Debt Buyers to be Licensed in Connecticut
This DBA Member Alert is to advise our members of a new licensing requirement in the state of Connecticut that will take effect October 1, 2013. The new requirement will impact all purchasers of delinquent or defaulted claims with Connecticut addresses in their portfolios.
Connecticut Senate Bill 911, sponsored by the Joint Legislative Committee on Banking at the request of the Connecticut Department of Banking, expands Connecticut’s definition of “consumer collection agency” to include those entities “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.” The language impacting debt buyers can be found in sections 22 through 29 of the bill.
Connecticut has required Third Party Collection Agencies to be licensed as “consumer collection agencies” since the 1950s but the definition was never expansive enough to include the activities of debt buyers prior to the adoption of this act.
The bill passed the legislature by unanimous votes in both houses. The governor’s signature is expected no later than July 15th. Given the industry’s prior experience with state implementation of licensing laws, DBA would encourage its members to begin familiarizing itself with the requirements of the law so that they may expedite their application immediately following the Governor’s approval. Information concerning licensure can be found on the Connecticut Department of Banking website.
DBA International, through our Connecticut lobbyist, worked closely with the Department of Banking to secure a number of friendly amendments to the bill including:
- Removal of an outdated statutory prohibition that prevented consumer collection agencies from purchasing debt,
- Exemption of debt buyers from collection agency bonding requirements,
- Flexibility for consumer collection agencies to have “access” rather than “possession” of the contract for purposes of obtaining post charge-off costs of collection,
- Replacement of a vague and confusing consumer notice requirement concerning out of statute debt that was ripe for interpretation and litigation with the notice statement favored by the Federal Trade Commission.