CHAPTER 669

REGULATED ACTIVITIES

Table of Contents

Sec. 36a-675. (Formerly Sec. 36-416). Short title: Connecticut Truth-in-Lending Act.

Sec. 36a-676. (Formerly Sec. 36-393). Definitions.

Sec. 36a-677. (Formerly Sec. 36-393a). State policy.

Sec. 36a-678. (Formerly Sec. 36-393b). Compliance with Consumer Credit Protection Act. Exempt transactions.

Sec. 36a-679. (Formerly Sec. 36-395). Regulations.

Sec. 36a-680. (Formerly Sec. 36-398). Effect of inconsistent law.

Sec. 36a-681. (Formerly Sec. 36-399). Penalty.

Sec. 36a-682. (Formerly Sec. 36-400). Compliance of governmental instruments. Exemptions from penalties.

Sec. 36a-683. (Formerly Sec. 36-407). Failure to comply; liability. Civil action. Right to rescind.

Sec. 36a-684. (Formerly Sec. 36-414). Enforcement. Disclosure errors and adjustments.

Sec. 36a-686. Civil penalty. Liability.

Sec. 36a-690. (Formerly Sec. 36-417z). Calculation of interest or finance charge rebates. Prohibited methods. Transactions affected.

Sec. 36a-701. Security freeze on credit report: Definitions.

Sec. 36a-701a. Security freeze on credit report. Timing. Disclosure of report to third party during freeze. Procedures for freeze. Refusal by credit rating agency to implement freeze. Exceptions. Fees.

Sec. 36a-701b. Breach of security re computerized data containing personal information. Notice of breach. Provision of identity theft prevention services and identity theft mitigation services. Delay for criminal investigation. Means of notice. Unfair trade practice.

Sec. 36a-718. (Formerly Sec. 36-442p). Licenses required. Exemptions.

Sec. 36a-719c. Surety bond, fidelity bond and errors and omissions coverage. Cancellation. Automatic suspension of license. Notices.

Sec. 36a-719d. Records to be maintained by licensee.

Sec. 36a-719h. Prohibited acts.

Sec. 36a-726. (Formerly Sec. 36-442bb). Disclosure required.

Sec. 36a-746a. Definitions.

Sec. 36a-760. Nonprime home loans: Definitions; applicability.

Sec. 36a-760d. Requirements for making nonprime home loans.

Sec. 36a-770. (Formerly Sec. 42-83). Applicability of Uniform Commercial Code. Filing and recording. Definitions.

Sec. 36a-771. (Formerly Sec. 42-84). General contract requirements.

Sec. 36a-772. (Formerly Sec. 42-85). Maximum finance charge on retail sales of motor vehicles and other goods.

Sec. 36a-774. (Formerly Sec. 42-87). Installment loan contract requirements.

Sec. 36a-785. (Formerly Sec. 42-98). Foreclosure.

Sec. 36a-800. (Formerly Sec. 42-127). Consumer collection agency. Definitions.

Sec. 36a-801. (Formerly Sec. 42-127a). License required. Application, issuance, renewal. Authority to conduct criminal history records check. Examination of records. Abandonment of application. Automatic suspension of license. Name and place of business.

Sec. 36a-804. (Formerly Sec. 42-129a). Suspension, revocation or refusal to renew license or taking of other action.

Sec. 36a-805. (Formerly Sec. 42-131). Prohibited practices. Exception.

Sec. 36a-810. (Formerly Sec. 42-133a). Penalty.

Sec. 36a-846. Definitions.

Sec. 36a-847. (Note: This section is effective July 1, 2016.) License required. Exemptions. Application. Issuance and renewal. Fees. Authority to conduct criminal records check. Examination of records. Abandonment of application. Automatic suspension of license.

Sec. 36a-848. (Note: This section is effective July 1, 2016.) Name and place of business. Change of location.

Sec. 36a-849. (Note: This section is effective July 1, 2016.) Records to be maintained by licensee.

Sec. 36a-850. (Note: This section is effective July 1, 2016.) Prohibited activities of student loan servicers.

Sec. 36a-851. (Note: This section is effective July 1, 2016.) Commissioner’s authority re investigations and examinations. Prohibited acts by subjects of investigation or examination.

Sec. 36a-852. (Note: This section is effective July 1, 2016.) Suspension, revocation or refusal to renew license.

Sec. 36a-853. (Note: This section is effective July 1, 2016.) Compliance with federal laws and regulations.

Sec. 36a-854. (Note: This section is effective July 1, 2016.) Regulations.


PART III

CONNECTICUT TRUTH-IN-LENDING ACT

Sec. 36a-675. (Formerly Sec. 36-416). Short title: Connecticut Truth-in-Lending Act. Sections 36a-675 to 36a-686, inclusive, shall be known and may be cited as the “Connecticut Truth-in-Lending Act”.

(1969, P.A. 454, S. 24; P.A. 15-235, S. 1.)

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); P.A. 15-235 added reference to Sec. 36a-686 and replaced “Truth-in-Lending Act” with “Connecticut Truth-in-Lending Act”, effective August 1, 2015.

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

(1) “Consumer Credit Protection Act” means 15 USC Chapter 41, Subchapter I, as from time to time amended, and includes regulations adopted by the Federal Reserve Board or the Bureau of Consumer Financial Protection pursuant to said act;

(2) “Creditor” means “creditor” as defined in 15 USC 1602, as amended from time to time, but does not include any department or agency of the United States; and

(3) “Lessor” means “lessor” as defined in 15 USC 1667, as amended from time to time, but does not include any department or agency of the United States.

(b) Any word or phrase in the Connecticut Truth-in-Lending Act that is not defined in said act but is defined in the Consumer Credit Protection Act has 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; P.A. 11-110, S. 5; P.A. 14-122, S. 162; P.A. 15-235, S. 2.)

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; P.A. 11-110 amended Subsec. (a)(2) to delete reference to Public Law 90-321, add references to Consumer Credit Protection Act and Bureau of Consumer Financial Protection and make a technical change, effective July 21, 2011; P.A. 14-122 made a technical change in Subsec. (b); P.A. 15-235 amended Subsec. (a) to delete former Subdiv. (1) defining “consumer”, to redesignate existing Subdiv. (2) as Subdiv. (1), to delete former Subdivs. (3) and (4) defining “credit” and “credit card, cardholder and card issuer”, to redesignate existing Subdiv. (5) as Subdiv. (2), to delete former Subdiv. (6) defining “credit sale”, to redesignate existing Subdiv. (7) as Subdiv. (3), to delete former Subdiv. (8) defining “open-end credit plan” and to make technical changes, and amended Subsec. (b) to make technical changes, effective August 1, 2015.

Sec. 36a-677. (Formerly Sec. 36-393a). State policy. (a) It is the policy of this state to (1) enhance economic stabilization and strengthen 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, and (2) protect consumers against inaccurate and unfair credit billing practices.

(b) It is also the policy of this state to provide that the commissioner 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; P.A. 15-235, S. 3.)

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; P.A. 15-235 amended Subsec. (a) by adding provisions re economic stabilization and protection of consumers against inaccurate and unfair credit billing practices and amended Subsec. (b) to make a technical change, effective August 1, 2015.

Sec. 36a-678. (Formerly Sec. 36-393b). Compliance with Consumer Credit Protection Act. Exempt transactions. (a) Except as otherwise provided in the Connecticut Truth-in-Lending Act or regulations adopted by the commissioner, each person shall comply with all provisions of the Consumer Credit Protection Act that apply to such person, including the delivery of integrated disclosures required by 12 USC 5301 et seq. and implemented through regulations adopted by the Bureau of Consumer Financial Protection.

(b) Any transaction that is exempt from the provisions of the Consumer Credit Protection Act, pursuant to 15 USC 1603, as amended from time to time, or by regulation promulgated pursuant to 15 USC 1604, as amended from time to time, is exempt from the provisions of the Connecticut Truth-in-Lending Act.

(c) Notwithstanding subsection (b) of this section, each person shall comply with all provisions of the Real Estate Settlement Procedures Act of 1974 (12 USC Chapter 27), as amended from time to time, and the regulations promulgated thereunder that apply to such person.

(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; P.A. 15-235, S. 4.)

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; P.A. 15-235 amended Subsecs. (a) and (b) to add provisions re federal integrated disclosure requirements and to make technical changes and added Subsec. (c) re compliance with the Real Estate Settlement Procedures Act of 1974, effective August 1, 2015.

Sec. 36a-679. (Formerly Sec. 36-395). Regulations. (a) The commissioner may adopt regulations, in accordance with chapter 54, to carry out the provisions of the Connecticut Truth-in-Lending Act, sections 36a-567, 36a-568, subdivision (13) of subsection (c) of section 36a-770, and sections 36a-771, 36a-774 and 36a-777. Such regulations shall be consistent with the policy of this state as provided in section 36a-677 and the Consumer Credit Protection Act.

(b) No liability shall be imposed under the Connecticut Truth-in-Lending Act for an act done or omitted in conformity with any provision of said act, the Consumer Credit Protection Act 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; P.A. 15-235, S. 5.)

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); P.A. 15-235 amended Subsec. (a) by deleting provisions re substantive and procedural regulations, adding reference to adoption in accordance with Ch. 54 and making technical changes, and amended Subsec. (b) by making technical changes, effective August 1, 2015.

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 the Connecticut Truth-in-Lending Act or regulations adopted thereunder, creditors may not make disclosures using the inconsistent term or form, and shall incur no liability under the other law of this state for failure to use such term or form, notwithstanding that such finding is subsequently amended, rescinded or determined by judicial or other authority to be invalid for any reason. 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 the Connecticut Truth-in-Lending Act shall control, provided sections 36a-746b to 36a-746g, inclusive, shall not be deemed inconsistent with the provisions of the Connecticut Truth-in-Lending Act.

(b) Except as provided in this section, the provisions of 15 USC 1639, as amended from time to time, do not annul, alter or affect the applicability of the laws of this state imposing requirements on high-cost mortgages as defined in 15 USC 1602(bb), as amended from time to time, or exempt any person subject to the provisions of 15 USC 1639, as amended from time to time, from complying with such laws. If any such law is inconsistent with any provision of 15 USC 1639, as amended from time to time, such provision shall prevail to the extent of such inconsistency.

(c) In any action or proceeding in any court involving a consumer credit sale, the disclosure of an annual percentage rate required by the Connecticut Truth-in-Lending Act 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.

(d) Except as provided in 15 USC 1635, 15 USC 1640 and 15 USC 1666e, as amended from time to time, the Connecticut Truth-in-Lending Act and any regulations adopted thereunder do not affect the validity or enforceability of any contract or obligation under state or federal law.

(e) The provisions of 15 USC 1632(c) and 15 USC 1637(c), (d), (e) and (f), as amended from time to time, shall supersede any law of this state relating to the disclosure of information in any credit or charge card application or solicitation that is subject to the requirements of 15 USC 1637(c), as amended from time to time, or any renewal notice that is subject to the requirements of 15 USC 1637(d), as amended from time to time, except the laws of this state employed or established for the purpose of enforcing the requirements of said sections.

(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; P.A. 15-235, S. 6.)

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; P.A. 15-235 amended Subsec. (a) to add provision re disclosures using inconsistent term or form, added new Subsec. (b) re compliance with state laws imposing requirements on high-cost mortgages, redesignated existing Subsec. (b) as Subsec. (c), added Subsec. (d) re validity or enforceability of any contract or obligation under state or federal law, added Subsec. (e) re federal act superseding state laws relating to disclosure of information in credit or charge card application or solicitation, and made technical changes, effective August 1, 2015.

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 the Connecticut Truth-in-Lending Act, 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 or the Bureau of Consumer Financial Protection under 15 USC 1606, as amended from time to time, 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; P.A. 11-110, S. 6; P.A. 15-235, S. 7.)

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 Sec. 36a-535(c) and substituting reference to Subdiv. (13) for Subdiv. (12) of Sec. 36a-770(c); P.A. 11-110 added reference to Bureau of Consumer Financial Protection, effective July 21, 2011; P.A. 15-235 made technical changes, effective August 1, 2015.

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 the Connecticut Truth-in-Lending Act 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 the Connecticut Truth-in-Lending Act for any violation thereof may be imposed upon the United States or any department or agency thereof, or 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 the Connecticut Truth-in-Lending Act 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 such department or agency has consulted with the commissioner to assure that such instrument complies with said act 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 the Connecticut Truth-in-Lending Act 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; P.A. 15-235, S. 8.)

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); P.A. 15-235 amended Subsec. (b) to add reference to the United States or any department or agency thereof, and made technical changes, effective August 1, 2015.

Sec. 36a-683. (Formerly Sec. 36-407). Failure to comply; liability. Civil action. Right to rescind. (a) Except as otherwise provided in this section, any creditor who fails to comply with any requirement of the Connecticut Truth-in-Lending Act, or of section 36a-771 or 36a-774, with respect to any person is liable to that person as provided for in 15 USC 1640, as amended from time to time.

(b) Any action under this section shall be brought in any court of competent jurisdiction pursuant to the time frames established in 15 USC 1640(e), as amended from time to time, provided a person may assert a violation of the Connecticut Truth-in-Lending Act in an action to collect the debt in accordance with the provisions of 15 USC 1640(e), as amended from time to time.

(c) 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 advisory opinion, final decision or order adopted by the commissioner, any rule, regulation or interpretation adopted by the Bureau of Consumer Financial Protection pursuant to the Consumer Credit Protection Act, or any interpretation or approval by an official or employee of the Federal Reserve System as provided in 15 USC 1640(f), as amended from time to time, notwithstanding that after such act or omission has occurred, such rule, regulation, approval, opinion, decision, order or interpretation is amended, rescinded or determined by judicial or other authority to be invalid for any reason.

(d) Notwithstanding any other provision of the Connecticut Truth-in-Lending Act, (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 15 USC 1640, as amended from time to time, 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 15 USC 1640, as amended from time to time, in which the same act or omission was the basis of that action.

(e) (1) Except as otherwise provided in this subsection, an obligor shall have the right to rescind as provided in 15 USC 1635, as amended from time to time.

(2) 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 15 USC 1635, as amended from time to time, or any other disclosures required under the Connecticut Truth-in-Lending Act, have not been delivered to the obligor, except that if (A) the commissioner institutes a proceeding to enforce the provisions of this section, or 15 USC 1635, as amended from time to time, 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 15 USC 1635, as amended from time to time, 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.

(3) (A) In any credit transaction in which an obligor has the right to rescind under 15 USC 1635, as amended from time to time, 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.

(f) (1) Except as otherwise specifically provided in the Connecticut Truth-in-Lending Act, any civil action for a violation of said act or proceeding by the commissioner which may be brought against a creditor may be maintained against any assignee of that creditor as provided in 15 USC 1641, as amended from time to time, and creditors and assignees shall comply with the notice requirements of said section.

(2) Any consumer who has the right to rescind a transaction under subsection (e) of this section or 15 USC 1635, as amended from time to time, may rescind the transaction as against any assignee of the obligation.

(g) 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 as provided in 15 USC 1666i, as amended from time to time.

(h) (1) Any lessor who fails to comply with any requirement imposed under 15 USC 1667a or 1667b, as amended from time to time, with respect to any person is liable to such person as provided in this section as if such lessor is a creditor.

(2) Any lessor who fails to comply with any requirement imposed under 15 USC 1667c, as amended from time to time, with respect to any person who suffers actual damage from the violation is liable to such person as provided in this section as if such lessor is a creditor.

(i) Any mortgage originator who fails to comply with any requirement imposed by 15 USC 1639b, as amended from time to time, or any regulation promulgated thereunder shall be liable as provided in 15 USC 1639b(d), as amended from time to time.

(j) In the case of any consumer credit transaction subject to the provisions of the Connecticut Truth-in-Lending Act that is consummated before September 30, 1995, the civil, administrative and criminal liability of a creditor or any assignee of a creditor under said act and a consumer’s extended rescission rights under subdivision (2) of subsection (e) of this section, shall be limited to the extent provided in and subject to the exceptions contained in 15 USC 1649, as amended from time to time.

(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; P.A. 11-110, S. 7, 8; P.A. 15-235, S. 9.)

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 added Subsec. (j)(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; P.A. 11-110 amended Subsecs. (f) and (j)(6) to add references to Bureau of Consumer Financial Protection, effective July 21, 2011; P.A. 15-235 substantially revised section to incorporate provisions of the federal Truth-in-Lending Act, deleted former Subsecs. (b) to (d), redesignated existing Subsec. (e) as Subsec. (b) and amended same to add reference to time frames established in 15 USC 1640(e), redesignated existing Subsec. (f) as Subsec. (c) and amended same to provide creditor with immunity from liability for any act done in reliance on commissioner’s advisory opinion, final decision or order, Bureau of Consumer Financial Protection interpretation or federal Consumer Credit Protection Act, deleted former Subsecs. (g) and (h), redesignated existing Subsec. (i) as Subsec. (d), redesignated existing Subsec. (j) as Subsec. (e) and amended same to add provision re right to rescind in Subdiv. (1), to delete former Subdiv. (2), to redesignate existing Subdivs. (3) and (4) as Subdivs. (2) and (3) and to delete former Subdivs. (5) to (7), redesignated existing Subsec. (k) as Subsec. (f) and amended same to add provisions re notice requirements of 15 USC 1641, to delete former Subdiv. (2), to redesignate existing Subdiv. (3) as Subdiv. (2) and to delete former Subdivs. (4) and (5), redesignated existing Subsec. (l) as Subdiv. (g) and amended same to add reference to 15 USC 1666i and to delete former Subdiv. (2), deleted former Subsec. (m)(1) re definition of “creditor”, redesignated existing Subsec. (m)(2) as Subsec. (h)(1) and amended same to add reference to 15 USC 1667a and 1667b, redesignated existing Subsec. (m)(3) as Subsec. (h)(2) and amended same to add reference to 15 USC 1667c, added new Subsec. (i) re mortgage originator compliance with 15 USC 1639b, redesignated existing Subsec. (n) as Subsec. (j), and made conforming and technical changes, effective August 1, 2015.

Sec. 36a-684. (Formerly Sec. 36-414). Enforcement. Disclosure errors and adjustments. (a) The commissioner shall enforce the requirements of sections 36a-567, 36a-568, the Connecticut Truth-in-Lending Act, subdivision (13) of subsection (c) of section 36a-770, and sections 36a-771, 36a-774 and 36a-777. 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 pursuant to sections 36a-50 to 36a-53, inclusive.

(b) In order to accomplish the purposes of the Connecticut Truth-in-Lending Act 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 act 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 act 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 the Connecticut Truth-in-Lending Act 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.

(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, the commissioner shall apply the tolerances set forth in 15 USC 1607(e)(1), as amended from time to time.

(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 15 USC 1605(b), (c) and (d), as amended from time to time, 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 15 USC 1605(b), as amended from time to time; (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, if the commissioner determines that a partial adjustment or making partial adjustments over an extended period is necessary to avoid causing the creditor to become undercapitalized pursuant to 12 USC 1831o, as amended from time to time, (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, or (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 the commissioner may order any creditor to make an adjustment as provided in 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, except with regard to the requirements of 15 USC 1666d, as amended from time to time.

(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; P.A. 15-235, S. 10.)

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; P.A. 15-235 amended Subsec. (a) to add reference to Secs. 36a-50 to 36a-53, amended Subsec. (d) to add reference to tolerances set forth in 15 USC 1607(e)(1) and to add provisions re creditors at risk of becoming undercapitalized, and made technical changes, effective August 1, 2015.

Sec. 36a-686. Civil penalty. Liability. (a) In addition to the enforcement provisions in the Connecticut Truth-in-Lending Act, the Banking Commissioner may order any person who violates 15 USC 1639e, as amended from time to time, to pay a civil penalty as provided in subsection (k) of said section. Such order shall be issued in accordance with section 36a-50, provided the amount of any civil penalty imposed shall be determined in accordance with 15 USC 1639e(k), as amended from time to time.

(b) In addition to any other liability allowed by the Connecticut Truth-in-Lending Act, a creditor found to have wilfully failed to obtain an appraisal as required by 15 USC 1639h, as amended from time to time, shall be liable to the applicant or borrower as provided in subsection (e) of said section.

(P.A. 15-235, S. 11.)

History: P.A. 15-235 effective August 1, 2015.

PART IV

INTEREST AND FINANCE CHARGE REBATES

Sec. 36a-690. (Formerly Sec. 36-417z). Calculation of interest or finance charge rebates. Prohibited methods. Transactions affected. (a) As used in this section:

(1) “Amount financed” means the amount of credit a borrower will actually be able to use as determined in accordance with sections 36a-675 to 36a-686, inclusive.

(2) “Annual percentage rate” means the annual percentage rate of finance charge determined in accordance with sections 36a-675 to 36a-686, inclusive.

(3) “Finance charge” means the cost of credit determined in accordance with sections 36a-675 to 36a-686, inclusive.

(b) Except as provided in this section, no creditor shall use any method of calculating interest rebates or finance charge rebates in any transaction described in subsection (c) of this section which originated on or after December 1, 1980, if such method would cause the actual interest or finance charge earned for the period during which the indebtedness is outstanding after deduction of an acquisition charge of twenty-five dollars to exceed the finance charge which would be earned if the annual percentage rate were calculated by the actuarial method on the amount financed in accordance with the disclosed schedule of payments. When such rebate is less than one dollar, no rebate need be made.

(c) Notwithstanding any section of the general statutes to the contrary, this section shall apply to any transaction which is subject to sections 36a-675 to 36a-686, inclusive, and which originated on or after December 1, 1980, but before October 1, 1987, if in such transaction: (1) The finance charge is precomputed; (2) the annual percentage rate is greater than fourteen per cent; and (3) the original term of the contract exceeds forty-eight months and fifteen days; and to any such transaction which originated on or after October 1, 1987, if in such transaction: (A) The finance charge is precomputed; and (B) the original term of the contract exceeds forty-eight months and fifteen days.

(P.A. 79-135, S. 1–4; P.A. 81-472, S. 70, 159; P.A. 87-13; P.A. 15-235, S. 19.)

History: P.A. 81-472 made technical changes; P.A. 87-13 amended Subsec. (c) to expand the application of the section after October 1, 1987, by deleting the requirement that the interest rate of the loan exceeds 14%; Sec. 36-417z transferred to Sec. 36a-690 in 1995; (Revisor’s note: In 1997 an obsolete reference in Subsec. (c) to “chapter 657” was changed editorially by the Revisors to “sections 36a-675 to 36a-685, inclusive,” to reflect the renumbering in 1995 of the sections contained in former chapter 657); P.A. 15-235 amended section to change “36a-685” to “36a-686”, effective August 1, 2015.

PART V

CONSUMER CREDIT REPORTS

Sec. 36a-701. Security freeze on credit report: Definitions. As used in this section and section 36a-701a:

(1) “Consumer” means any person who is utilizing or seeking credit for personal, family or household purposes;

(2) “Credit rating agency” means credit rating agency, as defined in section 36a-695;

(3) “Credit report” means credit report, as defined in section 36a-695;

(4) “Creditor” means creditor, as defined in section 36a-695;

(5) “Minor child” means an individual under eighteen years of age at the time a request for placement of a security freeze is submitted;

(6) “Security freeze” means a notice placed in a consumer’s credit report, at the request of the consumer, that prohibits the credit rating agency from releasing the consumer’s credit report or any information from it without the express authorization of the consumer. In the case of a minor child under subsections (j) and (k) of section 36a-701a, “security freeze” means (A) a restriction that is placed on the minor child’s credit report prohibiting the credit rating agency from releasing the minor child’s credit report or any information derived from the minor child’s credit report, provided a credit rating agency has information in its files pertaining to such minor child; or (B) a restriction that is placed on the minor child’s record prohibiting the credit rating agency from releasing the minor child’s record, provided a credit rating agency does not have any information in its files pertaining to such minor child; and

(7) “Sufficient proof of authority” means documentation showing that a parent or legal guardian has authority to act on behalf of a minor child, including, but not limited to, a court order, an original copy of the minor child’s birth certificate or a written notarized statement expressly describing the authority of the parent or legal guardian to act on behalf of the minor child that is signed by the parent or legal guardian and acknowledged, in accordance with the provisions of chapter 6, by (A) a judge of a court of record or a family support magistrate, (B) a clerk or deputy clerk of a court having a seal, (C) a town clerk, (D) a notary public, (E) a justice of the peace, or (F) an attorney admitted to the bar of this state.

(P.A. 05-148, S. 1; P.A. 15-62, S. 1.)

History: P.A. 05-148 effective January 1, 2006; P.A. 15-62 added new Subdiv. (5) defining “minor child”, redesignated existing Subdiv. (5) as Subdiv. (6) and amended same to redefine “security freeze” by adding provisions re minor child, and added Subdiv. (7) defining “sufficient proof of authority”.

Sec. 36a-701a. Security freeze on credit report. Timing. Disclosure of report to third party during freeze. Procedures for freeze. Refusal by credit rating agency to implement freeze. Exceptions. Fees. (a) Any consumer may submit a written request, by certified mail or such other secure method as authorized by a credit rating agency, to a credit rating agency to place a security freeze on such consumer’s credit report. Such credit rating agency shall place a security freeze on a consumer’s credit report not later than five business days after receipt of such request. Not later than ten business days after placing a security freeze on a consumer’s credit report, such credit rating agency shall send a written confirmation of such security freeze to such consumer that provides the consumer with a unique personal identification number or password to be used by the consumer when providing authorization for the release of such consumer’s report to a third party or for a period of time.

(b) In the event such consumer wishes to authorize the disclosure of such consumer’s credit report to a third party, or for a period of time, while such security freeze is in effect, such consumer shall contact such credit rating agency and provide: (1) Proper identification, (2) the unique personal identification number or password described in subsection (a) of this section, and (3) proper information regarding the third party who is to receive the credit report or the time period for which the credit report shall be available. Any credit rating agency that receives a request from a consumer pursuant to this section shall lift such security freeze not later than three business days after receipt of such request.

(c) Except for the temporary lifting of a security freeze as provided in subsection (b) of this section, any security freeze authorized pursuant to the provisions of this section shall remain in effect until such time as such consumer requests such security freeze to be removed. A credit rating agency shall remove such security freeze not later than three business days after receipt of such request provided such consumer provides proper identification to such credit rating agency and the unique personal identification number or password described in subsection (a) of this section at the time of such request for removal of the security freeze.

(d) Any credit rating agency may develop procedures to receive and process such request from a consumer to temporarily lift or remove a security freeze on a credit report pursuant to subsection (b) of this section. Such procedures, at a minimum, shall include, but not be limited to, the ability of a consumer to send such temporary lift or removal request by electronic mail, letter or facsimile.

(e) In the event that a third party requests access to a consumer’s credit report that has such a security freeze in place and such third party request is made in connection with an application for credit or any other use and such consumer has not authorized the disclosure of such consumer’s credit report to such third party, such third party may deem such credit application as incomplete.

(f) Any credit rating agency may refuse to implement or may remove such security freeze if such agency believes, in good faith, that: (1) The request for a security freeze was made as part of a fraud that the consumer participated in, had knowledge of, or that can be demonstrated by circumstantial evidence, or (2) the consumer credit report was frozen due to a material misrepresentation of fact by the consumer. In the event any such credit rating agency refuses to implement or removes a security freeze pursuant to this subsection, such credit rating agency shall promptly notify such consumer in writing of such refusal not later than five business days after such refusal or, in the case of a removal of a security freeze, prior to removing the freeze on the consumer’s credit report.

(g) Nothing in this section shall be construed to prohibit disclosure of a consumer’s credit report to: (1) A person, or the person’s subsidiary, affiliate, agent or assignee with which the consumer has or, prior to assignment, had an account, contract or debtor-creditor relationship for the purpose of reviewing the account or collecting the financial obligation owing for the account, contract or debt; (2) a subsidiary, affiliate, agent, assignee or prospective assignee of a person to whom access has been granted under subsection (b) of this section for the purpose of facilitating the extension of credit or other permissible use; (3) any person acting pursuant to a court order, warrant or subpoena; (4) any person for the purpose of using such credit information to prescreen as provided by the federal Fair Credit Reporting Act; (5) any person for the sole purpose of providing a credit file monitoring subscription service to which the consumer has subscribed; (6) a credit rating agency for the sole purpose of providing a consumer with a copy of his or her credit report upon the consumer’s request; or (7) a federal, state or local governmental entity, including a law enforcement agency, or court, or their agents or assignees pursuant to their statutory or regulatory duties. For purposes of this subsection, “reviewing the account” includes activities related to account maintenance, monitoring, credit line increases and account upgrades and enhancements.

(h) The following persons shall not be required to place a security freeze on a consumer’s credit report, provided such persons shall be subject to any security freeze placed on a credit report by another credit rating agency: (1) A check services or fraud prevention services company that reports on incidents of fraud or issues authorizations for the purpose of approving or processing negotiable instruments, electronic fund transfers or similar methods of payment; (2) a deposit account information service company that issues reports regarding account closures due to fraud, substantial overdrafts, automated teller machine abuse, or similar information regarding a consumer to inquiring banks or other financial institutions for use only in reviewing a consumer request for a deposit account at the inquiring bank or financial institution; or (3) a credit rating agency that: (A) Acts only to resell credit information by assembling and merging information contained in a database of one or more credit reporting agencies; and (B) does not maintain a permanent database of credit information from which new credit reports are produced.

(i) (1) Except as provided in subdivision (2) of this subsection, a credit rating agency may charge a fee of not more than ten dollars to a consumer for each security freeze, removal of such freeze or temporary lift of such freeze for a period of time, and a fee of not more than twelve dollars for a temporary lift of such freeze for a specific party.

(2) A credit rating agency shall not charge the fees authorized by subdivision (1) of this subsection to: (A) A victim of identity theft or the spouse of any victim of identity theft, who has submitted a copy of a police report prepared pursuant to section 54-1n to the credit rating agency; (B) any person who is covered under the victim of identity theft’s individual or group health insurance policy providing coverage of the type specified in subdivisions (1), (2), (4), (11) and (12) of section 38a-469, who has submitted a copy of a police report prepared pursuant to section 54-1n to the credit rating agency; (C) a person sixty-two years of age or older; (D) a person under eighteen years of age; (E) a person for whom a guardian or conservator has been appointed by a court; and (F) a victim of domestic violence, as defined in subdivision (1) of subsection (a) of section 17b-112a, who has provided evidence of such domestic violence as specified in subsection (b) of section 17b-112a to the credit rating agency. No credit rating agency shall charge a fee to a consumer for a replacement personal identification number when such replacement is the first one requested by the consumer.

(j) The parent or legal guardian of a minor child may place a security freeze on the credit report of a minor child by submitting a written request to the credit rating agency in the manner described in this section and subject to the same conditions and by providing the credit rating agency with proper identification and sufficient proof of authority to act on behalf of the minor child. The credit rating agency shall place the security freeze on the credit report of a minor child not later than five business days after receipt of such request. If the credit rating agency does not have any information in its files pertaining to the minor child at the time the credit rating agency receives a request pursuant to this subsection, the credit rating agency shall create a record for the minor child and place a security freeze on such record. Such record shall consist of a compilation of information created by a credit rating agency that identifies a minor child. A credit rating agency shall not create or use such record to consider the minor child’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living. A credit rating agency shall not release a minor child’s credit report, any information derived from a minor child’s credit report or any record created for a minor child.

(k) The parent or legal guardian of a minor child may request the removal of a security freeze placed on the credit report or record of a minor child by submitting a written request to the credit rating agency in the manner described in this section and subject to the same conditions and by providing the credit rating agency with proper identification and sufficient proof of authority to act on behalf of the minor child. The credit rating agency shall remove the security freeze on the credit report or record of a minor child not later than fifteen business days after receipt of such request.

(l) An insurer, as defined in section 38a-1, may deny an application for insurance if an applicant has placed a security freeze on such applicant’s credit report and fails to authorize the disclosure of such applicant’s credit report to such insurer pursuant to the provisions of subsection (b) of this section.

(P.A. 05-148, S. 2; 05-288, S. 230; P.A. 15-53, S. 9; 15-62, S. 2.)

History: P.A. 05-148 effective January 1, 2006; P.A. 05-288 made a technical change in Subsec. (f), effective January 1, 2006; P.A. 15-53 amended Subsec. (i) by designating existing provisions as Subdiv. (1) and amending same to add exception re Subdiv. (2), and by adding Subdiv. (2) re credit rating agencies not to charge fees to certain persons, effective June 19, 2015; P.A. 15-62 added Subsecs. (j) and (k) re request by parent or legal guardian of minor child for placement or removal of security freeze on minor child’s credit report or record, prohibited uses of minor child’s record by credit rating agency and timeline for agencies to respond to such requests, and redesignated existing Subsec. (j) as Subsec. (l).

Sec. 36a-701b. Breach of security re computerized data containing personal information. Notice of breach. Provision of identity theft prevention services and identity theft mitigation services. Delay for criminal investigation. Means of notice. Unfair trade practice. (a) For purposes of this section, (1) “breach of security” means unauthorized access to or unauthorized acquisition of electronic files, media, databases or computerized data, containing personal information when access to the personal information has not been secured by encryption or by any other method or technology that renders the personal information unreadable or unusable; and (2) “personal information” means an individual’s first name or first initial and last name in combination with any one, or more, of the following data: (A) Social Security number; (B) driver’s license number or state identification card number; or (C) account number, credit or debit card number, in combination with any required security code, access code or password that would permit access to an individual’s financial account. “Personal information” does not include publicly available information that is lawfully made available to the general public from federal, state or local government records or widely distributed media.

(b) (1) Any person who conducts business in this state, and who, in the ordinary course of such person’s business, owns, licenses or maintains computerized data that includes personal information, shall provide notice of any breach of security following the discovery of the breach to any resident of this state whose personal information was breached or is reasonably believed to have been breached. Such notice shall be made without unreasonable delay but not later than ninety days after the discovery of such breach, unless a shorter time is required under federal law, subject to the provisions of subsection (d) of this section and the completion of an investigation by such person to determine the nature and scope of the incident, to identify the individuals affected, or to restore the reasonable integrity of the data system. Such notification shall not be required if, after an appropriate investigation and consultation with relevant federal, state and local agencies responsible for law enforcement, the person reasonably determines that the breach will not likely result in harm to the individuals whose personal information has been acquired and accessed.

(2) If notice of a breach of security is required by subdivision (1) of this subsection:

(A) The person who conducts business in this state, and who, in the ordinary course of such person’s business, owns, licenses or maintains computerized data that includes personal information, shall, not later than the time when notice is provided to the resident, also provide notice of the breach of security to the Attorney General; and

(B) The person who conducts business in this state, and who, in the ordinary course of such person’s business, owns or licenses computerized data that includes personal information, shall offer to each resident whose personal information under subparagraph (A) of subdivision (4) of subsection (a) of section 38a-999b or subparagraph (A) of subdivision (2) of subsection (a) of this section was breached or is reasonably believed to have been breached, appropriate identity theft prevention services and, if applicable, identity theft mitigation services. Such service or services shall be provided at no cost to such resident for a period of not less than twelve months. Such person shall provide all information necessary for such resident to enroll in such service or services and shall include information on how such resident can place a credit freeze on such resident’s credit file.

(c) Any person that maintains computerized data that includes personal information that the person does not own shall notify the owner or licensee of the information of any breach of the security of the data immediately following its discovery, if the personal information of a resident of this state was breached or is reasonably believed to have been breached.

(d) Any notification required by this section shall be delayed for a reasonable period of time if a law enforcement agency determines that the notification will impede a criminal investigation and such law enforcement agency has made a request that the notification be delayed. Any such delayed notification shall be made after such law enforcement agency determines that notification will not compromise the criminal investigation and so notifies the person of such determination.

(e) Any notice to a resident, owner or licensee required by the provisions of this section may be provided by one of the following methods: (1) Written notice; (2) telephone notice; (3) electronic notice, provided such notice is consistent with the provisions regarding electronic records and signatures set forth in 15 USC 7001; (4) substitute notice, provided such person demonstrates that the cost of providing notice in accordance with subdivision (1), (2) or (3) of this subsection would exceed two hundred fifty thousand dollars, that the affected class of subject persons to be notified exceeds five hundred thousand persons or that the person does not have sufficient contact information. Substitute notice shall consist of the following: (A) Electronic mail notice when the person has an electronic mail address for the affected persons; (B) conspicuous posting of the notice on the web site of the person if the person maintains one; and (C) notification to major state-wide media, including newspapers, radio and television.

(f) Any person that maintains such person’s own security breach procedures as part of an information security policy for the treatment of personal information and otherwise complies with the timing requirements of this section, shall be deemed to be in compliance with the security breach notification requirements of this section, provided such person notifies, as applicable, residents of this state, owners and licensees in accordance with such person’s policies in the event of a breach of security and in the case of notice to a resident, such person also notifies the Attorney General not later than the time when notice is provided to the resident. Any person that maintains such a security breach procedure pursuant to the rules, regulations, procedures or guidelines established by the primary or functional regulator, as defined in 15 USC 6809(2), shall be deemed to be in compliance with the security breach notification requirements of this section, provided (1) such person notifies, as applicable, such residents of this state, owners, and licensees required to be notified under and in accordance with the policies or the rules, regulations, procedures or guidelines established by the primary or functional regulator in the event of a breach of security, and (2) if notice is given to a resident of this state in accordance with subdivision (1) of this subsection regarding a breach of security, such person also notifies the Attorney General not later than the time when notice is provided to the resident.

(g) Failure to comply with the requirements of this section shall constitute an unfair trade practice for purposes of section 42-110b and shall be enforced by the Attorney General.

(P.A. 05-148, S. 3; 05-288, S. 231, 232; June 12 Sp. Sess. P.A. 12-1, S. 130; P.A. 15-142, S. 6.)

History: P.A. 05-148 effective January 1, 2006; P.A. 05-288 made technical changes in Subsecs. (b) and (f), effective January 1, 2006; June 12 Sp. Sess. P.A. 12-1 amended Subsec. (a) by adding “unauthorized” re acquisition, amended Subsec. (b) by designating existing provisions as Subdiv. (1) and amending same to replace “disclose” with “provide notice of” and “disclosure” with “notice” and by adding Subdiv. (2) re notice of breach of security to Attorney General, amended Subsec. (c) by adding “of a resident of this state” re personal information, amended Subsec. (e) by adding “to a resident, owner or licensee” re notice, replacing “person, business or agency” with “person” and making a technical change, and amended Subsec. (f) by replacing references to subject persons with references to residents of this state, owners and licensees, as applicable, adding provisions re notice to Attorney General and deleting reference to system; P.A. 15-142 made technical changes in Subsec. (a), amended Subsec. (b) to replace “was, or is reasonably believed to have been, accessed by an unauthorized person through such breach of security” with “was breached or is reasonably believed to have been breached” and add provision re notice of breach of security not later than 90 days after discovery unless shorter time is required under federal law in Subdiv. (1), to designate existing provision re notice of breach to Attorney General as Subpara. (A) in Subdiv. (2) and amend same to add Subpara. (B) re provision of identity theft prevention services and identity theft mitigation services, and amended Subsec. (c) to replace “was, or is reasonably believed to have been accessed by an unauthorized person” with “was breached or is reasonably believed to have been breached”.

PART VII

MORTGAGE SERVICING

Sec. 36a-718. (Formerly Sec. 36-442p). Licenses required. Exemptions. (a) On and after January 1, 2015, no person shall act as a mortgage servicer, directly or indirectly, without first obtaining a license under section 36a-719 from the commissioner for its main office and each branch office where such business is conducted, unless such person is exempt from licensure pursuant to subsection (b) of this section.

(b) The following persons are exempt from mortgage servicer licensing requirements: (1) Any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union, provided such bank or credit union is federally insured; (2) any wholly-owned subsidiary of such bank or credit union; (3) any operating subsidiary where each owner of such operating subsidiary is wholly owned by the same such bank or credit union; (4) any person licensed as a mortgage lender in this state while acting as a mortgage servicer from a location licensed as a main office or branch office under sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b, provided (A) such person meets the supplemental mortgage servicer surety bond, fidelity bond and errors and omissions coverage requirements under section 36a-719c, and (B) during any period that the license of the mortgage lender in this state has been suspended, such exemption shall not be effective; and (5) any person licensed as a mortgage correspondent lender in this state while acting as a mortgage servicer with respect to any residential mortgage loan it has made and during the permitted ninety-day holding period for such loan from a location licensed as a main office or branch office under sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b, provided during any period the license of the mortgage correspondent lender in this state has been suspended, such exemption shall not be effective.

(c) The provisions of sections 36a-719e to 36a-719h, inclusive, shall apply to any person, including a person exempt from licensure pursuant to subsection (b) of this section, who acts as a mortgage servicer in this state on or after January 1, 2015.

(P.A. 88-230, S. 1, 12; P.A. 89-347, S. 6; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 94-122, S. 313, 340; P.A. 01-48, S. 13; P.A. 09-208, S. 34; P.A. 14-89, S. 4; P.A. 15-53, S. 1.)

History: (Revisor’s note: P.A. 88-230 authorized substitution of “judicial district of Hartford” for “judicial district of Hartford-New Britain” in the public and special acts of 1989, 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 deleted provisions allowing the commissioner to bring an enforcement action in superior court and to fine violators up to $2,500 and made technical changes, effective January 1, 1995; Sec. 36-442p transferred to Sec. 36a-718 in 1995; P.A. 01-48 added provision re express delivery; P.A. 09-208 added “take action against such mortgage servicing company” and reference to Sec. 36a-50 and deleted “, order the mortgage servicing company to cease and desist from such violation”, effective July 7, 2009; P.A. 14-89 replaced former provisions re violation by mortgage servicing company with Subsec. (a) re mortgage servicers to be licensed, Subsec. (b) re exemptions from licensure and Subsec. (c) re application of requirements to person acting as a mortgage servicer in this state on or after January 1, 2015; P.A. 15-53 amended Subsec. (b) to add Subdiv. (5) re exemption for licensed mortgage correspondent lender, effective June 19, 2015.

Sec. 36a-719c. Surety bond, fidelity bond and errors and omissions coverage. Cancellation. Automatic suspension of license. Notices. (a) Each mortgage servicer applicant or licensee and any person exempt from mortgage servicer licensure pursuant to subdivision (4) of subsection (b) of section 36a-718 shall file with the Banking Commissioner (1) a surety bond, written by a surety authorized to write such bonds in this state, covering its main office and any branch office from which it acts as mortgage servicer, in a penal sum of one hundred thousand dollars per office location in accordance with subsection (b) of this section, (2) a fidelity bond, written by a surety authorized to write such bonds in this state, in accordance with the requirements of subsection (c) of this section, and (3) evidence of errors and omissions coverage, written by a surety authorized to write such coverage in this state, in accordance with the requirements of subsection (c) of this section. No mortgage servicer licensee and no person otherwise exempt from mortgage servicer licensure pursuant to subdivision (4) of subsection (b) of section 36a-718 shall act as a mortgage servicer in this state without maintaining the surety bond, fidelity bond and errors and omissions coverage required by this section.

(b) The surety bond required by subsection (a) of this section shall be (1) in a form approved by the Attorney General; and (2) conditioned upon the mortgage servicer licensee or person exempt from mortgage servicer licensure pursuant to subdivision (4) of subsection (b) of section 36a-718 faithfully performing any and all written agreements or commitments with or for the benefit of mortgagors and mortgagees, truly and faithfully accounting for all funds received from a mortgagor or mortgagee in such person’s capacity as a mortgage servicer, and conducting such mortgage business consistent with the provisions of sections 36a-715 to 36a-719l, inclusive. Any mortgagor that may be damaged by the failure of a mortgage servicer licensee or person exempt from mortgage servicer licensure pursuant to subdivision (4) of subsection (b) of section 36a-718 to perform any written agreements or commitments, or by the wrongful conversion of funds paid by a mortgagor to such licensee or person, may proceed on such bond against the principal or surety thereon, or both, to recover damages. The commissioner may proceed on such bond against the principal or surety on such bond, or both, to collect any civil penalty imposed pursuant to subsection (a) of section 36a-50, any restitution imposed pursuant to subsection (c) of section 36a-50 and any unpaid costs of examination of a licensee as determined pursuant to section 36a-65. The proceeds of the bond, even if commingled with other assets of the principal, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the principal in the event of bankruptcy of the principal and shall be immune from attachment by creditors and judgment creditors. The surety bond shall run concurrently with the period of the license for the main office of the mortgage servicer or mortgage lender and the aggregate liability under the bond shall not exceed the penal sum of the bond. The principal shall notify the commissioner of the commencement of an action on the bond. When an action is commenced on a principal’s bond, the commissioner may require the filing of a new bond and immediately on recovery on any action on the bond, the principal shall file a new bond.

(c) The fidelity bond and errors and omissions coverage required by subsection (a) of this section shall name the commissioner as an additional loss payee on drafts the surety issues to pay for covered losses directly or indirectly incurred by mortgagors of residential mortgage loans serviced by the mortgage servicer. The fidelity bond shall cover losses arising from dishonest and fraudulent acts, embezzlement, misplacement, forgery and similar events committed by employees of the mortgage servicer. The errors and omissions coverage shall cover losses arising from negligence, errors and omissions by the mortgage servicer with respect to the payment of real estate taxes and special assessments, hazard and flood insurance or the maintenance of mortgage and guaranty insurance. The fidelity bond and errors and omissions coverage shall each be in the following principal amounts based on the mortgage servicer’s volume of servicing activity most recently reported to the commissioner:

(1) If the amount of the residential mortgage loans serviced is one hundred million dollars or less, the principal amount shall be at least three hundred thousand dollars; or

(2) If the amount of such loans exceeds one hundred million dollars, the principal amount shall be at least three hundred thousand dollars plus (A) three-twentieths of one per cent of the amount of residential mortgage loans serviced greater than one hundred million dollars but less than or equal to five hundred million dollars; (B) plus one-eighth of one per cent of the amount of residential mortgage loans serviced greater than five hundred million dollars but less than or equal to one billion dollars; and (C) plus one-tenth of one per cent of the amount of residential mortgage loans serviced greater than one billion dollars.

The fidelity bond and errors and omissions coverage may provide for a deductible amount not to exceed the greater of one hundred thousand dollars or five per cent of the face amount of such bond or coverage.

(d) A surety shall have the right to cancel the surety bond, fidelity bond and errors and omissions coverage required by this section at any time by a written notice to the principal stating the date cancellation shall take effect. Such notice shall be sent by certified mail to the principal at least thirty days prior to the date of cancellation. A surety bond, fidelity bond or errors and omissions coverage shall not be cancelled unless the surety notifies the commissioner, in writing, not less than thirty days prior to the effective date of cancellation. After receipt of such notification from the surety, the commissioner shall give written notice to the principal of the date such cancellation shall take effect. The commissioner shall automatically suspend the license of a mortgage servicer on such date. No automatic suspension or inactivation shall occur if, prior to the date that such bond or errors and omissions coverage cancellation shall take effect, (1) the principal submits a letter of reinstatement of the bond or errors and omissions coverage, or a new bond or errors and omissions policy; or (2) the mortgage servicer licensee has ceased business in this state and has surrendered all licenses in accordance with section 36a-51 and section 36a-719a. After a mortgage servicer license has been automatically suspended pursuant to this section, the commissioner shall give such licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-719j and an opportunity for a hearing on such action in accordance with section 36a-51 and require such licensee to take or refrain from taking such action as in the opinion of the commissioner will effectuate the purposes of this section. A person licensed as a mortgage lender in this state acting as a mortgage servicer from a location licensed as a main office or branch office under sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b shall cease to be exempt from mortgage servicer licensing requirements in this state upon cancellation of any surety bond, fidelity bond or errors and omissions coverage required by this section.

(e) If the commissioner finds that the financial condition of a mortgage servicer or mortgage lender licensee so requires, as evidenced by the reduction of tangible net worth, financial losses or potential losses as a result of a violation of sections 36a-715 to 36a-719k, inclusive, the commissioner may require one or more additional bonds meeting the standards set forth in this section. The licensee shall file any such additional bonds not later than ten days after receipt of the commissioner’s written notice of such requirement. A mortgage servicer or mortgage lender licensee shall file, as the commissioner may require, any bond rider or endorsement or addendum, as applicable, to any bond or evidence of errors and omissions coverage on file with the commissioner to reflect any changes necessary to maintain the surety bond, fidelity bond and errors and omissions coverage required by this section.

(P.A. 14-89, S. 8; P.A. 15-53, S. 2.)

History: P.A. 15-53 amended Subsec. (c) by adding “at least” re principal amount of bond and replacing “principal amount” with “face amount of such bond or coverage”, effective June 19, 2015.

Sec. 36a-719d. Records to be maintained by licensee. (a) Each mortgage servicer licensee and person exempt from licensure pursuant to subdivision (4) or (5) of subsection (b) of section 36a-718 shall maintain adequate records of each residential mortgage loan transaction at the office named in the mortgage servicer or mortgage lender license, or, if requested by the commissioner, shall make such records available at such office or send such records to the commissioner by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, not later than five business days after requested by the commissioner to do so. Upon request, the commissioner may grant a licensee additional time to make such records available or send them to the commissioner. Such records shall provide the following information: (1) A loan history for residential mortgage loans upon which payments are received or made by the mortgage servicer, itemizing the amount and date of each payment and the unpaid balance at all times; (2) the original or an exact copy of the note, residential mortgage or other evidence of indebtedness and mortgage deed; (3) the name and address of the mortgage lender, mortgage correspondent lender and mortgage broker, if any, involved in the residential mortgage loan transaction; (4) copies of any disclosures or notifications provided to the mortgagor required by state or federal law; (5) a copy of any bankruptcy plan approved in a proceeding filed by the mortgagor or a co-owner of the property subject to the residential mortgage loan; (6) a communications log that documents all verbal communications with the mortgagor or the mortgagor’s representative; and (7) a copy of all notices sent to the mortgagor related to any foreclosure proceeding filed against the encumbered property.

(b) Every mortgage servicer licensee and person exempt from licensure pursuant to subdivision (4) or (5) of subsection (b) of section 36a-718 shall retain the records of each residential mortgage loan serviced for not less than two years following the final payment on such residential mortgage loan, or the assignment of such residential mortgage loan, whichever occurs first, or such longer period as may be required by any other provision of law. Every mortgage servicer licensee and person exempt from licensure pursuant to subdivision (4) or (5) of subsection (b) of section 36a-718 shall keep and use in its business books, accounts and records that will enable the commissioner to determine whether such mortgage servicer is complying with the provisions of sections 36a-715 to 36a-719l, inclusive, and with any regulations adopted pursuant thereto.

(P.A. 14-89, S. 9; P.A. 15-53, S. 3.)

History: P.A. 15-53 added references to Sec. 36a-718(b)(5) and made a technical change, effective June 19, 2015.

Sec. 36a-719h. Prohibited acts. No mortgage servicer shall:

(1) Directly or indirectly employ any scheme, device or artifice to defraud or mislead mortgagors or mortgagees or to defraud any person;

(2) Engage in any unfair or deceptive practice toward any person or misrepresent or omit any material information in connection with the servicing of the residential mortgage loan, including, but not limited to, misrepresenting the amount, nature or terms of any fee or payment due or claimed to be due on a residential mortgage loan, the terms and conditions of the servicing agreement or the mortgagor’s obligations under the residential mortgage loan;

(3) Obtain property by fraud or misrepresentation;

(4) Knowingly misapply or recklessly apply residential mortgage loan payments to the outstanding balance of a residential mortgage loan;

(5) Knowingly misapply or recklessly apply payments to escrow accounts;

(6) Place hazard, homeowners or flood insurance on the mortgaged property when the mortgage servicer knows or has reason to know that the mortgagor has an effective policy for such insurance;

(7) Fail to comply with section 49-10a;

(8) Knowingly or recklessly provide inaccurate information to a credit bureau, thereby harming a mortgagor’s creditworthiness;

(9) Fail to report both the favorable and unfavorable payment history of the mortgagor to a nationally recognized consumer credit bureau at least annually if the mortgage servicer regularly reports information to a credit bureau;

(10) Collect private mortgage insurance beyond the date for which private mortgage insurance is required;

(11) Fail to issue a release of mortgage in accordance with section 49-8;

(12) Fail to provide written notice to a mortgagor upon taking action to place hazard, homeowners or flood insurance on the mortgaged property, including a clear and conspicuous statement of the procedures by which the mortgagor may demonstrate that he or she has the required insurance coverage and by which the mortgage servicer shall terminate the insurance coverage placed by it and refund or cancel any insurance premiums and related fees paid by or charged to the mortgagor;

(13) Place hazard, homeowners or flood insurance on a mortgaged property, or require a mortgagor to obtain or maintain such insurance, in excess of the replacement cost of the improvements on the mortgaged property as established by the property insurer;

(14) Fail to provide to the mortgagor a refund of unearned premiums paid by a mortgagor or charged to the mortgagor for hazard, homeowners or flood insurance placed by a mortgagee or the mortgage servicer if the mortgagor provides reasonable proof that the mortgagor has obtained coverage such that the forced placement insurance is no longer necessary and the property is insured. If the mortgagor provides reasonable proof that no lapse in coverage occurred such that the forced placement was not necessary, the mortgage servicer shall promptly refund the entire premium;

(15) Require any amount of funds to be remitted by means more costly to the mortgagor than a bank or certified check or attorney’s check from an attorney’s account to be paid by the mortgagor;

(16) Refuse to communicate with an authorized representative of the mortgagor who provides a written authorization signed by the mortgagor, provided the mortgage servicer may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the mortgagor;

(17) Conduct any business covered by sections 36a-715 to 36a-719l, inclusive, without holding a valid license as required under said sections, or assist or aid and abet any person in the conduct of business without a valid license as required under this title;

(18) Negligently make any false statement or knowingly and wilfully make any omission of a material fact in connection with any information or reports filed with a governmental agency or the system or in connection with any investigation conducted by the Banking Commissioner or another governmental agency; or

(19) Collect, charge, attempt to collect or charge or use or propose any agreement purporting to collect or charge any fee prohibited by sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b.

(P.A. 14-89, S. 13; P.A. 15-118, S. 29.)

History: P.A. 14-89 effective January 1, 2015; P.A. 15-118 made technical changes in Subdivs. (6), (12), (13) and (14).

PART VIII

MORTGAGE INSURANCE

Sec. 36a-726. (Formerly Sec. 36-442bb). Disclosure required. (a) Any mortgage lender who requires a borrower to pay for mortgage insurance as a condition of obtaining a first mortgage loan shall disclose to the applicant in writing at the time the first mortgage loan application is filed:

(1) That the purpose of mortgage insurance is to protect the mortgage lender against a loss which may be incurred in the event of a default by the borrower under the mortgage loan;

(2) That mortgage insurance is required as a condition of obtaining the mortgage loan, and under what, if any, conditions the lender may release the borrower from this obligation;

(3) A good faith estimate of the initial cost, if any, and the monthly cost, if any, of the required mortgage insurance. Notwithstanding the foregoing, if the first mortgage loan transaction is subject to the requirements of the federal Real Estate Settlement Procedures Act, the mortgage lender may, in place of the disclosure required under this subdivision, disclose that the cost of mortgage insurance will be disclosed on the good faith estimate of closing costs required to be furnished to the applicant in accordance with the Real Estate Settlement Procedures Act and the Truth-in-Lending Act, 15 USC Section 1601 et seq., as amended from time to time, and the regulations promulgated thereunder.

(b) Any mortgage lender who does not require mortgage insurance but does charge a higher interest rate for first mortgage loans in excess of an eighty per cent loan-to-value ratio shall disclose this fact to the applicant in writing at the time the first mortgage loan application is filed.

(c) The provisions of subsection (a) of this section shall not apply to any first mortgage loan which is to be insured or guaranteed by any agency of the federal government or any state or municipal government or quasi-governmental agency where such agency requires that mortgage insurance be obtained in connection with the loan.

(P.A. 89-95, S. 2; P.A. 15-235, S. 41.)

History: Sec. 36-442bb transferred to Sec. 36a-726 in 1995; P.A. 15-235 amended Subsec. (a)(3) to add reference to Truth-in-Lending Act, effective August 1, 2015.

PART IXa

CONNECTICUT ABUSIVE HOME LOAN
LENDING PRACTICES ACT

Sec. 36a-746a. Definitions. As used in this section and sections 36a-746b to 36a-746g, inclusive:

(1) “APR” means the annual percentage rate for the loan calculated according to the provisions of the federal Truth-in-Lending Act, 15 USC Section 1601 et seq., as amended from time to time, and the regulations promulgated thereunder. For purposes of this subdivision, any variable rate calculation shall use an index value in effect within forty-five days prior to consummation;

(2) “Broker” means a person who, for a fee, commission or other valuable consideration, negotiates, solicits, arranges, places or finds a high cost home loan that is to be made by a lender;

(3) “Consummation” means the time that a borrower becomes contractually obligated on a loan or extension of credit;

(4) “High cost home loan” means any loan or extension of credit, including an open-end line of credit but excluding a reverse mortgage transaction, as defined in 12 CFR 1026.33, as amended from time to time:

(A) In which the borrower is a natural person;

(B) The proceeds of which are to be used primarily for personal, family or household purposes;

(C) In which the loan is secured by a mortgage upon any interest in one-to-four family residential property, as defined in section 36a-485, located in this state that is, or, when the loan is made, is intended to be used or occupied by the borrower as a principal residence; and

(D) In which the APR applicable to the transaction determined in accordance with 12 CFR 1026.32(a)(3), as amended from time to time, will exceed the average prime offer rate, as defined in 12 CFR 1026.35(a)(2) as amended from time to time, by more than the number of percentage points specified in 12 CFR 1026.32(a)(1)(i), as amended from time to time;

(5) “Interim interest” means interest for the period from funding to the start of amortization paid by a borrower at or before consummation of a closed-end loan where such amortization begins sixty-two days or less after funding;

(6) “Lender” means any person who originates one or more high cost home loans; and

(7) “Prepaid finance charge” means any finance charge determined in accordance with 12 CFR 1026.4, as amended from time to time, that is paid separately in cash or by check before or at consummation of a loan or extension of credit or withheld from the proceeds of such transaction at any time, except the term includes any fees or commissions payable to the lender or broker in connection with the sale of credit life, accident, health, disability or unemployment insurance products or unrelated goods or services sold in conjunction with the loan or extension of credit when the cost of such insurance products or goods or services is prepaid with the proceeds of the loan or extension of credit and financed as part of the principal amount of the loan or extension of credit, and excludes premiums, fees and any other amounts paid to a governmental agency, any amounts required to be escrowed by a governmental agency and interim interest.

(P.A. 01-34, S. 3; P.A. 02-12, S. 1; P.A. 08-176, S. 63; P.A. 14-7, S. 5; P.A. 15-235, S. 16.)

History: P.A. 02-12 redefined “consummation” in Subdiv. (3), added definition of “interim interest” as new Subdiv. (5), redesignated existing Subdivs. (5) to (7) as Subdivs. (6) to (8) and redefined “prepaid finance charge” in redesignated Subdiv. (7), effective April 22, 2002; P.A. 08-176 made technical changes and, in Subdiv. (4)(C), added cite to Sec. 36a-485 and deleted former Subdiv. (8) re definition of “prepayment penalty”, effective July 1, 2008; P.A. 14-7 amended Subdiv. (1) to replace “12 CFR 226.6(a)(2) and 226.14(b)” with “12 CFR 1026.6(a)(2) and 1026.14(b)”, replace “12 CFR 226.6(a)(2) or 226.30” with “12 CFR 1026.6(a)(2) or 1026.30”, replace “12 CFR 226.18(e)” with “12 CFR 1026.18(e)” and replace “12 CFR 226.18(f) or 226.30” with “12 CFR 1026.18(f) or 1026.30”, amended Subdiv. (4) to replace “12 CFR 226.33” with “12 CFR 1026.33” and replace “12 CFR 226.32(a)(1)(i)” with “12 CFR 1026.32(a)(1)(i)”, and amended Subdiv. (7) to replace “12 CFR 226.4” with “12 CFR 1026.4”, effective May 8, 2014; P.A. 15-235 amended Subdiv. (1) to redefine “APR” and amended Subdiv. (4) to redefine “high cost home loan”, effective August 1, 2015.

PART X

OTHER MORTGAGE AND LOAN PRACTICES

Sec. 36a-760. Nonprime home loans: Definitions; applicability. (a) As used in this section and sections 36a-760a to 36a-760j, inclusive:

(1) “APR” has the same meaning as provided in section 36a-746a;

(2) “CHFA loan” means a loan made, insured, purchased, subsidized or guaranteed by the Connecticut Housing Finance Authority;

(3) “FHA loan” means a loan made, insured, purchased, subsidized or guaranteed by the Federal Housing Administration;

(4) “First mortgage loan” has the same meaning as provided in section 36a-485;

(5) “Lender” means any person engaged in the business of the making of mortgage loans who is (A) required to be licensed by the commissioner under chapter 668, or such person’s successors or assigns, or (B) exempt from licensing pursuant to subdivisions (1) to (3), inclusive, of subsection (a) of section 36a-487, and their successors and assigns, but does not include any mortgage broker, as defined in this section, or any mortgage loan originator, as defined in section 36a-485;

(6) “Mortgage broker” means a mortgage broker, as defined in section 36a-485, who is required to be licensed by the commissioner under chapter 668, or such person’s successors or assigns;

(7) “Nonprime home loan” means any loan or extension of credit, excluding an open-end line of credit, any mortgage insured under Title II of the National Housing Act, 12 USC 1701 et seq., as amended from time to time, that satisfies the requirements for a qualified mortgage set forth in 24 CFR 203.19(b), as amended from time to time, and a reverse mortgage transaction, as defined in 12 CFR 1026.33, as amended from time to time:

(A) In which the borrower is a natural person;

(B) The proceeds of which are to be used primarily for personal, family or household purposes;

(C) In which the loan is secured by a mortgage upon any interest in one-to-four family residential real property located in this state which is, or when the loan is made, intended to be used or occupied by the borrower as a principal residence;

(D) In which the principal amount of the loan does not exceed four hundred seventeen thousand dollars;

(E) Where the loan is not a CHFA loan; and

(F) In which the conditions set forth in subparagraph (F)(i) of this subdivision apply, subject to any adjustments made pursuant to subparagraph (F)(ii) of this subdivision:

(i) The difference, at the time of consummation, between the APR for the loan or extension of credit and the average prime offer rate for a comparable transaction, as of the date the interest rate is set, is greater than one and one-half percentage points if the loan is a first mortgage loan or three and one-half percentage points if the loan is a secondary mortgage loan. For purposes of this subparagraph, “average prime offer rate” has the meaning as provided in 12 CFR 1026.35, as amended from time to time. For purposes of this clause, the date the interest rate is set is the last date the interest rate is set, provided the rate is adjusted on or before consummation.

(ii) The commissioner shall have the authority, after consideration of the relevant factors, to increase the percentages set forth in subparagraph (F)(i) of this subdivision. For purposes of this clause, the relevant factors to be considered by the commissioner shall include, but not be limited to, the existence and amount of increases in fees or charges in connection with purchases of mortgages by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and increases in fees or charges imposed by mortgage insurers and the impact, including the magnitude of the impact, that such increases have had, or will likely have, on APRs for mortgage loans in this state. When considering such factors, the commissioner shall focus on those increases that are related to the deterioration in the housing market and credit conditions. The commissioner may refrain from increasing such percentages if it appears that lenders are increasing interest rates or fees in bad faith or if increasing the percentages would be contrary to the purposes of sections 36a-760 to 36a-760f, inclusive. No increase authorized by the commissioner to a particular percentage shall exceed one-quarter of one percentage point, and the total of all increases to a particular percentage under this clause shall not exceed one-half of one percentage point. No increase shall be made unless: (I) The increase is noticed in the Banking Department Bulletin and the Connecticut Law Journal, and (II) a public comment period of twenty days is provided. Any increase made under this clause shall be reduced proportionately when the need for the increase has diminished or no longer exists. The commissioner, in the exercise of his discretion, may authorize an increase in the percentages with respect to all loans or just with respect to a certain class or classes of loans;

(8) “Open-end line of credit” means a mortgage extended by a lender under a plan in which: (A) The lender reasonably contemplates repeated transactions; (B) the lender may impose a finance charge from time to time on an outstanding unpaid balance; (C) the amount of credit that may be extended to the consumer during the term of the plan, up to any limit set by the lender, is generally made available to the extent that any outstanding balance is repaid; and (D) none of the proceeds of the open-end line of credit are used at closing to (i) purchase the borrower’s primary residence, or (ii) refinance a mortgage loan that had been used by the borrower to purchase the borrower’s primary residence;

(9) “Secondary mortgage loan” has the same meaning as provided in section 36a-485.

(b) The provisions of sections 36a-760a to 36a-760i, inclusive, shall be applicable to nonprime home loans and mortgages, as appropriate, for which applications have been received on or after August 1, 2008.

(P.A. 08-176, S. 21; P.A. 09-207, S. 3; 09-209, S. 43; P.A. 10-32, S. 114; June Sp. Sess. P.A. 10-1, S. 47; P.A. 11-216, S. 45; P.A. 14-7, S. 19; P.A. 15-235, S. 17.)

History: P.A. 08-176 effective July 1, 2008; P.A. 09-207 amended Subsec. (a) by deleting former Subdiv. (1) defining “commissioner”, adding new Subdiv. (1) defining “APR” and redefining “nonprime home loan” in Subdiv. (7); P.A. 09-209 deleted former Subdiv. (1) defining “commissioner” and added new Subdiv. (1) defining “APR” in Subsec. (a); P.A. 10-32 made technical changes in Subsec. (a)(5) and (6), effective May 10, 2010; June Sp. Sess. P.A. 10-1 amended Subsec. (a)(7) (D) to delete provision re period applicable to $417,000 loan limit and delete provision re conforming loan limit for loan originated on or after July 1, 2010, effective June 22, 2010; P.A. 11-216 amended Subsec. (a) by redefining “nonprime home loan” in Subdiv. (7), deleting former Subdiv. (9) re definition of “residential property” and redesignating existing Subdiv. (10) as Subdiv. (9), effective July 13, 2011; P.A. 14-7 amended Subsec. (a)(7) to redefine “nonprime home loan”; P.A. 15-235 amended Subsec. (a) to redefine “lender”, “mortgage broker” and “nonprime home loan”, effective August 1, 2015.

Sec. 36a-760d. Requirements for making nonprime home loans. A lender shall not make a nonprime home loan unless:

(1) With respect to nonprime home loans that are first mortgage loans for which the lender receives an application on or after April 1, 2010, the lender requires and collects a monthly escrow for the payment of real property taxes and homeowners insurance. The provisions of this subdivision shall not apply to: (A) FHA loans; or (B) a nonprime home loan product which, in good faith, is generally designed and marketed to the public as a subordinate lien home equity loan product but is secured by a first mortgage loan;

(2) To the extent applicable, the lender obtains the written certification or statement under section 36a-760c; and

(3) The lender mailed or delivered to applicants, no later than the date three business days after the date of receipt of a completed application for a nonprime home loan, a notice containing a toll-free number that can be used to obtain a list of nonprofit housing counselors approved by the United States Department of Housing and Urban Development. For purposes of this subdivision, a lender may use the toll-free number which satisfies the requirements of Section 106(c)(5) of the Housing and Urban Development Act of 1968 (12 USC 1701(x) Section (c)(5)). No borrower shall have a private right of action for the lender’s failure to deliver, on a timely basis, a notice required by this subdivision.

(P.A. 08-176, S. 25; Sept. Sp. Sess. P.A. 09-7, S. 98; P.A. 15-118, S. 30.)

History: P.A. 08-176 effective July 1, 2008; Sept. Sp. Sess. P.A. 09-7 amended Subdiv. (1) by substituting “for which the lender receives an application on or after April 1, 2010” for “originated on or after January 1, 2010”, and amended Subdiv. (3) by making technical changes, effective October 5, 2009; P.A. 15-118 made a technical change in Subdiv. (1).

PART XI

RETAIL INSTALLMENT SALES FINANCING

Sec. 36a-770. (Formerly Sec. 42-83). Applicability of Uniform Commercial Code. Filing and recording. Definitions. (a) The Uniform Commercial Code. A transaction subject to sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c is also subject to the Uniform Commercial Code, title 42a, but in case of any conflict the provisions of sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c shall control.

(b) Filing and recording. Section 42a-9-310 determines the need for filing or recording to perfect a security interest, section 42a-9-317 determines the persons who take subject to an unperfected security interest, and sections 42a-9-311 and 42a-9-501 to 42a-9-526, inclusive, determine the place for such filing or recording.

(c) Definitions. As used in sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c, unless the context otherwise requires:

(1) “Boat” means any watercraft, as defined in section 22a-248, other than a seaplane, used or capable of being used as a means of transportation on water, by any power including muscular.

(2) “Cash price” means the total amount in dollars at which the seller and buyer agreed the seller would transfer unqualified title to the goods, if the transaction were a cash sale instead of a sale under a retail installment contract.

(3) “Commercial vehicle” means any domestic or foreign truck or truck tractor of ten thousand or more pounds gross vehicular weight or any trailer or semitrailer designed for use in connection with any truck or truck tractor of ten thousand or more pounds gross vehicular weight and which is not used primarily for personal, family or household use.

(4) “Filing fee” means the fee prescribed by law for filing, recording or otherwise perfecting and releasing or satisfying a security interest, as defined in subdivision (35) of subsection (b) of section 42a-1-201, retained or created by a retail installment contract or installment loan contract.

(5) “Finance charge” means the amount in excess of the cash price of the goods agreed upon by the retail seller and the retail buyer, to be paid by the retail buyer for the privilege of purchasing the goods under the retail installment contract or installment loan contract.

(6) “Goods” means (A) “consumer goods”, as defined in subdivision (23) of subsection (a) of section 42a-9-102 and motor vehicles included under such definition, having an aggregate cash price of fifty thousand dollars or less, and (B) “equipment”, as defined in subdivision (33) of subsection (a) of section 42a-9-102, having an aggregate cash price of sixteen thousand dollars or less, provided such consumer goods or such equipment is included in one retail installment contract or installment loan contract.

(7) “Installment loan contract” means any agreement made in this state to repay in installments the amount loaned or advanced to a retail buyer for the purpose of paying the retail purchase price of goods and by virtue of which a security interest, as defined in subdivision (35) of subsection (b) of section 42a-1-201, is taken in the goods for the payment of the amount loaned or advanced. For purposes of this subdivision, “installment loan contract” does not include agreements to repay in installments loans made by the United States or any department, agency or instrumentality thereof.

(8) “Lender” means a person who extends or offers to extend credit to a retail buyer under an installment loan contract.

(9) A retail installment contract or installment loan contract is “made in this state” if: (A) An offer or agreement is made in Connecticut by a retail seller or a lender to sell or extend credit to a resident retail buyer, including, but not limited to, any verbal or written solicitation or communication to sell or extend credit originating outside the state of Connecticut but forwarded to and received in Connecticut by a resident retail buyer; or (B) an offer to buy or an application for extension of credit, or an acceptance of an offer to buy or to extend credit, is made in Connecticut by a resident retail buyer, regardless of the situs of the contract which may be specified therein, including, but not limited to, any verbal or written solicitation or communication to buy or to have credit extended, originating within the state of Connecticut but forwarded to and received by a retail seller or a lender outside the state of Connecticut. For purposes of this subdivision, a “resident retail buyer” means a retail buyer who is a resident of the state of Connecticut.

(10) “Motor vehicle” means any device in, upon or by which any person or property is or may be transported or drawn upon a highway by any power other than muscular. For purposes of this subdivision, “motor vehicle” does not include self-propelled wheelchairs and invalid tricycles, tractors, power shovels, road machinery, implements of husbandry and other agricultural machinery, or other machinery not designed primarily for highway transportation but which may incidentally transport persons or property on a highway, or devices which move upon or are guided by a track or travel through the air.

(11) “Retail buyer” means a person who buys or agrees to buy one or more articles of goods from a retail seller not for the purpose of resale or lease to others in the course of business and who executes a retail installment contract or an installment loan contract in connection therewith.

(12) “Retail installment contract” means any security agreement, as defined in subdivision (74) of subsection (a) of section 42a-9-102, made in this state, including one in the form of a mortgage, conditional sale contract or other instrument evidencing an agreement to pay the retail purchase price of goods, or any part thereof, in installments over a period of time and pursuant to which a security interest, as defined in subdivision (35) of subsection (b) of section 42a-1-201, is retained or taken by the retail seller for the payment of the amount of such retail installment contract. For purposes of this subdivision, “retail installment contract” does not include a rent-to-own agreement, as defined in section 42-240.

(13) “Retail installment sale” means any sale evidenced by a retail installment contract or installment loan contract wherein a retail buyer buys goods from a retail seller at a time sale price payable in two or more installments. The cash price of the goods, the amount, if any, included for other itemized charges which are included in the amount of the credit extended but which are not part of the finance charge under sections 36a-675 to 36a-686, inclusive, and the finance charge shall together constitute the time sale price. For purposes of this subdivision, “retail installment sale” does not include a rent-to-own agreement, as defined in section 42-240.

(14) “Retail seller” means a person who sells or agrees to sell one or more articles of goods under a retail installment contract to a retail buyer.

(15) “Sales finance company” means any person engaging in this state in the business, in whole or in part, of acquiring retail installment contracts from retail sellers or installment loan contracts from holders thereof, by purchase, discount or pledge, or by loan or advance to the holder of either on the security thereof, or otherwise.

(1949 Rev., S. 6698; 1949, 1955, S. 2862d; November, 1955, N218; 1957, P.A. 357, S. 1; March, 1958, P.A. 27, S. 33; 1959, P.A. 495; 589, S. 2; 1961, P.A. 116, S. 20; 1969, P.A. 454, S. 28; P.A. 77-317; 77-604, S. 52, 84; P.A. 78-313, S. 1, 3; P.A. 81-158, S. 13, 17; P.A. 82-18, S. 2, 4; P.A. 89-210, S. 1; P.A. 91-162, S. 15, 18; P.A. 93-39; P.A. 94-122, S. 325, 340; 94-134, S. 1, 3; May 25 Sp. Sess. P.A. 94-1, S. 109, 130; P.A. 01-132, S. 170; P.A. 03-19, S. 85; 03-62, S. 21; P.A. 05-109, S. 49; P.A. 11-108, S. 28; P.A. 15-235, S. 20.)

History: 1959 acts amended definitions of “goods” and “retail buyer”; 1961 act coordinated this section with Uniform Commercial Code; 1969 act redefined “retail installment sale” to include the amount of itemized charges included in amount of credit extended but excluded from finance charge rather than the amount of insurances and other benefits and filing fees; P.A. 77-317 redefined goods to raise maximum aggregate cash price from $6,000 to $25,000; P.A. 77-604 revised references to Sec. 42a-9-105; P.A. 78-313 redefined “goods” to include motor vehicles and to establish separate maximum cash value of $8,000 for equipment and added Subsec. (3)(m) and (n) defining “lender” and contracts “made in this state”; P.A. 81-158 amended Subsec. (3)(d) by replacing “section 36-396”, which had been repealed, with “chapter 657”, 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. 89-210 added Subsec. (3)(o) defining “commercial vehicle”; P.A. 91-162 amended Subsec. (3)(d) and (e) to specifically exclude consumer rent-to-own agreements, as defined in Sec. 42-240, from the definitions of “retail installment sale” and “retail installment contract”; P.A. 93-39 amended Subsec. (3)(b) by increasing the aggregate cash price of a motor vehicle to be included in the definition of “consumer goods” from $25,000 to $50,000 and increasing the aggregate cash price of equipment to be included from $8,000 to $16,000; P.A. 94-122 changed Subsecs. (1), (2) and (3) to Subsecs. (a), (b) and (c), deleted the definition of “person”, reordered the definitions and made technical changes, effective January 1, 1995; P.A. 94-134 added Subsec. (p) defining “boat”, effective October 1, 1994, and applicable to retail installment contracts and installment loan contracts executed on or after that date; May 25 Sp. Sess. P.A. 94-1 made technical changes, effective January 1, 1994, and applicable January 1, 1995; Sec. 42-83 transferred to Sec. 36a-770 in 1995; (Revisor’s note: In 1997 a reference in Subsec. (a) to “42-110b” was corrected editorially by the Revisors to “42-100b” thereby correcting a clerical error which occurred during the preparation of the 1995 revision); P.A. 01-132 amended Subsec. (b) to replace reference to Sec. 42a-9-302 with Sec. 42a-9-310, replace reference to Sec. 42a-9-301 with Sec. 42a-9-317 and replace reference to Secs. 42a-9-302(3)(b) and 42a-9-401 to 42a-9-409, inclusive, with Secs. 42a-9-311 and 42a-9-501 to 42a-9-518, inclusive, and amended Subsec. (c) to make a technical change in Subdiv. (4), in Subdiv. (6) replace Secs. 42a-9-105(1)(h) and 42a-9-109(1) with Sec. 42a-9-102(a)(23) as the statutory reference for the definition of “consumer goods”, make a technical change and replace Sec. 42a-9-109(2) with Sec. 42a-9-102(a)(33) as the statutory reference for the definition of “equipment”, make a technical change in Subdiv. (7) and replace in Subdiv. (12) Sec. 42a-9-105(1)(l) with Sec. 42a-9-102(a)(73) as the statutory reference for the definition of “security agreement” and make a technical change; P.A. 03-19 made a technical change in Subsec. (b), effective May 12, 2003; P.A. 03-62 amended Subsec. (b) to replace reference to Sec. 42a-9-518 with Sec. 42a-9-526 and make technical changes; P.A. 05-109 amended Subsec. (c) by replacing references to Sec. 42a-1-201(37) with references to Sec. 42a-1-201(b)(35) in Subdivs. (4), (7) and (12); P.A. 11-108 amended Subsec. (c)(12) re definition of “retail installment contract” to replace reference to Sec. 42a-9-102(a)(73) with reference to Sec. 42a-9-102(a)(74), effective July 1, 2013; P.A. 15-235 amended Subsec. (c)(13) to change “36a-685” to “36a-686”, effective August 1, 2015.

Sec. 36a-771. (Formerly Sec. 42-84). General contract requirements. (a) Every retail installment contract shall be in writing, shall contain all the agreements of the parties and shall be completed as to all essential provisions prior to the signing of the contract by the retail buyer. No installment contract shall be signed by the retail buyer when such contract contains blank spaces to be filled in except that this provision shall not apply to serial number or other identifying marks which are not available for description at the time of execution of such contract. The retail seller shall deliver to the retail buyer a true and complete executed copy of the retail installment contract at the time the retail buyer signs such contract.

(b) Every retail installment contract for the purchase of consumer goods subject to section 36a-774 and this section shall set forth the information required to be disclosed under sections 36a-675 to 36a-686, inclusive, and the regulations thereunder, using the form, content and terminology provided therein.

(c) Retail installment contracts shall contain the following statements, printed in a size equal to at least ten-point bold type: (1) At the top of the contract, the words “RETAIL INSTALLMENT CONTRACT” or “RETAIL INSTALMENT CONTRACT”; (2) a definite statement that the insurance, if any, included in the retail installment sale provides or does not provide coverage for personal liability and property damage caused to others, as the case may be; (3) the following notice directly above the space reserved for the signature of the buyer: “NOTICE TO THE BUYER: 1. Do not sign this contract before you read it or if it contains any blank space. 2. You are entitled to a completely filled-in copy of the contract when you sign it. 3. Under the law, you have the following rights, among others: (a) To pay off in advance the full amount due and obtain a partial refund of any unearned finance charge; (b) to redeem the property if repossessed for a default; (c) to require, under certain conditions, a resale of the property if repossessed.”

(d) Each retail installment contract for the sale of merchandise on a deferred payment schedule shall also contain an explanation of the consequences of the failure of the retail buyer to make the first or future deferred installment payments under the contract in a timely manner, including a clear statement of whether or not interest would be charged for the entire period of deferment under the contract and, if so, the rate of such interest. Such explanation shall be printed in a size equal to at least ten-point bold type. Such deferred payment schedule shall not be effective unless the contract contains such provisions and the retail buyer acknowledges in writing on the contract that he or she has been informed of the consequences of failing to make the first or future deferred installment payments in a timely manner.

(1949 Rev., S. 6699, (a)(1), (b); 1949, S. 2863d; 2864d; 1957, P.A. 361, S. 1 (a)1, (b), (c); 1969, P.A. 454, S. 29; 1971, P.A. 698; P.A. 77-324, S. 1; P.A. 81-163, S. 1, 4; P.A. 82-18, S. 3, 4; 82-472, S. 161, 183; P.A. 03-19, S. 86; 03-105, S. 1; P.A. 15-235, S. 21.)

History: 1969 act rewrote Subsec. (b) re contract contents; 1971 act clarified Subsec. (b), specifying required terminology, inserted new Subdivs. (8), (9), (11) and (14) re total of payments, deferred payment price, date when finance charge begins to accrue and method of computing unearned portion of finance charge, etc., respectively; P.A. 77-324 replaced Subsec. (b) which had detailed required contents of contracts with new provision requiring that contracts conform to requirements of Ch. 657; P.A. 81-163 amended Subsec. (c) to provide that the partial refund would be of “any unearned” finance charge and that until April 1, 1982, a retail seller could use the notice required prior to May 18, 1981; P.A. 82-18 amended Subsec. (c) to extend from April 1, 1982, until the effective date of certain statute sections amended by P.A. 81-158, i.e. October 1, 1982, the date on which a retail seller must use the revised notice concerning refund of unearned finance charges; P.A. 82-472 made technical change in Subsec. (c); Sec. 42-84 transferred to Sec. 36a-771 in 1995; P.A. 03-19, effective May 12, 2003, and P.A. 03-105, effective October 1, 2003, both amended Subsec. (c) by inserting “or “RETAIL INSTALMENT CONTRACT”” in Subdiv. (1) and deleting obsolete provision re notices until October 1, 1982, and P.A. 03-105 further amended section to add Subsec. (d) re retail installment contracts for sale of merchandise on deferred payment schedule; P.A. 15-235 amended Subsec. (b) to change “36a-685” to “36a-686”, effective August 1, 2015.

Sec. 36a-772. (Formerly Sec. 42-85). Maximum finance charge on retail sales of motor vehicles and other goods. (a) A retail seller of motor vehicles may charge, contract for, receive or collect a finance charge expressed as an annual percentage rate on any retail installment contract covering the retail sale of a motor vehicle in this state, which charge shall not exceed the rates indicated for the respective classifications of motor vehicles as follows: (1) On sales made prior to October 1, 1985, of (A) new motor vehicles, eighteen per cent; (B) used motor vehicles of a model designated by the manufacturer by a year not more than three years prior to the year in which the sale is made, nineteen and one-quarter per cent; and (C) used motor vehicles of a model designated by the manufacturer by a year more than three years prior to the year in which the sale is made, twenty-one and one-half per cent; (2) on sales made on or after October 1, 1985, and prior to October 1, 1987, (A) new motor vehicles, sixteen per cent; (B) used motor vehicles of a model designated by the manufacturer by a year not more than two years prior to the year in which the sale is made, eighteen per cent; (C) used motor vehicles of a model designated by the manufacturer by a year more than two years prior to the year in which the sale is made, twenty per cent; and (3) on sales made on or after October 1, 1987, (A) new motor vehicles, fifteen per cent; (B) used motor vehicles of a model designated by the manufacturer by a year not more than two years prior to the year in which the sale is made, seventeen per cent; (C) used motor vehicles of a model designated by the manufacturer by a year more than two years prior to the year in which the sale is made, nineteen per cent.

(b) A retail seller of goods other than motor vehicles may charge, contract for, receive or collect a finance charge on any retail installment contract made on or after July 1, 1981, covering the retail sale of goods other than motor vehicles in this state, which charge shall not exceed an annual percentage rate of twenty-one per cent on sales made prior to October 1, 1985, nineteen per cent on sales made on or after October 1, 1985, and prior to October 1, 1987, and eighteen per cent on sales made on or after October 1, 1987.

(c) The finance charge under subsections (a) and (b) of this section shall be computed on the principal amount financed as determined under sections 36a-675 to 36a-686, inclusive, and the regulations adopted under said sections. On contracts providing for installment payments extending for a period which is less than or greater than one year, the finance charge shall be computed proportionately. The finance charge may be computed on the basis of a full month for any fractional month period in excess of ten days. A minimum finance charge of fifteen dollars may be charged on any retail installment contract in which the finance charge, when computed at the rates indicated, results in a total charge of less than that amount. Nothing contained in sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c shall be construed to prohibit the computation of the interest component of the finance charge by application of an interest rate to the actual balance of such principal amount financed as may be outstanding from time to time.

(1955, S. 2866d; 1957, P.A. 361, S. 1(i); P.A. 76-325; P.A. 77-391, S. 1; P.A. 78-11; P.A. 80-116, S. 1, 2; P.A. 81-158, S. 15, 17; 81-163, S. 2, 4; 81-362, S. 2, 4; 81-452, S. 1, 2; 81-472, S. 145, 159; P.A. 82-18, S. 2, 4; 82-105, S. 2, 3; 82-108; P.A. 83-226, S. 2, 3; 83-231; P.A. 85-522, S. 1; P.A. 15-235, S. 22.)

History: P.A. 76-325 expressed finance charges as annual percentages where previously charges were expressed as so many dollars per $100 per year and raised maximum rates: In Subdiv. (1) from 7% to 12.75%, in Subdiv. (2) from 9% to 16.25%, in Subdiv. (3) from 12% to 21.5%, in Subdiv. (4) from 14% to 25% and in Subdiv. (5) from 15% to 26.75%; P.A. 77-391 incorporated previous provisions as Subsecs. (a) and (c) and inserted new Subsec. (b) re finance charge on goods other than motor vehicles; P.A. 78-11 substituted “subsection (a)(5) of section 36-405 and regulations implementing chapter 657” for “subsection (b)(5) of section 42-84” in Subsec. (c); P.A. 80-116 raised rates on new motor vehicles to 16% temporarily (from May 5, 1980 to January 1, 1982), restoring previous rate on or after January 1, 1982, applied 21.5% rate to used vehicles designated by a year “not more than two years prior to the year in which the sale is made” rather than to used vehicles designated by a year “not more than four years and not less than two years prior to the year in which the sale is made” and deleted Subdivs. (4) and (5) which had set rates for those vehicles more than four model years old; P.A. 81-158 amended Subsec. (c) by replacing “subsection (a)(5) of section 36-405”, which had been repealed, with “chapter 657” and replacing “regulations implementing chapter 657” with “regulations adopted under that chapter”, effective March 31, 1982; P.A. 81-163 amended Subsec. (c) by providing that the computation of the interest component of the finance charge by applying the interest rate to the outstanding balance of the principal amount financed is permitted; P.A. 81-362 amended Subsec. (b) to provide that on contracts made on or after July 1, 1981, the maximum finance charge shall be 21% on sales made prior to March 1, 1983, and 18% thereafter; P.A. 81-452 amended Subsec. (a) to increase the finance charge on sales made prior to March 1, 1983, to 18% for new motor vehicles, 19.25% for used motor vehicles not more than three years old, and 21.5% for used motor vehicles more than three years old; P.A. 81-472 made technical changes; 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. 82-105 amended Subsec. (b) by extending from March 1, 1983, to October 1, 1983, the expiration date for the increase in finance charges enacted in 1981; P.A. 82-108 amended Subsec. (a) by extending from March 1, 1983, to October 1, 1983, the expiration date for the increase in finance charges enacted in 1981; P.A. 83-226 amended Subsec. (b) to extend the sunset date for the current maximum statutory interest rate for retail installment sales contracts from October 1, 1983, to October 1, 1985; P.A. 83-231 amended Subsec. (a) to extend from October 1, 1983, to October 1, 1985, the sunset date for the current maximum finance charge which dealers may charge on the sale of new and used automobiles; P.A. 85-522 amended Subsec. (a) to establish a maximum finance charge of (1) 16% for new motor vehicles, 18% for used motor vehicles not more than two years old and 10% for used motor vehicles more than two years old, on sales made on or after October 1, 1985, and prior to October 1, 1987, and (2) 15% for new motor vehicles, 17% for used motor vehicles not more than two years old and 19% for used motor vehicles more than two years old, on sales made on or after October 1, 1987, and amended Subsec. (b) to establish a maximum finance charge on retail sales other than motor vehicles of 19% on sales made on or after October 1, 1985, and prior to October 1, 1987, and 18% on sales made on or after October 1, 1987; Sec. 42-85 transferred to Sec. 36a-772 in 1995; P.A. 15-235 amended Subsec. (c) to change “36a-685” to “36a-686”, effective August 1, 2015.

Sec. 36a-774. (Formerly Sec. 42-87). Installment loan contract requirements. Every installment loan contract shall be in writing executed by the retail buyer and a copy thereof shall be delivered to such retail buyer at the time of the execution thereof. Within fifteen days after the execution of such installment loan contract, the holder thereof shall send or cause to be sent to the retail buyer a policy or policies or certificates of insurance clearly setting forth the amount of the premium, the kind or kinds of insurance and the scope of the coverage and all of the terms, exceptions, limitations, restrictions and conditions of the contract or contracts of the insurance. Every installment loan contract for the purchase of consumer goods subject to section 36a-771 and this section shall set forth the information required to be disclosed under sections 36a-675 to 36a-686, inclusive, and the regulations thereunder, using the form, content and terminology provided therein.

(1949 Rev., S. 6699, (e); 1957, P.A. 361, S. 1 (f); 1969, P.A. 454, S. 30; P.A. 77-324, S. 2; P.A. 15-235, S. 23.)

History: 1969 act rewrote provisions re contract contents; P.A. 77-324 replaced detailed provisions re contract contents with provision requiring contracts to contain information required under Ch. 657 and associated regulations; Sec. 42-87 transferred to Sec. 36a-774 in 1995; P.A. 15-235 changed “36a-685” to “36a-686”, effective August 1, 2015.

Sec. 36a-785. (Formerly Sec. 42-98). Foreclosure. (a) Repossession. When the retail buyer is in default in the payment of any sum due under the retail installment contract or installment loan contract, or in the performance of any other condition that such contract requires him to perform, or in the performance of any promise, the breach of which is by such contract expressly made a ground for the retaking of the goods, the holder of the contract may retake possession thereof, provided the filing of a petition in bankruptcy under 11 USC Chapter 7 by a retail buyer of a motor vehicle, or such retail buyer’s status as a debtor in bankruptcy, shall not be considered a default of a retail installment contract or ground for repossession of such motor vehicle. Unless the goods can be retaken without breach of the peace, it shall be retaken by legal process, but nothing herein contained shall be construed to authorize a violation of the criminal law. In the case of repossession of any motor vehicle without the knowledge of the retail buyer, the local police department shall be notified of such repossession within two hours. In the absence of a local police department or if the local police department cannot be reached for notification, the state police shall be promptly notified of such repossession.

(b) Notice of intention to repossess. Not less than ten days prior to the retaking, the holder of such contract, if he so desires, may serve upon the retail buyer, personally or by registered or certified mail, a notice of intention to retake the goods on account of the buyer’s default. The notice shall state the default and the period at the end of which such goods will be retaken, and shall briefly and clearly state what the retail buyer’s rights under this subsection will be in case such goods are retaken. If the notice is so served and the buyer does not perform the conditions and provisions as to which he is in default before the day set for retaking, the holder of the contract may retake said goods and hold such subject to the provisions of subsections (d), (e), (f), (g) and (h) of this section regarding resale, but without any right of redemption.

(c) Redemption. If the holder of such contract does not give the notice of intention to retake, described in subsection (b), he shall retain such goods for fifteen days after the retaking within the state in which they were located when retaken. During such period the retail buyer, upon payment or tender of the unaccelerated amount due under such contract at the time of retaking and interest, or upon performance or tender of performance of such other condition as may be named in such contract as precedent to the retail buyer’s continued possession of such goods, or upon performance or tender of performance of any other promise for the breach of which such goods were retaken, and upon payment of the actual and reasonable expenses of any retaking and storing, may redeem such goods and become entitled to take possession of the same and to continue in the performance of such contract as if no default had occurred. The holder of such contract shall within three days of the retaking furnish or mail, by registered or certified mail, to the last known address of the buyer a written statement of the unaccelerated sum due under such contract and the actual and reasonable expense of any retaking and storing. For failure to furnish or mail such statement as required by this section, the holder of the contract shall forfeit the right to claim payment for the actual and reasonable expenses of retaking and storage, and also shall be liable for the actual damages suffered because of such failure. If such goods are perishable so that retention for fifteen days as herein prescribed would result in their destruction or substantial injury, the provisions of this subsection shall not apply and the holder of the contract may resell the goods immediately upon such retaking.

(d) Compulsory resale. If the retail buyer does not redeem such goods within fifteen days after the holder of the contract has retaken possession, the holder of the contract shall sell such goods at public or private sale which sale may be held not less than fifteen days and shall be held not more than one hundred eighty days after the retaking. When the holder of the contract retakes possession by legal process, and an answer is interposed, the holder of the contract may, at his election, hold such retaken goods for a period not to exceed thirty days after the entry of final judgment by a court of competent jurisdiction entitling the holder of the contract to possession of such goods before holding such resale. The holder of the contract shall give the retail buyer not less than ten days’ written notice of the time and place of any public sale, or the time after which any private sale or other intended disposition is to be made, either personally or by registered mail or by certified mail receipted for on mailing directed to the retail buyer at his last-known place of business or residence. The holder of the contract may bid for such goods at any public sale. The proceeds of the resale shall be considered to be either the amount paid for such goods at such sale or the fair cash retail market value of such goods at the time of repossession, whichever is the greater, except as otherwise provided in subsection (g) of this section.

(e) Proceeds of resale. Proceeds of the resale shall be applied (1) to the payment of the actual and reasonable expenses thereof, (2) to the payment of the actual and reasonable expenses of any retaking and storing of said goods, (3) to the satisfaction of the balance due under the contract. Within thirty days of the resale, the holder of the contract shall give the retail buyer a written statement itemizing the disposition of the proceeds. Any sum remaining after the satisfaction of such claims shall be paid to the retail buyer.

(f) Deficiency on resale. Notwithstanding that the proceeds of the resale are not sufficient to defray the actual and reasonable expenses thereof, and also such actual and reasonable expenses of any retaking and storing of such goods and the balance due under the contract, the holder of the contract may not recover the deficiency from the retail buyer or any surety or guarantor for him, or from any one who has succeeded to the obligations of such retail buyer, except as provided in subsection (g) of this section.

(g) Fair market value. If the goods retaken consist of a motor vehicle the aggregate cash price of which was more than two thousand dollars, the prima facie fair market value of such motor vehicle shall be calculated by adding together the average trade-in value for that motor vehicle and the average retail value for that motor vehicle and dividing that sum by two. Such average trade-in value and average retail value shall be determined by the values as stated in the National Automobile Dealers Association Used Car Guide, Eastern Edition, as of the date of repossession. If the goods retaken consist of a boat the aggregate cash price of which was more than two thousand dollars, the prima facie fair market value of such boat shall be calculated by adding together the average trade-in value for that boat and the average retail value for that boat and dividing that sum by two. Such average trade-in value and average retail value shall be determined by the values as stated in the National Automobile Dealers Association Appraisal Guide for Boats, Eastern Edition, as of the date of repossession. In the event that the value of such motor vehicle or boat is not stated in such publication, then the fair market value at retail minus the reasonable costs of resale shall be determined by the court. The prima facie evidence of fair market value of such motor vehicle or boat so determined may be rebutted only by direct in-court testimony. If such value of the motor vehicle or boat is less than the balance due under the contract, plus the actual and reasonable expenses of the retaking of possession, the holder of the contract may recover from the retail buyer, or from anyone who has succeeded to his obligations, as a deficiency, the amount by which such liability exceeds such fair market value, as defined in this subsection. If the actual resale price received by the holder exceeds such fair market value, as defined in this subsection, the actual resale price shall govern.

(h) Election of remedies. After the holder retakes possession as provided in subsection (a), or if the holder obtains a prejudgment remedy against the goods under chapter 903a, the retail buyer or anyone who has succeeded to his obligations shall not be liable for any balance due, except to the extent permitted by subsection (g) of this section. The holder may seek a monetary judgment on the contract against the buyer unless the goods have been repossessed, with or without judicial process. Goods purchased under the contract shall not be executed upon to satisfy such judgment. When such judgment becomes final, the holder’s security interest in the goods shall be extinguished. If the contract covers a retail sale of a motor vehicle required to be registered, the holder shall comply with section 14-188.

(i) Recovery of part payments. If the holder of the contract fails to comply with the provisions of subsections (c), (d), (e), (f), (g) and (h), after retaking the goods, the retail buyer may recover from the holder of the contract his actual damages, if any, and in no event less than one-fourth of the sum of all payments which have been made under the contract.

(j) Waiver of statutory protection. No act or agreement of the retail buyer before or at the time of the making of a retail installment contract or installment loan contract nor any agreement or statement by the retail buyer in such contract shall constitute a valid waiver of the provisions of subsections (c), (d), (e), (f), (g), (h) and (i).

(k) Loss. After the delivery of the goods to the retail buyer and prior to any retaking thereof by the holder of the contract, the risk of injury and loss shall rest upon the retail buyer.

(1949 Rev., S. 6700; 1957, P.A. 357, S. 2, 3; 1959, P.A. 301; 1961, P.A. 116, S. 22, 23; P.A. 76-258, S. 1, 2; P.A. 77-506; 77-614, S. 486, 587, 610; P.A. 78-303, S. 85, 136; P.A. 94-134, S. 2, 3; May 25 Sp. Sess. P.A. 94-1, S. 61, 130; P.A. 09-189, S. 1; P.A. 15-42, S. 7.)

History: 1959 act added provisions re notification of police where vehicle is repossessed without its buyer’s knowledge in Subsec. (a); 1961 act amended Subsecs. (d) and (e) for conformity with Uniform Commercial Code; P.A. 76-258 amended Subsec. (d) to require that sale be held within 180, rather than 90 days, to require that buyer be notified of “the time after which any private sale or other intended disposition is to be made”, deleted Subsec. (e) re procedure where contract holder not required to resell repossessed goods, relettering as necessary, required that contract holder notify buyer of disposition of proceeds in new Subsec. (e), formerly (f), changed force of Subsec. (f), formerly (g), so that deficiency is not recoverable from buyer (“except as provided in subsection (g)”) where previously deficiency was recoverable, added new Subsecs. (g) and (h), deleted former Subsecs. (h) and (i), and relettered former Subsecs. (j) to (l) as (i) to (k); P.A. 77-506 substituted “retail” buyer for “installment” buyer in Subsec. (a), referred to “unaccelerated” amounts due, required that buyer be notified of amount due within 3 days of retaking rather than “immediately” upon buyer’s written demand and stated that failure to meet notice requirement resulted in forfeiture of right to claim payment for retaking and storage expenses rather than in forfeiture of $10 to the buyer, specified that Subsec. (h) is applicable where holder obtains a prejudgment remedy and made minor language changes in Subsecs. (e) and (g); P.A. 77-614 and P.A. 78-303 placed state police within the department of public safety, effective January 1, 1979; P.A. 94-134 amended Subsec. (g) to include a boat the aggregate price of which was more than $2,000 and reworded for clarity the formula for calculating a motor vehicle’s fair market value, effective October 1, 1994, and applicable to retail installment contracts and installment loan contracts executed on or after that date; May 25 Sp. Sess. P.A. 94-1 amended Subsec. (g) by making a technical change, effective July 1, 1994; Sec. 42-98 transferred to Sec. 36a-785 in 1995; P.A. 09-189 amended Subsec. (a) by adding proviso re “the filing of a petition in bankruptcy under 11 USC Chapter 7 by a retail buyer of a motor vehicle, or such retail buyer’s status as a debtor in bankruptcy, shall not be considered a default of a retail installment contract or ground for repossession of such motor vehicle” and by making a technical change; P.A. 15-42 amended Subsec. (a) by changing notification to police of motor vehicle repossession from “immediately thereafter” to “within two hours”.

PART XII

CONSUMER COLLECTION AGENCIES

Sec. 36a-800. (Formerly Sec. 42-127). Consumer collection agency. Definitions. As used in sections 36a-800 to 36a-812, inclusive, unless the context otherwise requires:

(1) “Branch office” means a location other than the main office at which a licensee or any person on behalf of a licensee acts as a consumer collection agency;

(2) “Consumer collection agency” means any person (A) engaged as a third party in the business of collecting or receiving for payment for others of any account, bill or other indebtedness from a consumer debtor, (B) engaged directly or indirectly in the business of collecting any account, bill or other indebtedness from a consumer debtor for such person’s own account if the indebtedness was acquired from another person and if the indebtedness was either delinquent or in default at the time it was acquired, or (C) engaged in the business of collecting or receiving for payment property tax from a property tax debtor on behalf of a municipality, including any person who, by any device, subterfuge or pretense, makes a pretended purchase or takes a pretended assignment of accounts from any other person or municipality of such indebtedness for the purpose of evading the provisions of sections 36a-800 to 36a-812, inclusive. It includes persons who furnish collection systems carrying a name which simulates the name of a consumer collection agency and who supply forms or form letters to be used by the creditor, even though such forms direct the consumer debtor or property tax debtor to make payments directly to the creditor rather than to such fictitious agency. “Consumer collection agency” further includes any person who, in attempting to collect or in collecting such person’s own accounts or claims from a consumer debtor, uses a fictitious name or any name other than such person’s own name which would indicate to the consumer debtor that a third person is collecting or attempting to collect such account or claim. “Consumer collection agency” does not include (i) an individual employed on the staff of a licensed consumer collection agency, or by a creditor who is exempt from licensing, when attempting to collect on behalf of such consumer collection agency, (ii) persons not primarily engaged in the collection of debts from consumer debtors who receive funds in escrow for subsequent distribution to others, including, but not limited to, real estate brokers and lenders holding funds of borrowers for payment of taxes or insurance, (iii) any public officer or a person acting under the order of any court, (iv) any member of the bar of this state, (v) a person who services loans or accounts for the owners thereof when the arrangement includes, in addition to requesting payment from delinquent consumer debtors, the providing of other services such as receipt of payment, accounting, record-keeping, data processing services and remitting, for loans or accounts which are current as well as those which are delinquent, (vi) a bank or out-of-state bank, as defined in section 36a-2, and (vii) a subsidiary or affiliate of a bank or out-of-state bank, provided such affiliate or subsidiary is not primarily engaged in the business of purchasing and collecting upon delinquent debt, other than delinquent debt secured by real property. Any person not included in the definition contained in this subdivision is, for purposes of sections 36a-645 to 36a-647, inclusive, a “creditor”, as defined in section 36a-645;

(3) “Consumer debtor” means any natural person, not an organization, who has incurred indebtedness or owes a debt for personal, family or household purposes, including current or past due child support, or who has incurred indebtedness or owes a debt to a municipality due to a levy by such municipality of a personal property tax;

(4) “Creditor” means a person, including a municipality, that retains, hires, or engages the services of a consumer collection agency;

(5) “Main office” means the main address designated on the application;

(6) “Municipality” means any town, city or borough, consolidated town and city, consolidated town and borough, district as defined in section 7-324 or municipal special services district established under chapter 105a;

(7) “Organization” means a corporation, partnership, association, trust or any other legal entity or an individual operating under a trade name or a name having appended to it a commercial, occupational or professional designation;

(8) “Property tax” has the meaning given to the term in section 7-560;

(9) “Property tax debtor” means any natural person or organization who has incurred indebtedness or owes a debt to a municipality due to a levy by such municipality of a property tax.

(1953, 1955, S. 3310d; 1967, P.A. 882, S. 19; 1971, P.A. 539, S. 1; P.A. 75-486, S. 64, 69; P.A. 77-614, S. 161, 162, 610; P.A. 78-226, S. 1; 78-303, S. 54, 136; P.A. 80-482, S. 333, 348; P.A. 84-61, S. 1, 3; P.A. 87-9, S. 2, 3; P.A. 88-65, S. 56; P.A. 91-357, S. 61, 78; P.A. 92-12, S. 103; P.A. 93-127, S. 1, 3; P.A. 94-122, S. 328, 340; P.A. 01-207, S. 3, 12; P.A. 02-111, S. 46; P.A. 03-262, S. 1; P.A. 04-8, S. 11; P.A. 07-72, S. 8; P.A. 13-253, S. 22; P.A. 14-7, S. 2; P.A. 15-235, S. 33.)

History: 1967 act deleted language which had specifically included debt adjustment and prorate companies in definition of “collection agency”; 1971 act defined “consumer collection agency” rather than “collection agency”, expanding definition and specifically excluding lender licensed by banking commission under Ch. 647, and added definitions of “commissioner”, “consumer debtor” and “organization”; P.A. 75-486 substituted replaced public utilities commission with public utilities control authority in Subdiv. (b); P.A. 77-614 replaced bank commissioner and public utilities commission with banking commissioner (within the department of business regulation, the banking department having been made a division within that department) and division of public utility control within the department of business regulation, effective January 1, 1979; P.A. 78-226 defined “creditor”; P.A. 78-303 confirmed change in bank commissioner’s title and replaced banking commission with banking commissioner to conform with P.A. 77-614 which abolished said commission; P.A. 80-482 restored division of banking to prior status as independent department, made division of public utility control an independent department and abolished the department of business regulation; P.A. 84-61 amended Subsec. (b) to exempt from the definition of “consumer collection agency” those persons delineated in Subdivs. (1) through (5), inclusive, replacing prior exemption provision; (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 substituted a reference to Sec. 42-133a for Sec. 42-133 in the introductory language; P.A. 91-357 made a technical change in Subsec. (c); P.A. 92-12 redesignated Subsecs. and Subdivs. and made technical changes; P.A. 93-127 amended Subdiv. (2) to include “municipality” in the definition of “consumer collection agency”, amended Subdiv. (4) to include debts owed to a municipality in the definition of “consumer debtor”, added a new Subdiv. (6) defining “municipality” and renumbered the former Subdiv. (6) as (7), effective July 1, 1993; P.A. 94-122 deleted the definitions of “person” and “commissioner”, reordered definitions and made other technical changes, effective January 1, 1995; Sec. 42-127 transferred to Sec. 36a-800 in 1995; (Revisor’s note: In 1997 the Revisors editorially changed the reference at the end of Subdiv. (1) from “creditor”, as defined in “subsection (2)” of section 36a-645; to “creditor” as defined in “subdivision (3)” of section 36a-645; to reflect correctly P.A. 94-122, S. 293); P.A. 01-207 made a technical change in Subdiv. (1) and amended definition of “consumer debtor” in Subdiv. (2) to add the phrase “including current or past due child support”, effective July 1, 2001; P.A. 02-111 redefined “consumer collection agency” in Subdiv. (1) and added Subdivs. (6) and (7) defining “property tax” and “property tax debtor”, effective July 1, 2002; P.A. 03-262 redefined “consumer collection agency” in Subdiv. (1) by substituting “or receiving for payment” for “, without receiving,” effective July 9, 2003; P.A. 04-8 made a technical change in Subdiv. (3), effective April 16, 2004; P.A. 07-72 made technical changes in Subdiv. (1); P.A. 13-253 added new Subdiv. (1) defining “branch office”, redesignated existing Subdiv. (1) as Subdiv. (2) and amended same to redefine “consumer collection agency”, redesignated existing Subdivs. (2) and (3) as Subdivs. (3) and (4), added new Subdiv. (5) defining “main office” and redesignated existing Subdivs. (4) to (7) as Subdivs. (6) to (9); P.A. 14-7 amended Subdiv. (2) to redefine “consumer collection agency” by deleting reference to account, bill or other indebtedness and making technical changes, effective May 8, 2014; P.A. 15-235 changed “36a-810” to “36a-812”, effective July 7, 2015.

Sec. 36a-801. (Formerly Sec. 42-127a). License required. Application, issuance, renewal. Authority to conduct criminal history records check. Examination of records. Abandonment of application. Automatic suspension of license. Name and place of business. (a) No person shall act within this state as a consumer collection agency unless such person has first obtained a consumer collection agency license for such person’s main office and each branch office where such person’s business is conducted. A consumer collection agency is acting within this state if it (1) has its place of business located within this state; (2) has its place of business located outside this state and (A) collects from consumer debtors or property tax debtors who reside within this state for creditors who are located within this state, or (B) collects from consumer debtors or property tax debtors who reside within this state for such consumer collection agency’s own account; (3) has its place of business located outside this state and regularly collects from consumer debtors or property tax debtors who reside within this state for creditors who are located outside this state; or (4) has its place of business located outside this state and is engaged in the business of collecting child support for creditors located within this state from consumer debtors who are located outside this state.

(b) Any person desiring to act within this state as a consumer collection agency shall make a written application to the commissioner for such license in such form as the commissioner prescribes. Such application shall be accompanied by (1) a financial statement prepared by a certified public accountant or a public accountant, the accuracy of which is sworn to under oath before a notary public by the proprietor, a general partner or a corporate officer or a member duly authorized to execute such documents, (2) (A) the history of criminal convictions of the (i) applicant; (ii) partners, if the applicant is a partnership; (iii) members, if the applicant is a limited liability company or association; or (iv) officers, directors and principal employees, if the applicant is a corporation, and (B) sufficient information pertaining to the history of criminal convictions of such applicant, partners, members, officers, directors and principal employees as the commissioner deems necessary to make the findings under subsection (c) of this section, (3) a license fee of eight hundred dollars, or in the case of an initial application that is filed not earlier than one year before the date such license will expire, a license fee of four hundred dollars, and (4) an investigation fee of one hundred dollars. The commissioner shall cause to be made such inquiry and examination as to the qualifications of each such applicant or any partner, member, officer, director or principal employee of the applicant as the commissioner deems necessary. The commissioner, in accordance with section 29-17a, may conduct a state and national criminal history records check of the applicant and of each partner, member, officer, director and principal employee of such applicant. Each applicant shall furnish satisfactory evidence to the commissioner that the applicant is a person of good moral character and is financially responsible.

(c) If the commissioner finds, upon the filing of an application for a consumer collection agency, that (1) the financial responsibility, character, reputation, integrity and general fitness of the applicant and the partners of such applicant 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 to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a-800 to 36a-812, 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, upon such finding, issue the applicant a consumer collection agency 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. The commissioner may deny an application if the commissioner finds that the applicant or any partner, member, officer, director or principal employee of such applicant has been convicted of any misdemeanor involving any aspect of the consumer collection agency business, or any felony. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80. Any such license issued by the commissioner shall expire at the close of business on September thirtieth of the odd-numbered year following its issuance, unless such license is renewed. The commissioner may renew such application, in the commissioner’s discretion, upon filing of a proper renewal application accompanied by a license fee of eight hundred dollars, and satisfactory proof that such applicant at that time possesses the required qualifications for the license. The commissioner may deny a renewal application if the commissioner finds that the applicant has been convicted of any misdemeanor involving any aspect of the consumer collection agency business, or any felony. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80. Such renewal application shall be filed with the commissioner on or before September first of the year in which the license expires. Any renewal application filed with the commissioner after September first shall be accompanied by a one-hundred-dollar late fee and any such filing shall be deemed to be timely and sufficient for purposes of subsection (b) of section 4-182. Whenever an application for a license, other than a renewal application, is filed under sections 36a-800 to 36a-812, inclusive, by any person who was a licensee under said sections 36a-800 to 36a-812, inclusive, and whose license expired less than sixty days prior to the date such application was filed, such application shall be accompanied by a one-hundred-dollar processing fee in addition to the application fee.

(d) To further the enforcement of this section and to determine the eligibility of any person holding a license, the commissioner may, as often as the commissioner deems necessary, examine the licensee’s books and records, and may, at any time, require the licensee to submit such a financial statement for the examination of the commissioner, so that the commissioner may determine whether the licensee is financially responsible to carry on a consumer collection agency business within the intents and purposes of sections 36a-800 to 36a-812, inclusive. Any financial statement submitted by a licensee shall be confidential and shall not be a public record unless introduced in evidence at a hearing conducted by the commissioner.

(e) The applicant or licensee shall notify the commissioner, in writing, of any change in the information provided in its initial application for a license or most recent renewal application for such license, as applicable, not later than ten business days after the occurrence of the event that results in such information becoming inaccurate.

(f) The commissioner may deem an application for a license to act as a consumer collection agency abandoned if the applicant fails to respond to any request for information required under sections 36a-801 to 36a-812, inclusive, or any regulations adopted pursuant to said sections 36a-801 to 36a-812, inclusive. The commissioner shall notify the applicant, in writing, that if the applicant fails to submit such information not later than sixty days after the date on which such request for information was made, the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license under sections 36a-801 to 36a-812, inclusive.

(g) If the commissioner determines that a check filed with the commissioner to pay a fee under subsection (b) of this section 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.

(h) 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. All fees required by this section shall be nonrefundable.

(i) No person licensed to act within this state as a consumer collection agency shall do so under any other name or at any other place of business than that named in the license. Any change of location of a place of business of a licensee shall require prior written notice to the commissioner. Not more than one place of business shall be maintained under the same license but the commissioner may issue more than one license to the same licensee upon compliance with the provisions of sections 36a-800 to 36a-812, inclusive, as to each new licensee. A license shall not be transferable or assignable. Any licensee holding, applying for, or seeking renewal of more than one license may, at its option, file the bond required under section 36a-802 separately for each place of business licensed, or to be licensed, or a single bond, naming each place of business, in an amount equal to twenty-five thousand dollars for each place of business.

(1971, P.A. 539, S. 2, 3; P.A. 73-284; 73-328; 73-341; P.A. 81-292, S. 12; P.A. 88-150, S. 9; P.A. 92-89, S. 17, 20; P.A. 93-127, S. 2, 3; P.A. 94-104, S. 6; 94-122, S. 329, 340; P.A. 96-71, S. 7, 8; P.A. 01-207, S. 4, 12; P.A. 02-111, S. 47; P.A. 04-69, S. 30; P.A. 05-46, S. 15; 05-74, S. 5; P.A. 06-35, S. 11; P.A. 09-208, S. 35; Sept. Sp. Sess. P.A. 09-7, S. 101; P.A. 11-216, S. 47; P.A. 13-253, S. 23; P.A. 14-89, S. 39; P.A. 15-235, S. 34.)

History: P.A. 73-284 required that financial statements be “prepared” rather than “certified” by accountant and required that their accuracy be sworn to by proprietor, general partner or corporate officer in Subsec. (b); P.A. 73-328 defined acting within state with regard to consumer collection agencies in Subsec. (a); P.A. 73-341 added Subsec. (c); P.A. 81-292 amended Subsec. (b) by increasing the license fee from $100 to $200 and the renewal fee from $50 to $200; P.A. 88-150 amended Subsec. (b) by providing that license and investigation fees are nonrefundable; P.A. 92-89 amended Subsec. (b) to increase the license fee from $200 to $400, to increase the investigation fee from $50 to $100 and to increase the renewal fee from $200 to $400; P.A. 93-127 amended Subsec. (a) by substituting “who are” for “whose place of business is”, effective July 1, 1993; P.A. 94-104 changed the license expiration date from May first to April thirtieth, made April first the renewal application deadline and added a $100 late fee in Subsec. (a), and made technical changes; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 42-127a transferred to Sec. 36a-801 in 1995; P.A. 96-71 amended Subsec. (b) to make technical changes and to add Subdiv. (2) to make all fees required by this section nonrefundable, effective July 1, 1996; P.A. 01-207 amended Subsec. (a) to add Subdiv. (4) defining acting within state re consumer collection agencies to include having its place of business located outside this state and engaging in the business of collecting child support for creditors located within this state from consumer debtors located outside this state, effective July 1, 2001; P.A. 02-111 amended Subsec. (a) by replacing provision re holding a license then in force with provision re consumer collection agency license and adding references to “property tax debtors”, amended Subsec. (b) by adding reference to “a member” in Subdiv. (1)(A), by providing that license fee is $800 or, in the case of initial application filed not earlier than one year before the expiration date of license, fee is $400 in Subdiv. (1)(B), by adding provisions re expiration of license at the close of business on September thirtieth of the odd-numbered year following its issuance, renewal fee of $800 and exceptions for license, renewed effective May 1, 2003, and licenses that expire on April 30, 2003, and by adding provision re $100 processing fee and amended Subsec. (c) by adding provisions re prior written notice to commissioner of any change of location of a place of business and re license shall not be transferable or assignable; P.A. 04-69 amended Subsec. (b) by adding new Subdiv. (2), requiring commissioner to automatically suspend license or renewal license if commissioner determines that a check filed to pay 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 redesignating existing Subdiv. (2) as Subdiv. (3); P.A. 05-46 amended Subsec. (b)(1) to make a technical change and provide that renewal application for licensees filed with commissioner after September first, accompanied by late fee, shall be deemed to be timely and sufficient for purposes of Sec. 4-182(b); P.A. 05-74 amended Subsec. (c) to make a technical change, effective June 2, 2005; P.A. 06-35 amended Subsec. (b)(1) to require applicants or licensees to notify commissioner, in writing, of any changes in information in initial or most recent renewal application for license within ten business days after occurrence of event that results in information becoming inaccurate; P.A. 09-208 amended Subsec. (b)(1) by adding new Subpara. (B) requiring applicants to submit history of criminal convictions, by redesignating existing Subparas. (B) and (C) as Subparas. (C) and (D), by authorizing commissioner to deny application or renewal application based on certain convictions, and by deleting outdated provisions re license expiration and renewal, effective July 7, 2009; Sept. Sp. Sess. P.A. 09-7 amended Subsec. (c) by changing bond amount from $5,000 to $25,000, effective October 5, 2009; P.A. 11-216 amended Subsec. (b)(1) to add provisions requiring history of criminal convictions of partners, members, officers, directors and principal employees of applicant in a form acceptable to commissioner, add provision authorizing commissioner to conduct criminal history records check of applicant and each partner, member, officer, director and principal employee of applicant, delete references to ten-year period prior to date of application and add provisions re abandonment of application; P.A. 13-253 amended Subsec. (a) to add provision re license for the main office and each branch office, designate existing provisions re collecting from in-state debtors for in-state creditors as Subpara. (A) and add Subpara. (B) re collecting for the agency’s own account, amended Subsec. (b) to make technical changes and delete provision re issuance of license if commissioner is satisfied that applicant is properly qualified and trustworthy, redesignated provisions of existing Subsec. (b) re denial of application as Subsec. (c) and amended same to add provisions re commissioner’s belief that the business will be operated soundly and efficiently and findings re solvency and bankruptcy proceedings, designated provisions of existing Subsec. (b) re enforcement as Subsec. (d), designated provisions of existing Subsec. (b) re notification of change in application information provided as Subsec. (e), designated provisions of existing Subsec. (b) re abandonment as Subpara. (f), designated provisions re dishonored checks as Subsec. (g), designated provisions of existing Subsec. (b) re abatement of license fee as Subsec. (h) and redesignated existing Subsec. (c) as Subsec. (i); P.A. 14-89 amended Subsec. (g) to replace “subdivision (1) of this subsection” with “subsection (b) of this section”, effective June 3, 2014; P.A. 15-235 changed “36a-810” to “36a-812”, effective July 7, 2015.

Sec. 36a-804. (Formerly Sec. 42-129a). Suspension, revocation or refusal to renew license or taking of other action. (a) The commissioner may suspend, revoke or refuse to renew any license or take any other action, 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-800 to 36a-812, 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 misrepresentation or misappropriated funds; or (3) violated any of the provisions of sections 36a-800 to 36a-812, inclusive, or of any regulations adopted pursuant thereto, or any other law or regulation applicable to the conduct of its business.

(b) Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any of the provisions of sections 36a-800 to 36a-812, inclusive, or any regulation adopted pursuant thereto, or the licensee or any proprietor, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee has committed any fraud, made any misrepresentation or misappropriated funds, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.

(1971, P.A. 539, S. 6; 1972, P.A. 108, S. 8; P.A. 74-254, S. 8; P.A. 94-122, S. 331, 340; P.A. 02-111, S. 49; P.A. 05-46, S. 16; P.A. 07-91, S. 24; P.A. 15-235, S. 35.)

History: 1972 act replaced superior court with court of common pleas, effective September 1, 1972, except that courts with cases pending retain jurisdiction; P.A. 74-254 replaced detailed appeal provisions with statement requiring that appeals be made in accordance with chapter 54; P.A. 94-122 replaced notice, hearing and appeal provisions with a reference to Sec. 36a-51, effective January 1, 1995; Sec. 42-129a transferred to Sec. 36a-804 in 1995; P.A. 02-111 replaced former provisions with new Subsecs. (a) and (b) re commissioner’s authority to suspend, revoke or refuse to renew license and the grounds for such action and commissioner’s authority re violations of Secs. 36a-800 to 36a-810; P.A. 05-46 amended Subsec. (b) to allow commissioner to impose civil penalty or issue cease and desist order against licensee or any proprietor, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee who has committed fraud, made any misrepresentation or misappropriated funds; P.A. 07-91 amended Subsec. (a) to authorize commissioner to take any other action, in accordance with Sec. 36a-51, effective June 5, 2007; P.A. 15-235 changed “36a-810” to “36a-812”, effective July 7, 2015.

Sec. 36a-805. (Formerly Sec. 42-131). Prohibited practices. Exception. (a) No consumer collection agency shall: (1) Furnish legal advice or perform legal services or represent that it is competent to do so, or institute judicial proceedings on behalf of others; (2) communicate with consumer debtors or property tax debtors in the name of an attorney or upon the stationery of an attorney, or prepare any forms or instruments which only attorneys are authorized to prepare; (3) receive assignments as a third party of claims for the purpose of collection or institute suit thereon in any court; (4) assume authority on behalf of a creditor to employ or terminate the services of an attorney unless such creditor has authorized such agency in writing to act as such creditor’s agent in the selection of an attorney to collect the creditor’s accounts; (5) demand or obtain in any manner a share of the proper compensation for services performed by an attorney in collecting a claim, whether or not such agency has previously attempted collection thereof; (6) solicit claims for collection under an ambiguous or deceptive contract; (7) refuse to return any claim or claims upon written request of the creditor, claimant or forwarder, which claims are not in the process of collection after the tender of such amounts, if any, as may be due and owing to the agency; (8) advertise or threaten to advertise for sale any claim as a means of forcing payment thereof, unless such agency is acting as the assignee for the benefit of creditors; (9) refuse or fail to account for and remit to its clients all money collected which is not in dispute within sixty days from the last day of the month in which said money is collected; (10) refuse or intentionally fail to return to the creditor all valuable papers deposited with a claim when such claim is returned; (11) refuse or fail to furnish at intervals of not less than ninety days, upon the written request of the creditor, claimant or forwarder, a written report upon claims received from such creditor, claimant or forwarder; (12) add any post charge-off charge or fee for cost of collection, unless such cost is a court cost, to the amount of any claim which it receives for collection or knowingly accept for collection any claim to which any such charge or fee has already been added to the amount of the claim unless (A) the consumer debtor is legally liable for such charge or fee as determined by the contract or other evidence of an agreement between the consumer debtor and creditor, a copy of which shall be obtained by or available to the consumer collection agency from the creditor and maintained as part of the records of the consumer collection agency or the creditor, or both, and (B) the total charge or fee for cost of collection does not exceed fifteen per cent of the total amount actually collected and accepted as payment in full satisfaction of the debt; (13) use or attempt to use or make reference to the term “bonded by the state of Connecticut”, “bonded” or “bonded collection agency” or any combination of such terms or words, except that the word “bonded” may be used on the stationery of any such agency in type not larger than twelve-point; (14) when the debt is beyond the statute of limitations, fail to provide the following disclosure in type not less than ten-point informing the consumer debtor in its initial communication with such consumer debtor that (A) when collecting on debt that is not past the date for obsolescence provided for in Section 605(a) of the Fair Credit Reporting Act, 15 USC 1681c: “The law limits how long you can be sued on a debt. Because of the age of your debt, (INSERT OWNER NAME) will not sue you for it. If you do not pay the debt, (INSERT OWNER NAME) may report or continue to report it to the credit reporting agencies as unpaid”; and (B) when collecting on debt that is past the date for obsolescence provided for in Section 605(a) of the Fair Credit Reporting Act, 15 USC 1681c: “The law limits how long you can be sued on a debt. Because of the age of your debt, (INSERT OWNER NAME) will not sue you for it and (INSERT OWNER NAME) will not report it to any credit reporting agencies.”; or (15) engage in any activities prohibited by sections 36a-800 to 36a-812, inclusive.

(b) No consumer collection agency shall impose a charge or fee for any child support payments collected through the efforts of a governmental agency. If the imposition of a charge or fee is permitted under section 36a-801b, no consumer collection agency shall impose a charge or fee for the collection of any child support overdue at the time of the contract in excess of twenty-five per cent of overdue support actually collected.

(c) (1) No consumer collection agency shall receive any property tax on behalf of a creditor that is a municipality, unless the consumer collection agency has procured from an insurer authorized to transact business in this state an insurance policy providing coverage against loss of money, securities or other property, including loss arising from any fraudulent or dishonest act of any employee, officer or director of the consumer collection agency, with limits of at least two million dollars. It shall be the obligation of the municipality to ensure compliance with the requirements of this subdivision.

(2) A municipality that enters into an agreement with a consumer collection agency to collect and receive for payment property tax on behalf of the municipality may also require such consumer collection agency to file a bond with the municipality in an amount not exceeding the total amount of the property tax to be collected on behalf of the municipality. Such bond, the form of which shall be approved by the municipality, shall be written by a surety authorized to write bonds in this state and shall contain a provision requiring the surety to provide the municipality with written notice of cancellation of such bond. Such notice shall be sent by certified mail to the municipality at least thirty days prior to the date of cancellation. The bond shall be conditioned that such consumer collection agency shall well, truly and faithfully account for all funds collected and received by the consumer collection agency for the municipality pursuant to such agreement. If the municipality is damaged by the wrongful conversion of any property tax debtor funds received by the consumer collection agency, the municipality may proceed on such bond against the principal or surety on the bond, or both, to recover damages. The proceeds of the bond, even if commingled with the other assets of the consumer collection agency, shall be deemed by operation of law to be held in trust for the benefit of the municipality in the event of bankruptcy of the consumer collection agency and shall be immune from attachment by creditors and judgment creditors.

(1953, S. 3314d; 1971, P.A. 539, S. 8; P.A. 81-183; P.A. 84-61, S. 2, 3; P.A. 92-12, S. 104; P.A. 01-207, S. 6, 12; P.A. 02-111, S. 50; P.A. 03-262, S. 3; P.A. 13-253, S. 26; P.A. 15-235, S. 36.)

History: 1971 act specified applicability to “consumer” collection agencies, deleted provisions prohibiting use of slogans in collection letters, etc., which threaten legal suit or wage garnishment or list attorney name and title, use of justices of the peace, constables, sheriffs, etc., for claims collection, use or threat of physical violence, use of instruments simulating judicial process, publication of list of debtors and threats to do so and use of “shame cards”, “shame automobiles”, etc., intimidation or methods in violation of postal regulations, clarified remaining provisions and required accounting to clients of moneys collected within sixty rather than 90 days from end of month in which collected and added prohibitions contained in Subdivs. (l) to (r); P.A. 81-183 required that consumer collection agencies not add any charge or collection fee to the amount of a claim greater than 15% of amount actually collected on the debt; P.A. 84-61 amended Subdiv. (i) to provide that no agency shall refuse or fail to remit as well as account for all money collected which is not in dispute and amended Subdiv. (m) to prohibit such agency from knowingly accepting for collection any claim to which any fee or charge has been already added to the amount of the claim; P.A. 92-12 redesignated Subdivs.; Sec. 42-131 transferred to Sec. 36a-805 in 1995; P.A. 01-207 designated existing provisions as Subsec. (a) and made a technical change therein for purposes of gender neutrality and added Subsec. (b) re charge or fee for collection of child support payments, effective July 1, 2001 (Revisor’s note: In codifying Subsec. (b), the reference to “section 10 of this act” was deemed by the Revisors to be a reference to “section 7 of this act”, codified as Sec. 36a-801b, since section “10” of P.A. 01-207 had been renumbered as section “7” during the amendment process); P.A. 02-111 amended Subsec. (a)(2) by changing “communicate with debtors” to “communicate with consumer debtors or property tax debtors” and (a)(13) by changing “charge or collection fee” to “collection charge or fee” and added new Subsec. (c) prohibiting consumer collection agency from receiving property tax on behalf of creditor that is a municipality, effective July 1, 2002; P.A. 03-262 amended Subsec. (c) by designating existing provisions as Subdiv. (1), amending Subdiv. (1) to add exception re procurement of insurance policy, and adding Subdiv. (2) authorizing municipality that enters into agreement with consumer collection agency to require agency to file bond, effective July 9, 2003; P.A. 13-253 amended Subsec. (a) to delete “purchase or” and add “as a third party” in Subdiv. (3), delete former Subdiv. (12) re comingling of money, redesignate existing Subdiv. (13) as Subdiv. (12) and amend same by adding “post charge-off”, adding provision re fee for cost of collection other than a court cost, designating provision re consumer debtor being legally liable for charge or fee as Subpara. (A) and amending same to add provision re determination by contract or other evidence of agreement between consumer debtor and creditor, and adding Subpara. (B) re total charge or fee for cost of collection not to exceed 15 per cent of total amount collected and accepted as payment in full satisfaction of the debt, redesignate existing Subdiv. (14) as Subdiv. (13), and add new Subdiv. (14) re disclosure when debt is beyond statute of limitations; P.A. 15-235 amended Subsec. (a) to change “36a-810” to “36a-812”, effective July 7, 2015.

Sec. 36a-810. (Formerly Sec. 42-133a). Penalty. Any person who operates a consumer collection agency without a license as required by sections 36a-800 to 36a-812, inclusive, shall be fined not more than one thousand dollars or imprisoned not more than one year, or both. Any person who violates any other provision of said sections shall be fined not more than five hundred dollars, or imprisoned not more than six months, or both. The state’s attorney or assistant state’s attorney for the superior court having jurisdiction in each town shall diligently inquire and make due complaint to the court of all violations of said sections which come to his knowledge, by investigation of report.

(1971, P.A. 539, S. 12; P.A. 74-183, S. 270, 291; P.A. 76-436, S. 233, 681; P.A. 15-235, S. 37.)

History: P.A. 74-183 replaced circuit court with court of common pleas, effective December 31, 1974; P.A. 76-436 replaced “prosecuting” attorney with “state’s attorney or assistant state’s” attorney and court of common pleas with superior court, effective July 1, 1978; Sec. 42-133a transferred to Sec. 36a-810 in 1995; P.A. 15-235 changed “36a-810” to “36a-812”, effective July 7, 2015.

PART XIV

STUDENT LOAN SERVICERS

Sec. 36a-846. Definitions. As used in this section and sections 36a-847 to 36a-854:

(1) “Student loan borrower” means (A) any resident of this state who has received or agreed to pay a student education loan; or (B) any person who shares responsibility with such resident for repaying the student education loan.

(2) “Student loan servicer” means any person, wherever located, responsible for the servicing of any student education loan to any student loan borrower.

(3) “Servicing” means (A) receiving any scheduled periodic payments from a student loan borrower pursuant to the terms of a student education loan; (B) applying the payments of principal and interest and such other payments with respect to the amounts received from a student loan borrower, as may be required pursuant to the terms of a student education loan; and (C) performing other administrative services with respect to a student education loan.

(4) “Student education loan” means any loan primarily for personal use to finance education or other school-related expenses.

(P.A. 15-162, S. 2.)

Sec. 36a-847. (Note: This section is effective July 1, 2016.) License required. Exemptions. Application. Issuance and renewal. Fees. Authority to conduct criminal records check. Examination of records. Abandonment of application. Automatic suspension of license. (a)(1) No person shall act as a student loan servicer, directly or indirectly, without first obtaining a license from the Banking Commissioner under subsection (b) of this section, unless such person is exempt from licensure pursuant to subdivision (2) of this subsection.

(2) The following persons are exempt from student loan servicer licensing requirements: (A) Any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union; (B) any wholly owned subsidiary of any such bank or credit union; and (C) any operating subsidiary where each owner of such operating subsidiary is wholly owned by the same bank or credit union.

(b) Any person seeking to act within this state as a student loan servicer shall make a written application to the commissioner for an initial license in such form as the commissioner prescribes. Such application shall be accompanied by (1) a financial statement prepared by a certified public accountant or a public accountant, the accuracy of which is sworn to under oath before a notary public by the proprietor, a general partner or a corporate officer or a member duly authorized to execute such documents, (2) (A) the history of criminal convictions of the (i) applicant; (ii) partners, if the applicant is a partnership; (iii) members, if the applicant is a limited liability company or association; or (iv) officers, directors and principal employees, if the applicant is a corporation, and (B) sufficient information pertaining to the history of criminal convictions of such applicant, partners, members, officers, directors or principal employees as the commissioner deems necessary to make the findings under subsection (c) of this section, (3) a nonrefundable license fee of one thousand dollars, and (4) a nonrefundable investigation fee of eight hundred dollars. The commissioner, in accordance with section 29-17a, may conduct a state and national criminal history records check of the applicant and of each partner, member, officer, director and principal employee of such applicant.

(c) Upon the filing of an application for an initial license and the payment of the fees for license and investigation, the commissioner shall investigate the financial condition and responsibility, financial and business experience, character and general fitness of the applicant. The commissioner may issue a license if the commissioner finds that:

(1) The applicant’s financial condition is sound;

(2) The applicant’s business will be conducted honestly, fairly, equitably, carefully and efficiently within the purposes and intent of sections 36a-846 to 36a-854, inclusive, and in a manner commanding the confidence and trust of the community;

(3) (A) If the applicant is an individual, such individual is in all respects properly qualified and of good character, (B) if the applicant is a partnership, each partner is in all respects properly qualified and of good character, (C) if the applicant is a corporation or association, the president, chairperson of the executive committee, senior officer responsible for the corporation’s business and chief financial officer or any other person who performs similar functions as determined by the commissioner, each director, each trustee and each shareholder owning ten per cent or more of each class of the securities of such corporation is in all respects properly qualified and of good character, or (D) if the applicant is a limited liability company, each member is in all respects properly qualified and of good character;

(4) No person on behalf of the applicant knowingly has made any incorrect statement of a material fact in the application, or in any report or statement made pursuant to sections 36a-846 to 36a-854, inclusive;

(5) No person on behalf of the applicant knowingly has omitted to state any material fact necessary to give the commissioner any information lawfully required by the commissioner;

(6) The applicant has paid the investigation fee and the license fee required under subsection (b) of this section; and

(7) The applicant has met any other similar requirements as determined by the commissioner.

(d) A license issued pursuant to subsection (c) of this section shall expire at the close of business on September thirtieth of the odd-numbered year following its issuance, unless renewed or earlier surrendered, suspended or revoked pursuant to sections 36a-846 to 36a-854, inclusive. Not later than fifteen days after a licensee ceases to engage in the business of student loan servicing in this state for any reason, including a business decision to terminate operations in this state, license revocation, bankruptcy or voluntary dissolution, such licensee shall provide written notice of surrender to the commissioner and shall surrender to the commissioner its license for each location in which such licensee has ceased to engage in such business. The written notice of surrender shall identify the location where the records of the licensee will be stored and the name, address and telephone number of an individual authorized to provide access to the records. The surrender of a license does not reduce or eliminate the licensee’s civil or criminal liability arising from acts or omissions occurring prior to the surrender of the license, including any administrative actions undertaken by the commissioner to revoke or suspend a license, assess a civil penalty, order restitution or exercise any other authority provided to the commissioner.

(e) A license may be renewed for the ensuing twenty-four-month period upon the filing of an application containing all required documents and fees as provided in subsection (b) of this section. Such renewal application shall be filed on or before September first of the year in which the license expires. Any renewal application filed with the commissioner after September first shall be accompanied by a one-hundred-dollar late fee and any such filing shall be deemed to be timely and sufficient for purposes of subsection (b) of section 4-182. If an application for a renewal license has been filed with the commissioner on or before the date the license expires, the license sought to be renewed shall continue in full force and effect until the issuance by the commissioner of the renewal license applied for or until the commissioner has notified the licensee in writing of the commissioner’s refusal to issue such renewal license together with the grounds upon which such refusal is based. The commissioner may refuse to issue a renewal license on any ground on which the commissioner might refuse to issue an initial license.

(f) If the commissioner determines that a check filed with the commissioner to pay a license or renewal fee has been dishonored, the commissioner shall automatically suspend the license or the 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.

(g) The applicant or licensee shall notify the commissioner, in writing, of any change in the information provided in its initial application for a license or its most recent renewal application for such license, as applicable, not later than ten business days after the occurrence of the event that results in such information becoming inaccurate.

(h) The commissioner may deem an application for a license abandoned if the applicant fails to respond to any request for information required under sections 36a-846 to 36a-854, inclusive, or any regulations adopted pursuant to said sections. The commissioner shall notify the applicant, in writing, that if the applicant fails to submit such information not later than sixty days after the date on which such request for information was made, the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license under the provisions of sections 36a-846 to 36a-854, inclusive.

(P.A. 15-162, S. 3.)

History: P.A. 15-162 effective July 1, 2016.

Sec. 36a-848. (Note: This section is effective July 1, 2016.) Name and place of business. Change of location. No person licensed to act within this state as a student loan servicer shall do so under any other name or at any other place of business than that named in the license. Any change of location of a place of business of a licensee shall require prior written notice to the commissioner. Not more than one place of business shall be maintained under the same license but the commissioner may issue more than one license to the same licensee upon compliance with the provisions of sections 36a-846 to 36a-854, inclusive, as to each new licensee. A license shall not be transferable or assignable.

(P.A. 15-162, S. 4.)

History: P.A. 15-162 effective July 1, 2016.

Sec. 36a-849. (Note: This section is effective July 1, 2016.) Records to be maintained by licensee. (a) Each student loan servicer licensee and persons exempt from licensure pursuant to subdivision (2) of subsection (a) of section 36a-847 shall maintain adequate records of each student education loan transaction for not less than two years following the final payment on such student education loan or the assignment of such student education loan, whichever occurs first, or such longer period as may be required by any other provision of law.

(b) If requested by the commissioner, each student loan servicer shall make such records available or send such records to the commissioner by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, not later than five business days after requested by the commissioner to do so. Upon request, the commissioner may grant a licensee additional time to make such records available or send the records to the commissioner.

(P.A. 15-162, S. 5.)

History: P.A. 15-162 effective July 1, 2016.

Sec. 36a-850. (Note: This section is effective July 1, 2016.) Prohibited activities of student loan servicers. No student loan servicer shall:

(1) Directly or indirectly employ any scheme, device or artifice to defraud or mislead student loan borrowers;

(2) Engage in any unfair or deceptive practice toward any person or misrepresent or omit any material information in connection with the servicing of a student education loan, including, but not limited to, misrepresenting the amount, nature or terms of any fee or payment due or claimed to be due on a student education loan, the terms and conditions of the loan agreement or the borrower’s obligations under the loan;

(3) Obtain property by fraud or misrepresentation;

(4) Knowingly misapply or recklessly apply student education loan payments to the outstanding balance of a student education loan;

(5) Knowingly or recklessly provide inaccurate information to a credit bureau, thereby harming a student loan borrower’s creditworthiness;

(6) Fail to report both the favorable and unfavorable payment history of the student loan borrower to a nationally recognized consumer credit bureau at least annually if the student loan servicer regularly reports information to a credit bureau;

(7) Refuse to communicate with an authorized representative of the student loan borrower who provides a written authorization signed by the student loan borrower, provided the student loan servicer may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the student loan borrower; or

(8) Negligently make any false statement or knowingly and wilfully make any omission of a material fact in connection with any information or reports filed with a governmental agency or in connection with any investigation conducted by the Banking Commissioner or another governmental agency.

(P.A. 15-162, S. 6.)

History: P.A. 15-162 effective July 1, 2016.

Sec. 36a-851. (Note: This section is effective July 1, 2016.) Commissioner’s authority re investigations and examinations. Prohibited acts by subjects of investigation or examination. (a) In addition to any authority provided under this title, the Banking Commissioner shall have the authority to conduct investigations and examinations as follows:

(1) For purposes of initial licensing, license renewal, license suspension, license revocation or termination, or general or specific inquiry or investigation to determine compliance with sections 36a-846 to 36a-854, inclusive, the commissioner may access, receive and use any books, accounts, records, files, documents, information or evidence including, but not limited to, (A) criminal, civil and administrative history information; (B) personal history and experience information, including independent credit reports obtained from a consumer reporting agency described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a; and (C) any other documents, information or evidence the commissioner deems relevant to the inquiry or investigation regardless of the location, possession, control or custody of such documents, information or evidence.

(2) For the purposes of investigating violations or complaints arising under sections 36a-846 to 36a-854, inclusive, or for the purposes of examination, the commissioner may review, investigate or examine any student loan servicer licensee or person subject to said sections as often as necessary in order to carry out the purposes of said sections. The commissioner may direct, subpoena or order the attendance of and examine under oath all persons whose testimony may be required about the student education loan or the business or subject matter of any such examination or investigation, and may direct, subpoena or order such person to produce books, accounts, records, files and any other documents the commissioner deems relevant to the inquiry.

(b) In making any examination or investigation authorized by this section, the commissioner may control access to any documents and records of the student loan servicer licensee or person under examination or investigation. The commissioner may take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where they are usually kept. During the period of control, no person shall remove or attempt to remove any of the documents and records except pursuant to a court order or with the consent of the commissioner. Unless the commissioner has reasonable grounds to believe the documents or records of the student loan servicer licensee or person have been, or are at risk of being, altered or destroyed for purposes of concealing a violation of sections 36a-846 to 36a-854, inclusive, the student loan servicer licensee or owner of the documents and records shall have access to the documents or records as necessary to conduct its ordinary business affairs.

(c) In order to carry out the purposes of this section, the commissioner may:

(1) Retain attorneys, accountants or other professionals and specialists as examiners, auditors or investigators to conduct or assist in the conduct of examinations or investigations;

(2) Enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information or evidence obtained under this section;

(3) Use, hire, contract or employ public or privately available analytical systems, methods or software to examine or investigate the student loan servicer licensee or person subject to sections 36a-846 to 36a-854, inclusive;

(4) Accept and rely on examination or investigation reports made by other government officials, within or without this state; and

(5) Accept audit reports made by an independent certified public accountant for the student loan servicer licensee or person subject to sections 36a-846 to 36a-854, inclusive, in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of examination, report of investigation or other writing of the commissioner.

(d) The authority of this section shall remain in effect, whether such student loan servicer licensee or person subject to sections 36a-846 to 36a-854, inclusive, acts or claims to act under any licensing or registration law of this state, or claims to act without such authority.

(e) No student loan servicer licensee or person subject to investigation or examination under this section may knowingly withhold, abstract, remove, mutilate, destroy or secrete any books, records, computer records or other information.

(P.A. 15-162, S. 7.)

History: P.A. 15-162 effective July 1, 2016.

Sec. 36a-852. (Note: This section is effective July 1, 2016.) Suspension, revocation or refusal to renew license. (a) The commissioner may suspend, revoke or refuse to renew any license issued under the provisions of subsection (c) of section 36a-847, or take any other action, in accordance with section 36a-51, if the commissioner finds that (1) the licensee has violated any provision of sections 36a-846 to 36a-854, inclusive, or any regulation or order lawfully made pursuant to and within the authority of said sections, or (2) any fact or condition exists which, if it had existed at the time of the original application for the license, clearly would have warranted a denial of such license. 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.

(b) Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any of the provisions of sections 36a-846 to 36a-854, inclusive, or any regulation adopted pursuant to said sections, or any licensee or any owner, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee has committed any fraud, engaged in dishonest activities or made any misrepresentation, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.

(P.A. 15-162, S. 8.)

History: P.A. 15-162 effective July 1, 2016.

Sec. 36a-853. (Note: This section is effective July 1, 2016.) Compliance with federal laws and regulations. A student loan servicer shall comply with all applicable federal laws and regulations relating to student loan servicing, including, but not limited to, the Truth-in-Lending Act, 15 USC Section 1601 et seq., as from time to time amended, and the regulations promulgated thereunder. In addition to any other remedies provided by law, a violation of any such federal law or regulation shall be deemed a violation of this section and a basis upon which the commissioner may take enforcement action pursuant to section 36a-852.

(P.A. 15-162, S. 9.)

History: P.A. 15-162 effective July 1, 2016.

Sec. 36a-854. (Note: This section is effective July 1, 2016.) Regulations. The Banking Commissioner shall adopt such regulations, in accordance with chapter 54, to implement the provisions of this section and sections 36a-846 to 36a-853, inclusive.

(P.A. 15-162, S. 10.)

History: P.A. 15-162 effective July 1, 2016.