TITLE 36a THE BANKING LAW OF CONNECTICUT
CHAPTER 668 Nondepository Financial Institutions
PART III Small Loan lending and Related Activities
Sec. 36a-555. (Formerly Sec. 36-225). Definitions.
As used in this section and sections 36a-556 to 36a-573, inclusive:
(1) “Advertise” or “advertising” means any announcement, statement, assertion or representation that is placed before the public in a newspaper, magazine or other publication, in the form of a notice, circular, pamphlet, letter or poster, over any radio or television station, by means of the Internet, by other electronic means of distributing information, by personal contact, or in any other way or medium;
(2) “APR” means the annual percentage rate for the loan calculated according to the provisions of the federal Truth-in-Lending Act, 15 USC 1601 et seq., as amended from time to time, and the regulations promulgated thereunder, and the “disclosed APR” shall mean the APR disclosed, as applicable, pursuant to 12 CFR Section 1026.6 or 12 CFR Section 1026.18. If more than one APR is disclosed pursuant to 12 CFR Section 1026.6, the “disclosed APR” shall be the highest APR disclosed pursuant to said section;
(3) “Branch office” means a location other than the main office where the licensee, or any person on behalf of the licensee, will engage in activities that require a small loan license;
(4) “Connecticut borrower” means any borrower who resides in or maintains a domicile in this state and who (A) negotiates or agrees to the terms of the small loan in person, by mail, by telephone or via the Internet while physically present in this state, (B) enters into or executes a small loan agreement with the lender in person, by mail, by telephone or via the Internet while physically present in this state, or (C) makes a payment on the loan in this state. For purposes of this subdivision, “payment on the loan” includes a debit on an account the borrower holds in a branch of a financial institution or the use of a negotiable instrument drawn on an account at a financial institution. For purposes of this subdivision, “financial institution” means any bank or credit union chartered or licensed under the laws of this state, any other state or the United States and having its main office or a branch office in this state;
(5) “Control person” means an individual that directly or indirectly exercises control over another person, and includes any person that (A) is a director, general partner or executive officer; (B) in the case of a corporation, directly or indirectly has the right to vote ten per cent or more of a class of any voting security or has the power to sell or direct the sale of ten per cent or more of any class of voting securities; (C) in the case of a limited liability company, is a managing member; or (D) in the case of a partnership, has the right to receive upon dissolution, or has contributed, ten per cent or more of the capital. For purposes of this subdivision, “control” means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract or otherwise;
(6) “Generating leads” means (A) engaging in the business of selling leads for small loans; (B) generating or augmenting leads for small loans for other persons for or with the expectation of compensation or gain; or (C) referring consumers to other persons for a small loan for or with the expectation of compensation or gain for such referral, except “generating leads” shall not include generating or augmenting leads for small loans for an exempt person, as described in subsection (b) of section 36a-557, using the exempt person’s data or customer information;
(7) “Lead” means any information identifying a potential consumer of a small loan;
(8) “Main office” means the main address designated on the system;
(9) “Open-end small loan” has the same meaning as “open-end credit”, as defined in 12 CFR 1026.2, as amended from time to time;
(10) “Person” means a natural person, corporation, company, limited liability company, partnership or association;
(11) “Small loan” means any loan of money or extension of credit, or the purchase of, or an advance of money on, a borrower’s future income where the following conditions are present: (A) The amount or value is fifteen thousand dollars or less; and (B) the APR is greater than twelve per cent. For purposes of this subdivision, “future income” means any future potential source of money, and expressly includes, but is not limited to, a future pay or salary, pension or tax refund. For purposes of this section and sections 36a-556 to 36a-573, inclusive, “small loan” shall not include: (i) A retail installment contract made in accordance with section 36a-772; (ii) a loan or extension of credit for agricultural, commercial, industrial or governmental use; (iii) a residential mortgage loan, as defined in section 36a-485; or (iv) an open-end credit account that is accessed by a credit card issued by an exempt entity, as described in subdivision (1) of subsection (b) of section 36a-557;
(12) “Trigger lead” means a consumer report obtained pursuant to Section 604(C)(1)(B) of the Fair Credit Reporting Act, 15 USC 1681b, where the issuance of the report is triggered by an inquiry made with a consumer reporting agency in response to an application for credit. “Trigger lead” does not include a consumer report obtained by a small loan lender that holds or services existing indebtedness of the applicant who is the subject of the report; and
(13) “Unique identifier” means a number or other identifier assigned by protocols established by the system.
Sec. 36a-556. (Formerly Sec. 36-226). Small loan lending and related activities prohibited without license or exemption.
(a) Without having first obtained a small loan license from the commissioner pursuant to section 36a-565, no person shall, by any method, including, but not limited to, mail, telephone, Internet or other electronic means, unless exempt pursuant to section 36a-557:
(1) Make a small loan to a Connecticut borrower;
(2) Offer, solicit, broker, directly or indirectly arrange, place or find a small loan for a prospective Connecticut borrower;
(3) Engage in any other activity intended to assist a prospective Connecticut borrower in obtaining a small loan, including, but not limited to, generating leads;
(4) Receive payments of principal and interest in connection with a small loan made to a Connecticut borrower;
(5) Purchase, acquire or receive assignment of a small loan made to a Connecticut borrower; and
(6) Advertise or cause to be advertised in this state a small loan or any of the services described in subdivisions (1) to (5), inclusive, of this subsection.
(b) No person shall accept any lead, referral or application for a small loan to a prospective Connecticut borrower from a person who is not (1) licensed pursuant to section 36a-565, or (2) exempt from licensure pursuant to section 36a-557.
(c) No person shall sell, transfer, pledge, assign or otherwise dispose of any small loan made to a Connecticut borrower to any person who is not (1) licensed pursuant to section 36a-565, or (2) exempt from licensure pursuant to section 36a-557.
(1949 Rev., S. 5940; 1949, S. 2756d; P.A. 78-303, S. 51, 136; P.A. 87-9, S. 2, 3; P.A. 91-357, S. 52, 78; P.A. 92-12, S. 66; P.A. 94-122, S. 259, 340; P.A. 02-111, S. 35; P.A. 09-208, S. 8; P.A. 11-216, S. 31; P.A. 16-65, S. 20.)
Sec. 36a-557. (Formerly Sec. 36-227). Exemptions.
(a) The following persons are exempt from the requirement for licensure set forth in section 36a-556:
(1) A licensed pawnbroker;
(2) A person licensed as a consumer collection agency in accordance with section 36a-801 when engaged in the activities of a consumer collection agency in the normal course of business;
(3) A person who services small loans for an exempt person described in subsection (b) of this section, when such exempt person owns the small loans, provided the servicing arrangements include, in addition to receiving payments of principal and interest in connection with the small loans, the provision of accounting, recordkeeping and data processing services;
(4) A person who is a passive buyer of a small loan. For purposes of this subdivision, “passive buyer” means a person who: (A) Has acquired a small loan for investment purposes from a person who is either licensed or exempt from licensure under subdivisions (1) to (3), inclusive, of subsection (b) of this section; (B) will receive the principal and interest and any other moneys due under the small loan through a person who is either licensed or exempt from licensure under subdivisions (1) to (3), inclusive, of subsection (b) of this section; and (C) has had and will have no communications of any kind with the Connecticut borrower regarding the small loan it has acquired;
(5) A consumer reporting agency, as defined in Section 603(f) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time, when generating leads; and
(6) A retail seller who offers, extends or facilitates credit through an open-end or closed-end credit plan for the purchase of goods or services from such retail seller.
(b) The following persons are exempt from the provisions of sections 36a-555 to 36a-573, inclusive:
(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; and
(3) Any operating subsidiary where each owner of such operating subsidiary is wholly owned by the same bank or credit union.
(c) Loans made by an exempt person described in subsection (b) of this section shall be exempt from the provisions of sections 36a-555 to 36a-573, inclusive, including, without limitation, the provisions applicable to licensed persons, even if: (1) The exempt person utilizes the services of a person exempt from licensing or required to be licensed pursuant to section 36a-556 in connection with the small loans that are made or offered to be made by the exempt person described in subsection (b) of this section; and (2) a person exempt from licensing or required to be licensed pursuant to section 36a-556 engages in activities intended to assist a prospective Connecticut borrower or a Connecticut borrower in obtaining a small loan that is made or offered to be made by an exempt person described in subsection (b) of this section. Nothing in this subsection shall be construed as exempting persons required to be licensed pursuant to section 36a-556 from the requirements to obtain and maintain a license or from the provisions of sections 36a-562 to 36a-573, inclusive. Notwithstanding the foregoing, no person licensed or required to be licensed under section 36a-556 shall engage in any of the activities described in subsection (a) of section 36a-556 for any small loan that has a disclosed APR in excess of thirty-six per cent if that small loan contains any condition or provision inconsistent with the requirements of subsections (d) to (g), inclusive, of section 36a-558.
Sec. 36a-558. (Formerly Sec. 36-228). Prohibitions re small loans and related activities. Permitted small loan provisions. Open-end small loans. Lead generation activities.
(a) Except as provided in subsection (c) of section 36a-557, no person licensed or required to be licensed under section 36a-556 shall engage in any of the activities described in subsection (a) of section 36a-556 for any small loan that contains any condition or provision inconsistent with the requirements in subsections (d) to (g), inclusive, of this section.
(b) No person exempt from licensure under section 36a-557 shall engage in any of the activities described in subdivision (4), (5) or (6) of subsection (a) of section 36a-556 for any small loan made by a person who was licensed or who was required to be licensed under section 36a-556 that contains any condition or provision inconsistent with the requirements in subsections (d) to (g), inclusive, of this section.
(c) (1) Except as the result of a bona fide error or as set forth in subdivision (2) of this subsection, any small loan described in subsection (a) or (b) of this section that contains any condition or provision inconsistent with the requirements in subsections (d) to (g), inclusive, of this section shall not be enforced in this state. Such small loan shall be void and no person shall have the right to collect or receive any principal, interest, charge or other consideration thereon. Any person attempting to collect or receive principal, interest, charge or other consideration on such small loan shall be subject to the provisions of section 36a-570.
(2) Subdivision (1) of this subsection shall not apply when: (A) The inconsistent condition or provision is the result of a bona fide error; or (B) the small loan was lawfully made in compliance with a validly enacted licensed loan law of another state to a borrower who was not, at the time of the making of such loan, a Connecticut borrower but who has since become a Connecticut borrower.
(3) For the purposes of this subsection, the term “bona fide error” includes, but is not limited to, clerical, calculation and computer malfunction, programming and printing errors, but does not include an error of legal judgment with respect to a person’s obligations under sections 36a-555 to 36a-573, inclusive, or under regulations implemented pursuant to section 36a-573.
(d) Small loans that are the subject of the activities set forth in subsections (a) and (b) of this section shall not contain:
(1) For a small loan that is under five thousand dollars, an annual percentage rate that exceeds the lesser of thirty-six per cent or the maximum annual percentage rate for interest that is permitted with respect to the consumer credit extended under the Military Lending Act, 10 USC 987 et seq., as amended from time to time, or for a small loan that is between five thousand and fifteen thousand dollars, an annual percentage rate that exceeds twenty-five per cent;
(2) For other than an open-end small loan, a provision that increases the interest rate due to payment default;
(3) A payment schedule with regular periodic payments that when aggregated do not fully amortize the outstanding principal balance;
(4) A payment schedule with regular periodic payments that cause the principal balance to increase;
(5) A payment schedule that consolidates more than two periodic payments and pays them in advance from the proceeds, unless such payments are required to be escrowed by a governmental agency;
(6) A prepayment penalty;
(7) An adjustable rate provision;
(8) A waiver of participation in a class action or a provision requiring a borrower, whether acting individually or on behalf of others similarly situated, to assert any claim or defense in a nonjudicial forum that: (A) Utilizes principles that are inconsistent with the law as set forth in the general statutes or common law; or (B) limits any claim or defense the borrower may have;
(9) A call provision that permits the lender, in its sole discretion, to accelerate the indebtedness, except when repayment of the loan is accelerated by a bona fide default pursuant to a due-on-sale clause;
(10) A security interest, except as provided in subsection (e) of this section; or
(11) Fees or charges of any kind, except as expressly permitted by subsection (e) of this section.
(e) Small loans as described in subsections (a) and (b) of this section may contain provisions:
(1) For late fees, if: (A) Such fees are assessed after an installment remains unpaid for ten or more consecutive days, including Sundays and holidays; (B) such fees do not exceed five per cent of the outstanding installment payment, excluding any previously assessed late fees, or a total of twenty-five dollars per month, whichever is less; and (C) no interest is charged on such fees;
(2) Allowing charges for a dishonored check or any other form of returned payment, provided the total fee for such returned payment shall not exceed twenty dollars;
(3) Allowing for collection of deferral charges, but only upon the specific written authorization of the borrower and in a total amount not to exceed the interest due during the applicable billing cycle;
(4) Allowing for the accrual of interest after the maturity date or the deferred maturity date, provided such interest shall not exceed twelve per cent per annum computed on a daily basis on the respective unpaid balances;
(5) Providing for reasonable attorney’s fees subject to the conditions and restrictions set forth in section 42-150aa;
(6) Including credit life insurance or credit accident and health insurance subject to the conditions and restrictions set forth in section 36a-559;
(7) Taking a security interest in a motor vehicle in connection with a closed-end small loan made solely for the purchase or refinancing of such motor vehicle, provided the APR of such loan shall not exceed the rates indicated for the respective classifications of motor vehicles as follows: (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; and (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.
(f) Open-end small loans as described in subsections (a) and (b) of this section shall, in addition to the requirements set forth in subsections (d) and (e) of this section:
(1) Not provide for an advance of money exceeding at any one time an unpaid principal of fifteen thousand dollars;
(2) Provide for payments and credits to be made to the same borrower’s account from which advances, interests, charges and costs on such loan are debited;
(3) Provide for interest to be computed on any unpaid principal balance of the account in each billing cycle by one of the following methods: (A) By converting the APR to a daily rate and multiplying such daily rate by the daily unpaid principal balance of the account, in which case the daily rate is determined by dividing the APR by three hundred sixty-five; or (B) by converting the APR to a monthly rate and multiplying the monthly rate by the average daily unpaid principal balance of the account in the billing cycle, in which case (i) the monthly rate is determined by dividing the APR by twelve, and (ii) the average daily unpaid principal balance is the sum of the amount unpaid each day during the cycle divided by the number of days in the cycle. In either of such computations, the billing cycle shall be monthly and the unpaid principal balance on any day shall be determined by adding to any balance unpaid as of the beginning of such day all advances and other permissible amounts charged to the borrower and deducting all payments and other credits made or received that day;
(4) Not compound interest or charges by adding any unpaid interest or charges authorized by sections 36a-555 to 36a-573, inclusive, to the unpaid principal balance of the borrower’s account; or
(5) Not include any other fees or charges of any kind, except as expressly permitted by subsection (g) of this section.
(g) Open-end small loans as described in subsections (a) and (b) of this section, in addition to the requirements set forth in subsections (d) to (f), inclusive, of this section, may:
(1) Provide for an annual fee for the privileges made available to the borrower under the open-end loan agreement, provided such annual fee shall not exceed fifty dollars; and
(2) Include credit life insurance or credit accident and health insurance, subject to the conditions and restrictions set forth in section 36a-559.
(h) No person licensed or required to be licensed under sections 36a-555 to 36a-573, inclusive, who is engaged in generating leads shall in connection with lead generation activities:
(1) Initiate any outbound telephone call using an automatic telephone dialing system or an artificial or prerecorded voice without the prior express written consent of the recipient;
(2) Fail to transmit or cause to transmit the lead generator’s name and telephone number to any caller identification service in use by a consumer;
(3) Initiate an outbound telephone call to a consumer’s residence between nine o’clock p.m. and eight o’clock a.m. local time at the consumer’s location;
(4) Fail to clearly and conspicuously identify the lead generator and the purpose of the contact in its written and oral communications with a consumer;
(5) Fail to provide the ability to opt out of any unsolicited advertisement communicated to a consumer via an electronic mail address;
(6) Initiate an unsolicited advertisement via electronic mail to a consumer more than ten business days after the receipt of a request from such consumer to opt out of such unsolicited advertisements;
(7) Use a subject heading or electronic mail address in a commercial electronic mail message that would likely mislead a recipient, acting reasonably under the circumstances, about a material fact regarding the sender, contents or subject matter of the message;
(8) Sell, lease, exchange or otherwise transfer or release the electronic mail address or telephone number of a consumer who has requested to be opted out of future solicitations;
(9) Collect, buy, lease, exchange or otherwise transfer or receive an individual’s Social Security number or bank account number;
(10) Use information from a trigger lead to solicit consumers who have opted out of firm offers of credit under the federal Fair Credit Reporting Act;
(11) Initiate a telephone call to a consumer who has placed his or her contact information on a federal or state Do Not Call list, unless the consumer has provided express written consent;
(12) Represent to the public, through advertising or other means of communicating or providing information, including, but not limited to, the use of business cards or stationery, brochures, signs or other promotional items, that such lead generator can or will perform any other activity requiring licensure under this title, unless such lead generator is duly licensed to perform such other activity or exempt from such licensure requirements;
(13) Refer applicants to, or receive a fee from, any person who is required to be licensed under this title, but was not so licensed as of the time of the performance of such lead generator’s services; or
(14) Assist or aid and abet any person in the conduct of business requiring licensure under this title when such person does not hold the license required.
Sec. 36a-559. (Formerly Sec. 36-229). Credit life insurance. Credit accident and health insurance.
(a) Subject to the conditions provided in this section, insurance may be sold to a Connecticut borrower by a licensee at the request of the borrower (1) for insuring the life of persons obligated on a small loan pursuant to sections 38a-645 to 38a-658, inclusive, and (2) providing accident and health insurance covering one person on a small loan pursuant to sections 38a-645 to 38a-658, inclusive. In the case of credit life insurance sold under subdivision (1) of this subsection, the amount of the insurance shall be sufficient to pay the total balance of the loan due on the date of the insured’s death. Credit accident and health insurance sold under subdivision (2) of this subsection shall not provide indemnity against the risk of a borrower becoming disabled for a period of less than fourteen days, except that it may provide for retroactive coverage if the disability continues for the period stated in the policy. Irrespective of the number of obligors, only one obligor may be insured, except that life insurance may cover both a borrower and such borrower’s spouse where both are obligors on a small loan. A licensee shall not require the purchase of insurance as a condition precedent to the making of a small loan. A licensee shall, both verbally and in writing, inform the borrower prior to entering into any small loan contract of his or her right not to purchase credit insurance. In order to be excluded from the APR calculation, the charge for insurance shall be reasonable, the licensee may not receive any direct or indirect compensation relating to the sale of the insurance and the charge for the insurance may not be paid to an affiliate of the licensee.
(b) If a borrower obtains credit accident and health insurance, the borrower shall have the right to cancel such credit accident and health insurance at any time by giving written notice of cancellation to the licensee. Notification of this right shall be made in the borrower’s insurance election. All persons obligated on the loan shall agree, in writing, to the cancellation and return all certificates of insurance. Upon cancellation, the licensee shall, at the licensee’s option, either refund the insurance charges to the borrower or apply them to the unpaid balance of the loan.
(c) For the purposes of this section, in the case of an open-end small loan, the additional charge for credit life insurance or credit accident and health insurance shall be calculated in each billing cycle by applying the current monthly premium rate for such insurance, as such rate may be determined by the Insurance Commissioner, to the unpaid balances in the account, using any of the methods for the calculation of loan charges specified in subdivision (4) of subsection (f) of section 36a-558. No credit life insurance or credit accident and health insurance written in connection with an open-end small loan shall be cancelled by the licensee because of delinquency of the borrower in the making of the required minimum payments on the loan unless (1) one or more of such payments is past due for a period of ninety days or more, and (2) the licensee advances to the insurer the amounts required to keep the insurance in force during such period, which amounts may be debited from the borrower’s account. Any cancellation shall be effective at the end of the billing cycle in which the notice is received and the licensee shall discontinue any further charges for credit accident and health insurance.
Sec. 36a-560. (Formerly Sec. 36-230). Restrictions on licensee.
No licensee shall:
(1) Cause a borrower, including, but not limited to, a comaker or guarantor, to owe at any time more than fifteen thousand dollars in principal on one or more small loans;
(2) Induce or permit a borrower to split or divide any small loan or loans, or induce or permit a borrower to become obligated, directly or indirectly, under more than one contract of loan at the same time, primarily for the purpose of obtaining rates or charges that would otherwise be prohibited by any applicable provision of sections 36a-555 to 36a-573, inclusive;
(3) Take any (A) confession of judgment, (B) power of attorney, (C) note or promise to pay that does not state the actual amount of the loan, the time period for which the loan is made and the charges for such loan, or (D) instrument related to the loan in which blanks are left to be filled after the loan is made;
(4) Offer the borrower any other product or service for which there is or will ever be any cost to the borrower in connection with a small loan unless (A) permitted by sections 36a-555 to 36a-573, inclusive, (B) authorized under another license, or by applicable exemption from any requirement for such licensure, to offer such product or services, or (C) if no separate license or exemption therefrom is required to offer such product or services, authorized in advance, in writing, by the commissioner upon being satisfied that such other product or service is of such a character that the granting of such authority would not permit or easily facilitate evasion of the provisions of sections 36a-555 to 36a-573, inclusive, or of any regulations promulgated thereunder; or
(5) Renew or refinance a small loan unless the renewal or refinancing of the loan will result in a distinct advantage to the borrower, provided restoration to a contractually up-to-date condition shall not, in itself, constitute a distinct advantage to the borrower.
Sec. 36a-561. (Formerly Sec. 36-231). Prohibited practices.
No person licensed or required to be licensed and no control person shall, directly or indirectly:
(1) Assist or aid and abet any person in conduct prohibited by sections 36a-555 to 36a-573, inclusive;
(2) Employ any scheme, device or artifice to defraud or mislead any person in connection with a small loan;
(3) Make, in any manner, any false, misleading or deceptive statement or representation in connection with a small loan or engage in bait and switch advertising;
(4) Engage in any unfair or deceptive practice toward any person or misrepresent or omit any material information in connection with a small loan; or
(5) Fail to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable laws and regulations concerning small loan lenders.
Sec. 36a-562. (Formerly Sec. 36-232). Main and branch offices.
In each case where a license is required by section 36a-556, the licensee shall have a main office license and may have a branch office license. All offices shall be located in the United States. Each main office shall have a qualified individual, who shall be responsible for the actions of the licensee and for supervising all aspects of the licensee’s small loan business. Each branch shall have a branch manager, who shall be responsible for the actions of the licensee and for supervising all aspects of the branch’s small loan business.
Sec. 36a-563. (Formerly Sec. 36-233). Application for small loan license.
(a) An application for a small loan license shall be made and processed on the system pursuant to section 36a-24b, in the form prescribed by the commissioner on the system. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purpose of sections 36a-555 to 36a-573, inclusive. The applicant shall, at a minimum, furnish to the system, in a form prescribed by the system, information concerning the identity of the applicant and any control person of the applicant, the qualified individual and any branch manager, including personal history and experience in a form prescribed by the system and information related to any administrative, civil or criminal findings by any governmental jurisdiction. The commissioner, in accordance with section 29-17a, may conduct a state and national criminal history records check of the applicant and its control persons, qualified individual and branch manager, and, in accordance with section 36a-24b, may require the submission of fingerprints to the Federal Bureau of Investigation or other state, national or international criminal databases and may require control persons, qualified individuals and branch managers to furnish authorization for the system and the commissioner to obtain an independent credit report from a consumer reporting agency described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time. Applicants may also be required to upload on the system an audited financial statement prepared by a certified public accountant in accordance with generally accepted accounting principles dated not later than ninety days after the end of the applicant’s fiscal year. Such financial statement shall include a balance sheet, income statement, statement of cash flows and all relevant notes thereto. If the applicant is a start-up company, only an initial statement of condition shall be required.
(b) The commissioner may deem an application for a small loan license abandoned if the applicant fails to respond to any request for information required under sections 36a-555 to 36a-573, inclusive, or any regulation adopted pursuant to section 36a-573. The commissioner shall notify the applicant on the system that if such information is not submitted on or before sixty days after the date of such request, 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-555 to 36a-573, inclusive.
Sec. 36a-564. (Formerly Sec. 36-233a). License fees. Renewal. Automatic suspension.
(a) Each applicant for a small loan license shall pay to the system any required fees or charges and a license fee of four hundred dollars. Each such license shall expire at the close of business on December thirty-first of the year in which the license was approved, unless such license is renewed, and provided any such license that is approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which the license expires. Each applicant for renewal of a small loan license shall pay to the system any required fees or charges and a renewal fee of four hundred dollars.
(b) In accordance with section 36a-24b, the commissioner may automatically suspend any license if such person receives a deficiency on the system indicating that a required payment was Returned-ACH or returned pursuant to any other term as may be utilized by the system to indicate that payment was not accepted. After the license has been automatically suspended pursuant to this subsection, the commissioner shall (1) give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew pursuant to section 36a-570 and an opportunity for a hearing on such action in accordance with section 36a-51, and (2) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(c) No abatement of the license fee shall be made if an application is denied or withdrawn prior to the issuance of the license or if the license is surrendered, revoked or suspended prior to the expiration of the period for which the license was issued. All fees required by this section shall be nonrefundable.
Sec. 36a-565. (Formerly Sec. 36-233b). Findings required for issuance of license. Denial of application. Minimum funds. Standards for renewal. Surrender of license.
(a) Upon the filing of the required application and license fee under sections 36a-563 and 36a-564, the commissioner shall investigate the facts and no license shall be granted unless the commissioner finds that: (1) The experience, character and general fitness of the applicant and its control persons, qualified individual and any branch manager are satisfactory; (2) the activities to be conducted by the applicant will be for the convenience and advantage of the consumers it seeks to serve; (3) the applicant has available the funds required by subsection (d) of this section; and (4) the applicant and its control persons and any qualified individual and branch manager have not made a material misstatement in the application. If the commissioner fails to make such findings, the commissioner shall not issue a license and shall notify the applicant of the denial and the reasons for such denial.
(b) Notwithstanding the provisions of subsection (a) of this section, the commissioner may deny an application if the applicant or its control persons or qualified individual or branch manager have demonstrated a lack of financial responsibility. For purposes of this subsection, a person has shown that he or she is not financially responsible when such person has shown a disregard in the management of such person’s own financial condition. A determination that a person has not shown financial responsibility may include, but is not limited to: (1) Current outstanding judgments, except judgments solely as a result of medical expenses; (2) current outstanding tax liens or other government liens and filings; (3) foreclosures during the three years preceding the date of application for an initial license or renewal of a license; or (4) a pattern of seriously delinquent accounts within the past three years.
(c) Notwithstanding the provisions of subsection (a) of this section, and subject to the provisions of section 46a-80, the commissioner may deny an application based on the history of criminal convictions of the applicant or of its control persons or qualified individual or branch manager.
(d) Applicants shall have a minimum of fifty thousand dollars continuously available for each licensed location. The requirement of this subsection may be met by cash on hand, cash in bank or lines of credit.
(e) The minimum standards for renewal of a small loan license shall include the following: (1) The applicant continues to meet the minimum standards under subsections (a) to (d), inclusive, of this section; (2) the applicant has paid all required fees for renewal of the license; and (3) the applicant has paid any outstanding examination fees or other moneys due to the commissioner. The license of a small loan lender failing to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system.
(f) Surrender of a license shall be governed by subsection (c) of section 36a-51. Not later than fifteen days after the date a licensee ceases to engage in this state in the business of a small loan lender for any reason, including a business decision to terminate operations in this state, license revocation, bankruptcy or voluntary dissolution, such licensee shall request surrender of the license on the system for each location in which such licensee has ceased to engage in such business.
(g) Every license shall remain in force and effect until the license has been surrendered, revoked or suspended, or has expired in accordance with the provisions of sections 36a-555 to 36a-573, inclusive.
Sec. 36a-566. (Formerly Sec. 36-234). License not assignable or transferable. Use of name. Change in control person, name or place of business. Automatic suspension of license.
(a) No license issued under section 36a-556 shall be assignable or transferable. Any change in any control person of the licensee, except a change of a director, general partner or executive officer that is not the result of an acquisition or change of control of the licensee, shall be the subject of an advance change notice filed on the system at least thirty days prior to the effective date of such change and no such change shall occur without the commissioner’s approval.
(b) No licensee may use any name other than its legal name or a fictitious name approved by the commissioner, provided such licensee may not use its legal name if the commissioner disapproves of such name. No licensee shall engage in any activity requiring a small loan license under any other name or at any other place of business than that named in the license. Any proposed change in a licensee’s name or to the licensee’s place of business shall be the subject of an advance change notice filed on the system at least thirty days prior to the effective date of such change and no such change to the licensee’s name or place of business shall be made without the commissioner’s approval of such change.
(c) The commissioner may automatically suspend any license for a violation of this section or upon a failure of the licensee to designate a qualified individual or branch manager who meets the requirements set forth in section 36a-562 not later than thirty-days after such position becomes vacant. After a license has been automatically suspended pursuant to this subsection, the commissioner shall (1) give the licensee notice of the automatic suspension, pending proceedings for revocation of or refusal to renew the license pursuant to section 36a-570 and an opportunity for a hearing in accordance with section 36a-51, and (2) require the licensee to take or refrain from taking action as the commissioner deems necessary to effectuate the purpose of this section.
Sec. 36a-567. (Formerly Sec. 36-235). Change in information. Required system filing or notice to commissioner.
(a) Except as otherwise specified in section 36a-566, each small loan license applicant or licensee, and each control person, qualified individual and branch manager of the applicant or licensee shall file any change in the information most recently submitted to the system by such licensee, control person, qualified individual or branch manager in connection with the application or license, or, if the information cannot be filed on the system, notify the commissioner, in writing, of such change in the information not later than fifteen days after the date the applicant, licensee, control person, qualified individual or branch manager has reason to know of such change.
(b) A licensee shall file with the system or, if the information cannot be filed on the system, notify the commissioner, in writing, of the occurrence of any of the following developments not later than fifteen days after the licensee had reason to know of the occurrence: (1) Filing for bankruptcy or the consummation of a corporate restructuring of the licensee; (2) filing of a criminal indictment against the licensee in any way related to the activities of the licensee or receiving notification of the filing of any criminal felony indictment or felony conviction of any of the licensee’s control persons or qualified individual or branch manager; (3) receiving notification of the institution of a license denial, cease and desist, suspension or revocation procedures, or other formal or informal action by any governmental agency against the licensee or any control person, branch manager or qualified individual of the licensee and the reasons therefor; (4) receiving notification of the initiation of any action against the licensee or any control person, branch manager or qualified individual of the licensee by the Attorney General or the attorney general of any other state and the reasons therefor; (5) receiving notification of a material adverse action against the licensee or any control person, branch manager or qualified individual of the licensee with respect to any existing line of credit or warehouse credit agreement; (6) receiving notification of any of the licensee’s control persons or qualified individual or branch manager filing or having filed for bankruptcy; or (7) a decrease in the available funds required by section 36a-565.
Sec. 36a-568. (Formerly Sec. 36-236). Unique identifier of licensee. Advertising of licensee.
(a) The unique identifier of any small loan licensee shall be clearly shown on the licensee’s application forms for a small loan and all of the licensee’s solicitations or advertisements, including business cards or Internet web sites, and any other documents as established by rule, regulation or order of the commissioner.
(b) The advertising of a licensee: (1) Shall not include any statement that such licensee is endorsed in any way by this state, except it may include a statement that such licensee is licensed in this state; (2) shall not include any statement or claim which is deceptive, false or misleading; (3) shall be retained for two years from the date of its use; and (4) shall otherwise conform to the requirements of sections 36a-555 to 36a-573, inclusive, and any regulations issued thereunder.
Sec. 36a-569. (Formerly Sec. 36-237). Books and records. Reports of condition. Submission of sworn statement and other information.
(a) Each small loan licensee shall keep adequate books and records at the place of business specified in the license in such form and in such manner as the commissioner prescribes and shall preserve all books, accounts and records for the following time periods: (1) If the licensee offered, solicited, brokered, directly or indirectly arranged, placed, found or generated leads for a small loan, at least two years after the date it engaged in such activity; (2) if the licensee made, owns or services a small loan, at least two years after the date the licensee (A) no longer owns the small loan, or (B) has made the final entry on the small loan.
(b) Each licensee shall make such books and records available at such office or send such books and 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 to do so by the commissioner. Upon request, the commissioner may grant a licensee additional time to make such books and records available or send them to the commissioner.
(c) Licensees shall be required to complete any reports of condition required by the system. Any such reports of condition shall be accurately and timely filed on the system in accordance with the due dates and formats required by the system.
(d) Until such time as information is able to be captured by a system-based report, each licensee shall furnish annually, on or before January thirtieth, a sworn statement of the condition of the business of such licensee as of the preceding December thirty-first, together with such other information and statements as the commissioner may, from time to time, require. Any licensee that fails to furnish any such report of condition pursuant to subsection (c) of this section or such sworn statement or any other information required by this subsection shall be in violation of this section.
Sec. 36a-570. (Formerly Sec. 36-239). Suspension, revocation or refusal to renew license or taking of other action. Enforcement action and orders. Removal from office and employment. Temporary order to cease business.
(a) The commissioner may suspend, revoke or refuse to renew any license issued under sections 36a-555 to 36a-573, inclusive, or take any other action, in accordance with the provisions of section 36a-51, for any reason that would be sufficient grounds for the commissioner to deny an application for such license under sections 36a-555 to 36a-573, inclusive, or if the commissioner finds that the licensee or any control person of the licensee, qualified individual or branch manager with supervisory authority, 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, misappropriated funds or misrepresented, concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose any of the material particulars of any small loan transaction to anyone entitled to such information, including, but not limited to, any disclosures required by part III of chapter 669 or regulations adopted pursuant thereto; (3) violated any of the provisions of this title or any regulation or order adopted or issued pursuant thereto pertaining to any such person, or any other law or regulation applicable to the conduct of such licensee’s small loan business; or (4) failed to perform any agreement with a licensee or a borrower.
(b) Whenever it appears to the commissioner that (1) any person has violated, is violating or is about to violate any of the provisions of sections 36a-555 to 36a-573, inclusive, or any regulation adopted pursuant thereto, (2) any person is, was or would be a cause of the violation of any such provision or regulation due to an act or omission such person knew or should have known would contribute to such violation, or (3) any licensee has failed to perform any agreement with a borrower, committed any fraud, misappropriated funds or misrepresented, concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose any of the material particulars of any small loan transaction to anyone entitled to such information, including disclosures required by part III of chapter 669 or regulations adopted pursuant thereto, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.
(c) The commissioner may order a licensee to remove any individual conducting business under sections 36a-555 to 36a-573, inclusive, from office and from employment or retention as an independent contractor in the small loan business in this state in accordance with section 36a-51a.
(d) The commissioner may issue a temporary order to cease business under a license if the commissioner determines that such license was issued erroneously. Such temporary order shall be issued in accordance with subsection (j) of section 36a-24b.
Sec. 36a-571. (Formerly Sec. 36-241). License suspension.
Section 36a-571 is repealed, effective October 1, 2002.
Sec. 36a-572. (Formerly Sec. 36-242). Investigations and examinations.
Section 36a-572 is repealed, effective October 1, 2018.
Sec. 36a-573. (Formerly Sec. 36-243). Regulations.
The commissioner may adopt such regulations, in accordance with chapter 54, as the commissioner deems necessary to administer and enforce the provisions of this section and sections 36a-555 to 36a-570, inclusive.
Secs. 36a-574 to 36a-579. Reserved for future use.