CT Consumers To Get Refund From Payday Loan Collection Agency

CONNECTICUT — The state Department of Banking came to an agreement with a consumer collection agency that was trying to collect on payday loans that can't be enforced in Connecticut.

Consumer collection agencies licensed in Connecticut can't collect on small loans (under $15,000) made by unlicensed non-exempt lenders, including those affiliated with tribes. Small loans made to Connecticut consumers by licensed nor exempt lenders that charge more than 12 percent interest are illegal.

Connecticut DOB came to a consent order agreement with TruAccord Corp that will refund a total of $44,000 to 103 Connecticut consumers.

Tribal sovereign immunity shields federally recognized tribes and entities that are "arms of the tribe" from certain enforcement actions under state law, but it doesn't apply to consumer collection agencies.

“While the Department has done an excellent job in minimizing what is widely known as ‘payday lending’ here in Connecticut, we are still seeing some unlicensed out-of-state companies engaging in this practice and consumer collection agencies attempting to collect on this debt," Banking Commissioner Jorge Perez said in a statement. "I want to be clear, that any company originating loans in this state which violate Connecticut law with excessive interest rates and collection agencies attempting to collect on this debt will be investigated by the Department."