Nearly a year after dropping administrative proceedings against small-dollar lenders owned by Native American tribes, the Connecticut Department of Banking has assessed a penalty on a Kansas-based company that collected debt from Connecticut consumers on behalf of tribal lenders.
TrueAccord, a digital debt collection agency, has agreed to pay a $10,000 civil penalty to the Department of Banking and provide about $44,000 in refunds to Connecticut consumers who were charged interest rates on small-dollar loans that exceeded amounts allowed by the state.
The Department of Banking said in a statement yesterday that TrueAccord violated Connecticut law by collecting on the loans that had been made by lenders that were not licensed to operate in Connecticut and were affiliated with federally recognized Native American tribes.
As part of a consent order with Banking Commissioner Jorge Perez issued on June 28, TrueAccord did not admit or deny the allegations.
“[B]oth the Commissioner and TrueAccord acknowledge the possible consequences of formal administrative proceedings, and TrueAccord voluntarily agrees to consent to the entry of the sanctions imposed below solely for the purpose of obviating the need for formal administrative proceedings concerning the allegations set forth herein,” the consent order said.
The consent order called for TrueAccord to refund to Connecticut consumers by July 1 the amounts that the company had collected on behalf of Native American tribes.
Perez had dismissed administrative proceedings and civil penalties in September 2021 against two Oklahoma-based lenders owned by the Otoe-Missouria Tribe – Great Plains Lending and Clear Creek Lending – following orders from Connecticut state courts. The Connecticut Supreme Court had found that Great Plains had met its burden of demonstrating that it was an arm of the tribe.
The Department of Banking said in yesterday’s statement said that while tribal sovereign immunity shields federally recognized tribes and their entities from enforcement actions involving certain violations of state law, the immunity does not extend to collection agencies or other people working on behalf of the tribes.
TrueAccord must also stop collecting on any loans that are not compliant with Connecticut law, including small loans made by unlicensed lenders affiliated with federally-recognized Native American tribes, the consent order said.
“While the Department has done an excellent job in minimizing what is widely known as ‘payday lending’ here in Connecticut, we are still seeing some unlicensed out-of-state companies engaging in this practice and consumer collection agencies attempting to collect on this debt,” Perez said in yesterday’s statement. “I want to be clear, that any company originating loans in this state which violate Connecticut law with excessive interest rates and collection agencies attempting to collect on this debt will be investigated by the Department.”