PA 07-118—sHB 7073

Banks Committee

Judiciary Committee


SUMMARY: This act prohibits first and second mortgage lenders and brokers from engaging in any unfair or deceptive act or practice, as defined in the act, when soliciting a mortgage secured by residential property in Connecticut if the solicitation is based in any way on a mortgage trigger lead. It makes a violation of its provisions an unfair or deceptive trade practice under the Connecticut Unfair Trade Practices Act (CUTPA).

EFFECTIVE DATE: October 1, 2007



The act defines a “mortgage trigger lead” as a consumer report that is (1) obtained in accordance with the provisions of the federal Fair Credit Reporting Act (FCRA) governing the issuance of consumer reports when the transaction is not initiated by the consumer and (2) issued as a result of an inquiry to a consumer reporting agency (CRA) in connection with a consumer's credit application. The act excludes from the definition a consumer report obtained by a lender that holds or services the applicant's existing debt.

Unfair or Deceptive Acts or Practices

The act makes it an “unfair or deceptive act or practice” to:

1. fail to clearly and conspicuously state in the initial phase of the solicitation that (a) the solicitor is not affiliated with the lender or broker with which the consumer initially applied and (b) the solicitation is based on information about the consumer purchased from a CRA without the initial lender's or broker's permission or knowledge;

2. fail to comply with FCRA's provisions on pre-screened offers of credit; or

3. knowingly or negligently use information from a mortgage trigger lead to solicit consumers who have, in accordance with FCRA, opted-out of receiving pre-screened offers of credit or who are on the federal or state “Do Not Call” list.



The law prohibits businesses from engaging in unfair and deceptive acts or practices. CUTPA allows the consumer protection commissioner to issue regulations defining what constitutes an unfair trade practice, investigate complaints, issue cease and desist orders, order restitution in cases involving less than $5,000, enter into consent agreements, ask the attorney general to seek injunctive relief, and accept voluntary statements of compliance. The Act also allows individuals to sue. Courts may issue restraining orders; award actual and punitive damages, costs, and reasonable attorneys fees; and impose civil penalties of up to $5,000 for willful violations and $25,000 for violation of a restraining order.

Fair Credit Reporting Act (FCRA)

FCRA promotes the accuracy, fairness, and privacy of information in the files of CRAs. It allows CRAs to issue “consumer reports” in a number of circumstances, but contains special provisions for situations where the consumer does not initiate the transaction (i. e. , for unsolicited pre-screened offers). Among other things, FCRA prohibits an agency from furnishing a consumer report in connection with any credit or insurance transaction not initiated by the consumer unless:

1. the consumer authorizes it or

2. the transaction consists of a “firm offer” of credit or insurance, the CRA gives consumers an opportunity to be excluded from such pre-screened lists that the agency provides without the consumer's consent, and the consumer has not exercised his right to be excluded.

The law also places disclosure duties on people who use the reports to solicit consumers. They must accompany each written solicitation with a clear and conspicuous statement that:

1. information in the consumer's credit report was used;

2. the consumer received the offer of credit or insurance because he satisfied the criteria for creditworthiness or insurability under which he was selected;

3. if applicable, the credit or insurance offer may be denied if, after the consumer responds, he does not meet the selection or other applicable criteria or does not furnish any required collateral; and

4. the consumer has a right to prohibit information in his file at the agency from being used in any transaction not initiated by him and can exercise this right by writing to a specific address or calling a toll-free number.

FCRA does not address how the disclosures should be made for telephone solicitations.

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