On October 6, 2026, the Connecticut Banking Commissioner issued an order imposing $2.1 million in civil penalties on an out of state debt relief company and the two managers who ran it. The company was assessed $1.2 million, one manager $600,000, and the other $300,000. The order follows a temporary cease and desist order issued on August 18, 2026, which also required the respondents to make restitution and disgorge their fees. None of the respondents requested a hearing, so the Department’s allegations were deemed admitted. According to the Department, the company had never been licensed to engage in debt negotiation, debt adjustment, or money transmission in Connecticut or in any other state.
The case began with a single consumer complaint filed in August 2024. The consumer had signed up in December 2023, enrolled $46,934 in unsecured debt, and agreed to 36 monthly payments of $1,000. The contract set the company’s fee at 25 percent of the verified debt on each account it settled. Connecticut’s Schedule of Maximum Fees, established under Section 36a-671b(b) of the Connecticut General Statutes, caps a debt negotiator’s total fees on unsecured debt at 10 percent of the amount by which the debt is reduced. The contract also offered a three day cancellation right but left out the specific “Debtor’s three-day right to cancel” caption and statement that Section 36a-671b(a) requires. After seven payments, none of the consumer’s debts had been negotiated and his creditors had started calling.
The bank records the Department reviewed explain why the order reaches well beyond the debt negotiation statute. Consumer payments went directly into the company’s operating account. Over six months in 2024, roughly 1,569 consumer payments totaling about $488,751 were deposited or attempted, and the same statements showed $62,700 transferred to a manager’s personal accounts, $95,008 in cash withdrawals, and nearly $149,000 in credit card payments, with no record of a single creditor payoff. Because the company took in consumer money to pay creditors later, the Department charged it with unlicensed debt adjustment under Section 36a-656(a) and unlicensed money transmission under Section 36a-597(a), and cited Section 36a-659, which requires debt adjusters to hold consumer funds in a separate account. The Department has taken the position since a January 2016 memorandum that activity meeting both the debt adjustment and money transmission definitions requires both licenses unless an exemption applies.