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IN THE MATTER OF: NATIONAL CREDIT ("National Credit Adjusters") |
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CONSENT ORDER |
WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Part XII of Chapter 669, Sections 36a-800 to 36a-812, inclusive, of the Connecticut General Statutes, “Consumer Collection Agencies”, and the regulations promulgated thereunder, Sections 36a-809-6 to 36a-809-17, inclusive, of the Regulations of Connecticut State Agencies (“Regulations”), and Part III of Chapter 668, Sections 36a-555 to 36a-573, inclusive, of the Connecticut General Statutes, “Small Loan Lenders”;
WHEREAS, National Credit Adjusters is a Kansas limited liability company with an office located at 327 West 4th Avenue, Hutchinson, Kansas;
WHEREAS, National Credit Adjusters is not currently licensed to act as a consumer collection agency in Connecticut;
WHEREAS, the Commissioner, through the Consumer Credit Division of the Department of Banking (“Division”), conducted an investigation pursuant to Section 36a-17 of the Connecticut General Statutes into the activities of National Credit Adjusters to determine if it had violated, was violating or was about to violate the provisions of the Connecticut General Statutes and Regulations within the jurisdiction of the Commissioner;
WHEREAS, as a result of such investigation, the Commissioner alleges that on or about October 1, 2013 to the present, National Credit Adjusters has acted within this state as a consumer collection agency without the requisite consumer collection agency license, in violation of Section 36a-801(a) of the 2016 Supplement to the General Statutes;
WHEREAS, the Commissioner alleges that National Credit Adjusters collected or attempted to collect on no less than 1,254 loans from Connecticut borrowers which contained interest rates in excess of twelve per cent (12%) per annum computed on a daily basis on the respective unpaid balances, in violation of Section 36a-555 of the 2016 Supplement to the General Statutes in effect prior to July 1, 2016, and effective July 1, 2016, Section 36a-558 of the Connecticut General Statutes, as amended by Public Act 16-65, which loans are void and unenforceable pursuant that section;
WHEREAS, the Commissioner believes that such allegation would support the initiation of enforcement proceedings against National Credit Adjusters, including, without limitation, proceedings to issue a cease and desist order against National Credit Adjusters pursuant to Section 36a-804(b) of the 2016 Supplement to the General Statutes, Section 36a-570(b) of the Connecticut General Statutes, as amended by Public Act 16-65, and Section 36a-52(a) of the Connecticut General Statutes, impose a civil penalty of up to one hundred thousand dollars ($100,000) per violation upon National Credit Adjusters pursuant to Section 36a-804(b) of the 2016 Supplement to the General Statutes, Section 36a-570(b) of the Connecticut General Statutes, as amended by Public Act 16-65, and Section 36a-50(a) of the Connecticut General Statutes, and issue an order to make restitution pursuant to Section 36a-804(b) of the 2016 Supplement to the General Statutes, Section 36a-570(b) of the Connecticut General Statutes, as amended by Public Act 16-65, and Section 36a-50(c) of the Connecticut General Statutes;
WHEREAS, initiation of such enforcement proceedings would constitute a “contested case” within the meaning of Section 4-166(4) of the 2016 Supplement to the General Statutes;
WHEREAS, Section 4-177(c) of the Connecticut General Statutes and Section 36a-1-55(a) of the Regulations of Connecticut State Agencies provide that a contested case may be resolved by consent order, unless precluded by law;
WHEREAS, both the Commissioner and National Credit Adjusters acknowledge the possible consequences of formal administrative proceedings, and National Credit Adjusters voluntarily agrees to consent to the entry of the sanctions imposed below without admitting or denying the allegation set forth herein and solely for the purpose of obviating the need for formal administrative proceedings concerning the allegation set forth herein;
WHEREAS, National Credit Adjusters specifically assures the Commissioner that the violation alleged herein shall not occur in the future;
WHEREAS, nothing in this Consent Order shall be construed to prevent any Connecticut debtor from pursuing any right or remedy at law;
WHEREAS, no agreement, settlement, or release between National Credit Adjusters and any Connecticut debtor or class shall preclude or in any way limit National Credit Adjusters’ obligations in this Consent Order;
WHEREAS, National Credit Adjusters acknowledges that this Consent Order is a public record and is a reportable event for the purposes of the Nationwide Multistate Licensing System and Registry (“NMLS”), as applicable;
AND WHEREAS, National Credit Adjusters, through its execution of this Consent Order, voluntarily agrees to waive its procedural rights, including a right to a notice and an opportunity for a hearing as it pertains to the allegation set forth herein, and voluntarily waives its right to seek judicial review or otherwise challenge or contest the validity of this Consent Order.
CONSENT TO ENTRY OF SANCTIONS
WHEREAS, National Credit Adjusters, and all subsidiaries, affiliates, successors, assignees, agents, representatives and employees, through its execution of this Consent Order, consents to the Commissioner’s entry of a Consent Order imposing the following sanctions:
| 1. | No later than August 31, 2016, National Credit Adjusters shall remit to the Department of Banking by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut”, the sum of Forty Thousand Dollars ($40,000) as a civil penalty; | ||||||
| 2. | No later than September 30, 2016, National Credit Adjusters shall provide each Connecticut debtor listed in Exhibit A with an additional credit towards their account balance equal to the sum that National Credit Adjusters has collected payments from each debtor since the account was placed with National Credit Adjusters; provided, however, that nothing in this paragraph standing alone shall require National Credit Adjusters to mail refund checks to Connecticut debtors; | ||||||
| 3. | No later than October 31, 2016, National Credit Adjusters shall mail the form letter (“Form”) attached as Exhibit C to each Connecticut debtor identified in Exhibit B to each debtor’s most current mailing address. The Form shall be sent in an envelope with a clear and conspicuous statement on the front of the envelope stating in bold, uppercase letters: “IMPORTANT INFORMATION ENCLOSED BASED ON A SETTLEMENT WITH THE STATE OF CONNECTICUT.” National Credit Adjusters shall utilize industry standard practices for locating debtors, including skip tracing and the National Change of Address System, to identify the current mailing address for each Connecticut debtor listed in Exhibit B before mailing the Form. National Credit Adjusters shall mail refund checks, together with the Form, to Connecticut debtors in accordance with the refund they are owed, as indicated in the “Amount Collected” column of Exhibit B. All refund checks that National Credit Adjusters mails pursuant to this Consent Order shall be valid for at least sixty (60) days after the date of issue of the check and shall be mailed to eligible Connecticut debtors within five (5) days of the date of issue. Should any Connecticut debtor listed in Exhibit B entitled to a refund not cash a check after more than sixty (60) days have lapsed since the Form and refund check are mailed to them in accordance with this paragraph, that debtor’s refund shall be reduced to an additional civil penalty to be paid by National Credit Adjusters by cashier’s check, certified check or money order made payable to the “Treasurer, State of Connecticut.” Such additional civil penalty shall be remitted to the Department no later than January 3, 2017. National Credit Adjusters shall provide any refund payment information requested by the Division, including, without limitation, the date a refund check was issued and mailed and the status of such refund payment, to Carmine Costa, Director, Consumer Credit Division, Department of Banking, 260 Constitution Plaza, Hartford, Connecticut 06103-1800 or carmine.costa@ct.gov, within three (3) business days of such request, and shall separately provide two (2) monthly reports, due November 30, 2016 and December 31, 2016, respectively, listing the names and addresses of Connecticut debtors listed in Exhibit B to whom National Credit Adjusters has mailed refund checks and the amount of each check; | ||||||
| 4. | No later than October 31, 2016, National Credit Adjusters shall reduce each account balance identified in Exhibit B attached hereto (“Payday Loan Accounts”) to zero (0) to reflect that no money under the Payday Loan Accounts is owed; release and discharge all remaining alleged indebtedness on the Payday Loan Accounts; mark the Payday Loan Account loans “paid in full”; and cease collection efforts on the Payday Loan Accounts; | ||||||
| 5. |
With respect to the Payday Loan Accounts listed in Exhibit B, National Credit Adjusters shall:
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| 6. | No later than thirty (30) days after October 31, 2016, National Credit Adjusters shall submit a universal data form (“UDF”) or equivalent form to the three major credit reporting agencies (TransUnion, Experian, Inc. and Equifax (“Agencies”)) requesting that the Agencies delete the tradelines regarding the Payday Loan Accounts and provide evidence of each submission to the Commissioner in writing. If at any time following sixty (60) days after National Credit Adjusters submits the UDF or equivalent form to the Agencies the Commissioner determines that one or more of the Agencies have not complied with the National Credit Adjusters’ request as set forth in this paragraph, National Credit Adjusters, within thirty (30) days following the Commissioner’s written notice to National Credit Adjusters that an Agency has not complied with such request, shall re-contact all Agencies that have not updated the credit reports for the Payday Loan Accounts and again request that the Payday Loan Accounts be deleted; | ||||||
| 7. | National Credit Adjusters shall not collect or attempt to collect from any account listed in Exhibit A unless and until it applies for and subsequently receives a consumer collection agency license in Connecticut; and | ||||||
| 8. | National Credit Adjusters shall immediately cease and desist from acting as a consumer collection agency in Connecticut without a license, in violation of Section 36a-801(a) of the 2016 Supplement to the General Statutes, and immediately cease and desist from collecting or attempting to collect on small loans not made in compliance with Sections 36a-555 to 36a-573, inclusive, of the Connecticut General Statutes. |
CONSENT ORDER
NOW THEREFORE, the Commissioner enters the following:
| 1. | The Sanctions set forth above be and are hereby entered; |
| 2. | Upon issuance of this Consent Order by the Commissioner, this matter will be resolved and the Commissioner will not take any future enforcement action against National Credit Adjusters based upon the allegation contained herein; provided that issuance of this Consent Order is without prejudice to the right of the Commissioner to take enforcement action against National Credit Adjusters based upon a violation of this Consent Order or the matters underlying its entry, if the Commissioner determines that compliance with the terms herein is not being observed or if any representation made by National Credit Adjusters and reflected herein is subsequently discovered to be untrue; |
| 3. | Subject to the foregoing, and so long as this Consent Order is promptly disclosed by National Credit Adjusters and its control persons on NMLS, as applicable, nothing in the issuance of this Consent Order shall adversely affect the ability of National Credit Adjusters to apply for or obtain a license or renewal license under Part XII of Chapter 669, Sections 36a-800 to 36a-812, inclusive, of the Connecticut General Statutes; |
| 4. | In the event of nonperformance or violation by National Credit Adjusters of any term or condition set forth in this Consent Order, including, without limitation, National Credit Adjusters’ obligation to reduce the Payday Loan Accounts balances to zero (0) and request deletion of their tradelines to the Agencies, as set forth in paragraphs 3 and 4 of the Consent to Entry of Sanctions above, the Commissioner shall issue to National Credit Adjusters a written notice of violation. In the event that the claimed violation remains unresolved after the expiration of thirty (30) days from the Commissioner’s transmission of such notice, National Credit Adjusters consents to the immediate entry and imposition of an additional civil penalty in the amount of Ten Thousand Dollars ($10,000), knowingly, willfully and voluntarily waiving its right to a notice and an opportunity for a hearing in conjunction therewith. Any modification or extension of the deadlines imposed upon National Credit Adjusters, including the deadlines for repayment and submission of UDFs, absent prior written authorization from and prior review by the Commissioner, shall be construed as a violation of this Consent Order, except that such authorization shall not be unreasonably withheld, and an extension of fifteen (15) calendar days shall be deemed presumptively reasonable for the first such request for an extension; and |
| 5. | This Consent Order shall become final when issued. |
Issued at Hartford, Connecticut
this 15th day of September 2016. ______/s/__________
Jorge L. Perez
Banking Commissioner
I, Mark Fletchall, state on behalf of National Credit Adjusters, L.L.C., that I have read the foregoing Consent Order; that I know and fully understand its contents; that I am authorized to execute this Consent Order on behalf of National Credit Adjusters, L.L.C.; that National Credit Adjusters, L.L.C., agrees freely and without threat or coercion of any kind to comply with the sanctions entered and terms and conditions ordered herein; and that National Credit Adjusters, L.L.C., voluntarily agrees to enter into this Consent Order, expressly waiving the procedural rights set forth herein as to the matters described herein.
By: ________/s/___________
Name: Mark Fletchall
Title: General Counsel
National Credit Adjusters, L.L.C.
State of: Kansas
County of: Reno
On this the 31st day of August 2016, before me, Graciela Grajeda, the undersigned officer, personally appeared Mark A. Fletchall who acknowledged himself/herself to be the General Counsel of National Credit Adjusters, L.L.C., a member managed/manager managed limited liability company, and that he/she as such General Counsel, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company by himself/herself as General Counsel.
In witness whereof I hereunto set my hand.
________/s/___________
Notary Public
Date Commission Expires: 11/06/19