State of Connecticut Department of Banking

Small-owned Businesses: Join us for a “Meet the Bankers” event on Wednesday, May 8th at 5:30 p.m. at CT Community College Housatonic in Bridgeport. Click here for more information. Pequeñas empresas: Participe con nosotros en el evento “Conozca a los Banqueros” el miércoles 8 de mayo a las 5:30 p.m. en CT Community College Housatonic en Bridgeport. Presione aquí para más información.

Department of Banking logo
Governor Rell:  Legislation to Target Deceptive Debt Relief

This news release was issued by the Governor's Office

November 14, 2008

Governor M. Jodi Rell today announced that she will propose legislation aimed at protecting consumers from the predatory practices of individuals intending to make money for debt negotiation, which may include foreclosure prevention services. 

“These ‘debt negotiators’ are in the business of charging high fees for services that may be performed for a nominal fee or even free of charge,” Governor Rell said.  “As more Connecticut residents face financial turmoil and possibly even foreclosure, they are answering the solicitations of individuals or companies that promise help.  Unfortunately, this so-called help is nothing more than an attempt to charge unnecessary fees for services that these consumers could have received for free or for a nominal fee with a reputable company.”

The proposed legislation will:

  • Amend the existing definition of “debt adjuster” to include persons who offer debt negotiation services and require them to obtain a license as a non-profit organization and to maintain the required bond to ensure the consumer’s money is safe.
  • Provide the state Banking Commissioner with stronger enforcement tools to prevent the fraudulent use of licenses.
  • Authorize the Commissioner to issue an order imposing a civil penalty against any person that violates the outlined provisions.
  • Include numerous other initiatives to protect the consumers from predatory practices.

“My goal is to prevent innocent people from being defrauded,” Governor Rell said.  “This proposed legislation will send a message to the industry that preying on consumers in financial distress will not be tolerated.  This can be a very vulnerable time in someone’s life and we must take proactive steps to ensure the citizens of this state have adequate protections against unscrupulous behavior.”

The legislation will be submitted to the Banks Committee of the General Assembly in January at the start of the 2009 legislative session.