On September 24, the Connecticut Department of Banking entered into a consent order with a company that provided advances on potential personal injury judgments, alleging that the company was operating as a small loan lender without the required state license. The consent order ended litigation stemming from a 2023 order by the Department concerning alleged unlicensed small loan activity. The Department found that the company’s litigation funding advances to Connecticut borrowers were “small loans” under the state’s Small Loan and Related Activities Act, and that the company’s failure to obtain a small loan company license violated Sections 36a-556(a)(1) and 36a-558(c)(1) of the Connecticut General Statutes. The Department also alleged the company failed to provide certain information requested by the Department during its investigation.
Under the consent order, the company agreed to cease and desist making or collecting on small loans in Connecticut without a license and to cooperate with the Department in any future investigations. The company agreed to create a $50,000 fund to provide restitution to Connecticut borrowers who paid sums greater than what would have been payable at a 12 percent interest rate on the advanced amount, and to maintain the restitution fund for six months. Any remaining funds at the end of that period will be paid as a civil penalty to the Department of Banking. Finally, the company agreed to withdraw its pending appeal of the Department’s prior enforcement action, given this consent order vacated the 2023 final order.
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