(a) No such license and no renewal thereof shall be granted to a consumer collection agency, except a consumer collection agency engaged solely in the business of debt buying, unless the applicant has filed with the commissioner a bond to the people of the state in the penal sum of twenty-five thousand dollars, approved by the Attorney General as to form and by the commissioner as to sufficiency of the security thereof. Such bond shall be conditioned that such licensee shall well, truly and faithfully account for all funds entrusted to the licensee and collected and received by the licensee in the licensee's capacity as a consumer collection agency. Any person who may be damaged by the wrongful conversion of any creditor, consumer debtor, property tax debtor or federal income tax debtor funds received by such consumer collection agency may proceed on such bond against the principal or surety thereon, or both, to recover damages. The commissioner may proceed on such bond against the principal or surety thereon, or both, to collect any civil penalty imposed upon the licensee pursuant to subsection (a) of section 36a-50 and, effective April 1, 2019, any restitution imposed pursuant to subsection (c) of section 36a-50, and any unpaid costs of examination as determined pursuant to section 36a-65. The proceeds of the bond, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the licensee in the event of bankruptcy of the licensee and shall be immune from attachment by creditors and judgment creditors. The bond shall run concurrently with the period of the license granted to the applicant, and the aggregate liability under the bond shall not exceed the penal sum of the bond.
(b) The surety company shall have the right to cancel the bond at any time by a written notice to the licensee and the commissioner stating the date cancellation shall take effect. If the bond is issued electronically on the system, written notice of cancellation may be provided by the surety company to the licensee and the commissioner through the system at least thirty days prior to the date of cancellation. Any notice of cancellation not provided through the system shall be sent by certified mail to the licensee and the commissioner at least thirty days prior to the date of cancellation. A surety bond shall not be cancelled unless the surety company notifies the commissioner in writing not less than thirty days prior to the effective date of cancellation. After receipt of such notification from the surety company, the commissioner shall give written notice to the licensee of the date such bond cancellation shall take effect. The commissioner shall automatically suspend the license on such date, unless the licensee prior to such date submits a letter of reinstatement of the bond from the surety company or a new bond or the licensee has ceased business and has surrendered its license. After a license has been automatically suspended, the commissioner shall (1) give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51, and (2) require the licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(1971, P.A. 539, S. 4; P.A. 02-111, S. 48; P.A. 03-262, S. 2; P.A. 04-69, S. 31; P.A. 09-208, S. 36; P.A. 13-253, S. 29; P.A. 16-65, S. 49; P.A. 18-173, S. 80.)
History: Sec. 42-128a transferred to Sec. 36a-802 in 1995; P.A. 02-111 amended section by changing “him” to “the licensee”, changing “him in his” to “the licensee in the licensee's”, changing “trust funds” to “creditor, consumer debtor or property tax debtor funds” and adding provision authorizing commissioner to proceed on bond to collect civil penalty imposed on licensee pursuant to Sec. 36a-50(a); P.A. 03-262 substituted “funds received” for “funds held” and made a technical change, effective July 9, 2003; P.A. 04-69 designated existing provisions as Subsec. (a) and added Subsec. (b) re cancellation of surety bond and automatic suspension of license; P.A. 09-208 amended Subsec. (a) by changing amount of required bond from $5,000 to $25,000 and amended Subsec. (b) by requiring commissioner to give written notice to licensee of effective date of a bond cancellation and to automatically suspend a license on effective date of a bond cancellation unless licensee takes certain actions before such date, and by authorizing commissioner to require licensee to take or refrain from taking certain actions; P.A. 13-253 amended Subsec. (a) to add “to a third party consumer collection agency”; P.A. 16-65 amended Subsec. (a) by adding reference to federal income tax debtor; P.A. 18-173 amended Subsec. (a) by replacing “third party consumer collection agency” with “consumer collection agency, except a consumer collection agency engaged solely in the business of debt buying,”, and adding provision effective April 1, 2019 re restitution imposed and unpaid costs of examination, amended Subsec. (b) by adding reference to commissioner, deleting provision re sending notice by certified mail, adding provisions re notice of cancellation if bond issued electronically on the system, adding provision re notice of cancellation not provided through the system to be sent by certified mail to licensee and commissioner, designated existing provisions re notice to licensee of automatic suspension as Subdiv. (1), and provision re commissioner's authority to require licensee to take or refrain from taking action as Subdiv. (2) and amending same by replacing “action as in the opinion of the commissioner will effectuate the purposes of this section” with “action as the commissioner deems necessary to effectuate the purposes of this section”.