OLR Bill Analysis

sHB 6434

AN ACT CONCERNING CONSUMER DEPOSITS AT BANQUET FACILITIES.

SUMMARY:

This bill requires businesses renting or leasing a facility for events to (1) maintain a secured line of credit or (2) hold a portion of the deposit in trust in a separate escrow account. The amount maintained or held must be at least 25% of the amount of any deposits or down payments greater than $ 500. The amount must be adjusted at least 30 days from its establishment or most recent adjustment to reflect the value of additional deposits, down payments, or services rendered. A violation is an unfair trade practice.

EFFECTIVE DATE: October 1, 2009

SECURITY

The bill defines “secured line of credit” as an irrevocable letter of credit reissued annually by a bank or other state or federally chartered financial institution that names the Department of Consumer Protection (DCP) as a beneficiary. A copy of the letter must be sent to DCP.

The bill defines an “escrow account” as a state or federally chartered bank account where funds are separate from the funds of the facility and are held in trust for the person paying to use the facility.

BACKGROUND

Connecticut Unfair Trade Practices Act

This law prohibits businesses from engaging in unfair and deceptive acts or practices. It allows the consumer protection commissioner to issue regulations defining what constitutes an unfair trade practice, investigate complaints, issue cease and desist orders, order restitution in cases involving less than $ 5,000, enter into consent agreements, ask the attorney general to seek injunctive relief, and accept voluntary statements of compliance. The act also allows individuals to sue. Courts may issue restraining orders; award actual and punitive damages, costs, and reasonable attorneys fees; and impose civil penalties of up to $ 5,000 for willful violations and $ 25,000 for violation of a restraining order.

COMMITTEE ACTION

General Law Committee

Joint Favorable Substitute