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Financial Services Law Insights and Observations


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  • Connecticut amends its Money Transmission Act

    State Issues

    On June 6, Connecticut enacted HB 5211 (the “Act”), amending laws regulating virtual currency and money transmission. The Act updated "permissible investment" to include additional forms of assets and clarified that “cash” will include demand deposits and cash equivalents, such as international wires in transit to the payee, transmission receivables funded by debit cards or credit cards, and AAA-rated mutual funds. The Act also stated that after October 1, 2024, the owning, operating, solicitation, marketing, advertising, or facilitation of virtual currency kiosks will be considered to “money transmission” business and thus will require persons to be state licensed as a money transmitter.

    Additionally, the Act will require money transmission licensees to maintain a detailed accounting plan on winding down operations, as well as meet certain conditions to terminate a licensee’s businesses. Furthermore, the Act will require licensees to communicate third party disclosure information to consumers, as well as provide a physical receipt for transactions to senders. The Act also expanded the banking commissioner’s authority to adopt forms and orders governing digital assets to expressly include nonfungible tokens.

    State Issues Money Service / Money Transmitters Connecticut State Legislation Consumer Protection Cryptocurrency

  • Connecticut amends provisions of its Emergency Mortgage Assistance Payment program

    State Issues

    On May 28, the Governor of Connecticut signed SB 283 (the “Act”) into law, introducing amendments to the Connecticut Housing Finance Authority’s (CHFA) Emergency Mortgage Assistance Payment (EMAP) program. This law will extend benefits to homeowners who are in foreclosure and forbearance. Under the new legislation, homeowners must enter into a repayment agreement directly with the CHFA, which will now receive the monthly payments previously made to the loan originator.

    The Act will modify the criteria for financial hardship eligibility, remove utility and heating expenses from the total housing expense calculation, and grant the CHFA authority to factor in equity in determining a homeowner’s ability to repay timely. Additionally, the CHFA will provide greater flexibility regarding the repayment agreement terms, along with several other amendments. The Act’s provisions will go into effect on October 1.

    State Issues State Legislation Mortgages Connecticut

  • Connecticut becomes latest state to ban medical debts in credit reporting

    State Issues

    On May 9, the Governor of Connecticut approved SB 395 (the “Act”) banning health care providers from reporting medical debt to credit rating agencies. Further, the Act will prohibit hospitals and collection agents from reporting a patient to a credit rating agency, as well as initiating an action to foreclose a lien where the lien was filed to secure payment for health care (retroactive from October 1, 2022), and from garnishing wages for health care collections (also retroactive from October 1, 2022). The Act will go into effect on July 1. The CFPB wrote in favor of this bill’s enactment after the CFPB promulgated its NPRM to prohibit creditors from using medical bills in underwriting decisions, as covered by InfoBytes here.

    State Issues Connecticut State Legislation CFPB Medical Debt Credit Report

  • CFPB supports Connecticut’s bill to ban medical debt on credit reports

    Federal Issues

    On April 15, the CFPB released a letter written by Brian Shearer, the Assistant Director within the Office of Policy Planning and Strategy, throwing the Bureau’s support behind Connecticut’s new bill to bar medical debt on credit reports. The proposed bill, SB 395, has passed its committee in the first chamber. This legislation would align Connecticut with similar legislation in Colorado and New York, and the CFPB noted that the “preemption of state law is narrow under both the [FDCPA] and the [FCRA], and states may… limit the inclusion of information about a person’s allegedly unpaid medical bills on consumer reports.” The CFPB announced in September 2023 its NPRM to prohibit creditors from using medical bills in underwriting decisions (as covered by InfoBytes here). According to the letter, “[m]edical debt is categorically different from most types of consumer tradelines that typically appear on consumer reports. Consumers frequently incur medical bills in unique circumstances that differ from other forms of credit extension, and CFPB research has found that medical debt is less predictive of future consumer credit performance than other tradelines.”

    Federal Issues State Legislation Connecticut CFPB Medical Debt Credit Report

  • Connecticut Attorney General reports on Connecticut Data Privacy Act

    State Issues

    On February 1, Connecticut’s Attorney General (AG) released a report on the Connecticut Data Privacy Act (CTDPA) including information on the law and how the state enforces it. Enacted in May 2022, the CTDPA is a comprehensive consumer data privacy law which took effect on July 1, 2023. The CTDPA gives consumers in Connecticut a set of rights regarding their personal information and privacy standards for businesses handling such data. Connecticut residents can: (i) see what data companies have on them; (ii) ask for corrections on inaccurate information; (iii) request the deletion of their data; and (iv) choose not to have their personal information used for selling products, targeted advertisements, or profiling. The report noted that within the first six months the CTDPA has been in effect, the AG issued dozens of violations towards a number of information requests. It added that companies generally responded positively to the notices and updated quickly their privacy policies and consumer rights mechanisms. According to the report, while some companies initially went below the CTDPA threshold, they made changes to meet it later while a few went beyond identified areas in the notices by strengthening their disclosures. 

    The report also mentioned that beginning on January 1, 2025, businesses are required to acknowledge universal opt-out signals, reflecting consumers’ choice to opt out of targeted advertising and the sale of personal data. This mandatory provision was emphasized during Connecticut's legislative process to alleviate the consumer burden, and it has been enacted into law. Finally, the report discusses possible expansions and clarifications to the CTDPA for the legislature to consider.  

    State Issues Connecticut State Attorney General Privacy, Cyber Risk & Data Security

  • FTC, Connecticut file complaint against auto dealer for deceptive and unfair practices

    Federal Issues

    On January 4, the FTC and the State of Connecticut issued a joint complaint against an auto dealer and its owner for alleged violations of the FTC Act and the Connecticut Unfair Trade Practices Act. According to the complaint, the dealership allegedly imposed additional fees, including certification fees, add-on charges, and government charges, without consumers’ explicit consent. The FTC alleged that the dealership made misrepresentations regarding advertised prices, charging consumers additional fees when they would attempt to purchase vehicle, and charged customers for certification fees for vehicles that had been advertised as “certified.” The complaint also alleged that the dealership would charge consumers for add-ons, such as GAP insurance, service contracts, maintenance contracts, and total loss protection with or without express consent, and at times after the consumer specifically declined the add-on. The complaint further alleged that the dealership often stated in advertisements that a vehicle was certified but did not report the sale of that vehicle or pay the certification fee to the manufacturer, so consumers did not receive the actual benefits. The complaint seeks consumer redress, disgorgement of ill-gotten money, civil penalties, and a permanent injunction.

    Federal Issues State Issues FTC Connecticut Deceptive Enforcement FTC Act

  • 2nd Circuit: Reverse and remand a buy-now-pay-later suit


    On November 3, the U.S. Court of Appeals for the Second Circuit reversed and remanded a district court’s decision to deny a buy now pay later servicer’s (defendant) motion to compel arbitration in a class action. The plaintiffs alleged the defendant violated the Connecticut Unfair Trade Practices Act, among other things, after the defendant’s charges incurred overdraft fees on the plaintiff’s checking account. The defendant argued that the consumer agreed, on multiple occasions, to the mandatory arbitration provisions in the servicer’s terms and conditions when she used its services. The district court concluded that the plaintiff did not have “reasonably conspicuous notice of and unambiguously manifest assent to [defendant’s] terms” and therefore plaintiff was not bound by the mandatory arbitration provisions in the defendant’s terms.

    The 2nd Circuit panel of three judges identified “several factors” in its finding that the plaintiff had reasonably conspicuous notice, including that defendant’s interface was “uncluttered” adding that “[a] reasonable internet user, therefore, could not avoid noticing the hyperlink to [defendant’s] terms when the user selects ‘confirm and continue’ on the [application].” Further, the court found that the plaintiff “unambiguously manifested her assent” to the defendant’s terms and conditions.


    Courts Consumer Finance Buy Now Pay Later Appellate Connecticut Debt Collection

  • Connecticut implements measures for auto-renewals

    State Issues

    On June 28, the Connecticut governor signed HB 5314 (the “Act”), enacting measures relating to automatic renewal offers and consumer agreements. The Act, among other things, includes newly defined terms such as “automatic renewal provision.” The Act stipulates that any business that enters into a consumer agreement that contains an automatic renewal or continuous services provision must provide various consumer notices and enable any consumer who enters into such an agreement online to terminate online. Notices include a description of the actions the consumer must take to terminate, and if disclosed electronically, a link or other electronic means. Also, to be disclosed before renewal, in any consumer agreement containing an automatic renewal provision, must be the amount of the recurring charge and the amount of the change if the charges are subject to change (if such change in amount is known by the business). The business must further disclose the length of the term for such an agreement, unless the consumer chooses the length of the term, as well as any minimum purchase obligations and contact information for the business. The business must also establish a means for communication with consumers, such as email, toll-free phone number, or website if the agreement is contracted online. The Act also stipulates the nature of the disclosures for consumers before entering such an agreement, before the business makes a material change to the terms of the agreement, and before a consumer enters an agreement that offers a gift or free trial period. Additionally, the Act provides that no person doing business can impose any charge or fee for providing bills to consumers in paper form.

    The Act is effective October 1.

    State Issues State Legislation Connecticut Consumer Finance Auto-Renewal

  • Connecticut establishes rules for virtual currency kiosks

    State Issues

    On June 27, the Connecticut governor signed HB 6752 (the “Act”) to establish certain requirements for owners or operators of virtual currency kiosks in the state. Among other things, the commissioner has the authority to establish regulations, forms, and orders that govern the use of digital assets, such as virtual currencies and stablecoins, by regulated entities and individuals. When adopting, amending, or rescinding any such regulation, form, or order, the commissioner may consult with federal financial services regulators, regulators from other states, as well as other stakeholders and industry professionals to promote the consistent treatment and handling of digital assets. Definitions for “virtual currency address,” “virtual currency kiosk,” and “virtual currency wallet” have also been added.

    The Act further provides that prior to engaging in an initial virtual currency transaction with a customer, the owner or operator of a virtual currency kiosk is required to provide clear and conspicuous written disclosures in English regarding the material risks associated with virtual currency. These disclosures should cover several key points, including a prominent and bold warning acknowledging that losses resulting from fraudulent or accidental transactions may not be recoverable, transactions in virtual currency are irreversible, and that the nature of virtual currency may lead to an increased risk of fraud or cyber-attack. Disclosures must also address a customer’s liability for unauthorized virtual currency transactions, a customer’s right to stop payment for a preauthorized virtual currency transfer (along with the process to initiate a stop-payment order), and circumstances in which the owner or operator will disclose information regarding the customer’s account to third parties, unless required by a court or government order. Additionally, customers must be provided upfront information relating to the amount of the transaction, any fees, expenses, and charges, and any applicable warnings. It is the responsibility of the owner or operator of a virtual currency kiosk to ensure that every customer acknowledges the receipt of all disclosures mandated by the Act, and to provide receipts upon completion of any virtual currency transaction. The Act is effective October 1.

    State Issues Digital Assets Fintech Virtual Currency State Legislation Connecticut

  • Connecticut amends requirements for small lenders

    On June 29, SB 1033 (the “Act) was enacted in Connecticut to amend the banking statutes. The Act, among other things, (i) redefines “small loan”; (ii) redefines “APR” to be calculated based on the Military Lending Act and include the cost of ancillary products among other fees as part of the “finance charge”; (iii) requires more people to obtain small loan licenses; (iv) requires that certain small loans are worth $5,000-$50,000, which is intended to capture larger loans particularly for student borrowers who may enter into income sharing agreements; (v) prohibits small loans from providing for an advance exceeding an unpaid principal of $50,000; and (vi) eliminates a requirement that certain people demonstrate an ability to supervise mortgage servicing offices in person. The Act also includes new licensing provisions, adding that any person who acts as an agent or service provider for a person who is exempt from licensure requires licensure if (i) they have a predominant economic interest in a small loan; (ii) they facilitate and hold the right to purchase the small loan, receivables or interest in the small loan; or (iii) the person is a lender who structured the loan to evade provisions in the Act. If the facts and circumstances deem the person a lender, they must be licensed under the Act.

    Licensing State Issues Small Dollar Lending Loan Origination Connecticut State Legislation


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