdivision (1) of this subsection. After such an order is issued, the persons named therein may, within fourteen days after receipt of the order, file a written request for a hearing. The hearing shall be held in accordance with the provisions of chapter 54.

      (5) Except as otherwise specifically provided in this subsection and notwithstanding any other provision of law, the commissioner may not require a creditor to make dollar adjustments for errors in any requirements under the Consumer Credit Protection Act (15 USC 1601 et seq.), except with regard to the requirements of Section 165 of the Consumer Credit Protection Act (15 USC 1666d).

      (6) A creditor shall not be subject to an order to make an adjustment, if within sixty days after discovering a disclosure error, whether pursuant to a final written examination report or through the creditor's own procedures, the creditor notifies the person concerned of the error and adjusts the account so as to assure that such person will not be required to pay a finance charge in excess of the finance charge actually disclosed or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower.

      (1969, P.A. 454, S. 22; P.A. 74-254, S. 7; P.A. 78-280, S. 6, 127; P.A. 81-158, S. 9, 10, 17; P.A. 82-18, S. 2, 4; 82-174, S. 7, 14; P.A. 88-65, S. 46; 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 94-122, S. 308, 340; P.A. 96-109, S. 15; P.A. 03-61, S. 7.)

      History: P.A. 74-254 substituted reference to chapter 54 for reference to chapter 637 in Subsec. (f); P.A. 78-280 substituted "judicial district of Hartford-New Britain" for "Hartford county" in Subsec. (d); P.A. 81-158 amended Subsec. (b) to include leasing practices and problems in the education programs of the commissioner, amended Subsec. (c) to require the intention of records related to consumer leases, provide that the record retention requirements are in addition to those imposed by federal law and provide that examination of records related to required disclosures may take place on the premises of a lessor or an assignee of a creditor or lessor, amended Subsec. (d) to provide that the commissioner is not required to post a bond, amended Subsec. (e) to delete provisions concerning the specific topics to be covered by the report, amended Subsec. (f) to add "or lessor or assignee thereof", effective March 31, 1982, and added Subsec. (g) concerning disclosure errors and required adjustments by a creditor to conform to federal law; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to "the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended", i.e. October 1, 1982; P.A. 82-174 amended Subsec. (f) by deleting provisions authorizing the commissioner, after a hearing, to order a creditor, lessor or assignee to cease and desist from violating the chapter and authorizing an aggrieved person to appeal in the manner provided in chapter 54, and by adding provisions authorizing the commissioner to issue, after notice, cease and desist orders unless a hearing is requested and authorizing him to bring an action to enforce any such order; P.A. 88-65 made technical changes by adding U.S. code citations; P.A. 88-230 replaced "judicial district of Hartford-New Britain" with "judicial district of Hartford", effective September 1, 1991; P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; (Revisor's note: In 1991 the incorrect internal reference in Subsec. (a) to section "42-83(2)(d)" was changed editorially by the Revisors to "42-83(3)(d)"); P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 94-122 deleted a provision authorizing the commissioner or his representative to examine records on a creditor's or lessor's premises in Subsec. (c), deleted Subsecs. (d) re court injunctions, (e) re annual reports to the governor and (f) re cease and desist orders, relettered former Subsec. (g) as Subsec. (d) and made technical changes, effective January 1, 1995; Sec. 36-414 transferred to Sec. 36a-684 in 1995; P.A. 96-109 made technical change in Subsec. (a), deleting reference to Subsec. (c) of Sec. 36a-535 and substituting reference to Subdiv. (13) for reference to Subdiv. (12) of Sec. 36a-770(c); P.A. 03-61 deleted Subsec. (d)(7) re adjustments for annual percentage rate disclosure errors with respect to transactions consummated between January 1, 1977, and May 18, 1981.

      Sec. 36a-685. (Formerly Sec. 36-415). Unenforceable agreements. (a) If it is the understanding of the creditor and the debtor at the time an extension of credit is made that delay in making repayment or failure to make repayment could result in the use of violence or other criminal means to cause harm to the person, reputation or property of any person, the repayment of the extension of credit is unenforceable through civil judicial processes against the debtor.

      (b) Proof that an extension of credit was made at an annual rate exceeding forty-five per cent calculated according to the actuarial method, and that the creditor then had a reputation for the use or threat of use of violence or other criminal means to cause harm to the person, reputation or property of any person to collect extensions of credit or to punish the nonrepayment thereof, is prima facie evidence that the extension of credit was unenforceable under subsection (a) of this section.

      (1969, P.A. 454, S. 23; P.A. 05-288, S. 209.)

      History: Sec. 36-415 transferred to Sec. 36a-685 in 1995; P.A. 05-288 made a technical change in Subsec. (b), effective July 13, 2005.

      Secs. 36a-686 to 36a-689.