DOB: CreditAnswers, LLC - NOI CD-CP

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IN THE MATTER OF:

CREDITANSWERS, LLC
a/k/a DEBT MEDIATION INITIATIVE
("CreditAnswers")

CREDITARBITRATORS, LLC
("CreditArbitrators")

  (collectively "Respondents")

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NOTICE OF INTENT TO ISSUE
ORDER TO CEASE AND DESIST

NOTICE OF INTENT TO IMPOSE
CIVIL PENALTY

AND

NOTICE OF RIGHT TO HEARING


I. LEGAL AUTHORITY AND JURISDICTION

The Banking Commissioner (“Commissioner”) is charged with the administration of Sections 36a-671 to 36a-671d, inclusive, of the Connecticut General Statutes contained in Part II of Chapter 669 of the Connecticut General Statutes, “Debt Adjusters and Debt Negotiation”.
 
Pursuant to the authority granted by Section 36a-17(a) of the Connecticut General Statutes, the Commissioner, through the Consumer Credit Division of the Department of Banking, has investigated the activities of Respondents to determine if they have violated, are violating or are about to violate the provisions of the Connecticut General Statutes within the jurisdiction of the Commissioner.
 
Section 36a-17(a) of the Connecticut General Statutes provides that:

The commissioner, in the commissioner’s discretion, may make such public or private investigations or examinations within or outside this state, concerning any person subject to the jurisdiction of the commissioner, as the commissioner deems necessary to carry out the duties of the commissioner.

Section 36a-52(a) of the Connecticut General Statutes provides, in pertinent part, that:

Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any provision of the general statutes within the jurisdiction of the commissioner, . . . the commissioner may send a notice to such person by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt.  The notice shall be deemed received by the person on the earlier of the date of actual receipt, or seven days after mailing or sending.  Any such notice shall include:  (1) A statement of the time, place, and nature of the hearing; (2) a statement of the legal authority and jurisdiction under which the hearing is to be held; (3) a reference to the particular sections of the general statutes . . . alleged to have been violated; (4) a short and plain statement of the matters asserted; and (5) a statement indicating that such person may file a written request for a hearing on the matters asserted within fourteen days of receipt of the notice.  If a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice, unless the person fails to appear at the hearing.  After the hearing, the commissioner shall determine whether an order to cease and desist should be issued against the person named in the notice.  If the person does not request a hearing within the time specified in the notice or fails to appear at the hearing, the commissioner shall issue an order to cease and desist against the person.  No such order shall be issued except in accordance with the provisions of chapter 54.

Section 36a-50(a) of the Connecticut General Statutes provides, in pertinent part, that:

(1)  Whenever the commissioner finds as the result of an investigation that any person has violated any provision of the general statutes within the jurisdiction of the commissioner, . . . the commissioner may send a notice to such person by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt.  The notice shall be deemed received by the person on the earlier of the date of actual receipt or seven days after mailing or sending.  Any such notice shall include:  (A) A statement of the time, place, and nature of the hearing; (B) a statement of the legal authority and jurisdiction under which the hearing is to be held; (C) a reference to the particular sections of the general statutes . . . alleged to have been violated; (D) a short and plain statement of the matters asserted; (E) the maximum penalty that may be imposed for such violation; and (F) a statement indicating that such person may file a written request for a hearing on the matters asserted within fourteen days of receipt of the notice.

(2)  If a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice unless such person fails to appear at the hearing.  After the hearing, if the commissioner finds that the person has violated any such provision, . . . the commissioner may, in the commissioner’s discretion and in addition to any other remedy authorized by law, order that a civil penalty not exceeding one hundred thousand dollars per violation be imposed upon such person.  If such person does not request a hearing within the time specified in the notice or fails to appear at the hearing, the commissioner may, as the facts require, order that a civil penalty not exceeding one hundred thousand dollars per violation be imposed upon such person.

(3)  Each action undertaken by the commissioner under this subsection shall be in accordance with the provisions of chapter 54.


II.  MATTERS ASSERTED

1. Respondents are Texas limited liability companies with a place of business at 6200 Tennyson Parkway, Suite 200, Plano, Texas.  William Loughborough is listed as the Manager of Respondents.
2. By letter dated February 2, 2010, the Commissioner informed CreditAnswers that it appeared to be engaging in the business of debt negotiation in this state without a license and advised the entity of Connecticut’s law requiring that “[n]o person shall engage or offer to engage in debt negotiation in this state without a license”.  (Emphasis in original.)
3. By letter dated February 10, 2010, CreditAnswers stated that it had not enrolled any clients from Connecticut since October 1, 2009, and that “until licensed, we have no intent to enroll clients from Connecticut”.  By letter dated February 18, 2011, Credit Answers affirmed its previous statement that it had not enrolled any new clients since October 1, 2009.
4.
From at least August 2010 to the present, CreditAnswers offered to engage in debt negotiation concerning unsecured debt in this state via various media, including the Internet.  On CreditAnswers’ website, CreditAnswers offers to assist debtors, not excluding Connecticut residents, in negotiating or attempting to negotiate on behalf of the debtor the terms of each debtor’s obligations with one or more creditors of each debtor for or with the expectation of a fee, commission or other valuable consideration.
5. On or about October 2010, CreditAnswers offered to engage in debt negotiation services in this state via mail.  The letter received by a Connecticut resident states, in pertinent part, that “[u]pon activation of your credit card balance mediation program, we will begin a plan to negotiate with your creditors to reduce your balances for less that what you owe”.  Enclosed with the letter was a catalog that details the debt negotiation services offered by CreditAnswers and advises customers to “Call for Custom Quote”.
6. On or about December 22, 2010, a Connecticut resident inquired about debt negotiation services via CreditAnswers’ website, indicating her state of residence as Connecticut.  On or about December 22, 2010, CreditAnswers e-mailed the Connecticut resident offering its services to assist such resident in reducing her debt by customizing a personal debt settlement plan.
7. From at least January 2011 to the present, CreditArbitrators offered to engage in debt negotiation in this state concerning unsecured debt via various media, including the Internet.  On CreditArbitrators’ website, CreditArbitrators offers to assist debtors, not excluding Connecticut residents, in negotiating or attempting to negotiate on behalf of the debtor, the terms of each debtor’s obligations with one or more creditors of each debtor for or with the expectation of a fee, commission or other valuable consideration.
8. On or about January 19, 2011, CreditArbitrators e-mailed and faxed a Connecticut resident offering to engage in debt negotiation services in this state.  The e-mail states, in pertinent part, that “[w]e professionally negotiate your debt with the creditor on your behalf.  Typically, we can help you get out of debt in thirty-six months or less, and save you thousands of dollars . . . .  Our service fee is 12% of your total debt and a monthly maintenance fee of $49.95”.
9.
At no time relevant hereto were Respondents licensed to engage or offer to engage in debt negotiation in this state, nor did Respondents qualify for an exemption from such licensure.
 

III.  STATUTORY BASIS FOR ORDER TO CEASE AND DESIST
AND IMPOSITION OF CIVIL PENALTY

Section 36a-671 of the Connecticut General Statutes states, in pertinent part, that:

(a)  As used in this section and sections 36a-671a to 36a-671d, inclusive, (1) “debt negotiation” means, for or with the expectation of a fee, commission or other valuable consideration, assisting a debtor in negotiating or attempting to negotiate on behalf of a debtor the terms of a debtor’s obligations with one or more mortgagees or creditors of the debtor . . . [and] (2) “debtor” means any individual who has incurred indebtedness or owes a debt for personal, family or household purposes . . . .

(b)  No person shall engage or offer to engage in debt negotiation in this state without a license issued under this section for each location where debt negotiation will be conducted. . . .  A person is engaging in debt negotiation in this state if such person:  . . . (2) has a place of business located outside of this state and the debtor is a resident of this state who negotiates or agrees to the terms of the services contract in person, by mail, by telephone or via the Internet while physically present in this state . . . .

Section 36a-671a(b) of the Connecticut General Statutes provides, in pertinent part, that:

Whenever it appears to the commissioner that any person has violated, is violating or is about to violate the provisions of sections 36a-671 to 36a-671d, inclusive, . . . the commissioner may take action against such person . . . in accordance with sections 36a-50 and 36a-52.

Respondents’ offering to engage in debt negotiation in this state without obtaining the required license, as more fully described in paragraphs 1 through 9, inclusive, of the Matters Asserted, constitutes a violation of Section 36a-671(b) of the Connecticut General Statutes.  Such violation forms the basis to issue an order to cease and desist upon each Respondent pursuant to Sections 36a-671a(b) and 36a-52(a) of the Connecticut General Statutes, and impose a civil penalty upon each Respondent pursuant to Sections 36a-671a(b) and 36a-50(a) of the Connecticut General Statutes.  Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon each Respondent in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.  The Commissioner intends to impose a civil penalty upon each Respondent not to exceed Ten Thousand Dollars ($10,000), subject to each Respondent’s right to a hearing on the allegations set forth above.


IV.  NOTICE OF INTENT TO ISSUE ORDER TO CEASE AND DESIST,
NOTICE OF INTENT TO IMPOSE CIVIL PENALTY
AND NOTICE OF RIGHT TO HEARING

WHEREAS, the Commissioner has reason to believe that Respondents have engaged in acts or conduct which forms the basis to issue an order to cease and desist pursuant to Sections 36a-671a(b) and 36a-52(a) of the Connecticut General Statutes and impose a civil penalty pursuant to Sections 36a-671a(b) and 36a-50(a) of the Connecticut General Statutes.
 
NOW THEREFORE, notice is hereby given to Respondents that the Commissioner intends to issue an order requiring Respondents to CEASE AND DESIST from violating Section 36a-671(b) of the Connecticut General Statutes and impose a CIVIL PENALTY upon Respondents as set forth herein, subject to each Respondent’s right to a hearing on the allegations set forth above.
 
A hearing will be granted to each Respondent if a written request for a hearing is received by the Department of Banking, Consumer Credit Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800 within fourteen (14) days following each Respondent’s receipt of this Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing as set forth in Sections 36a-52(a) and 36a-50(a) of the Connecticut General Statutes.  This Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing shall be deemed received on the earlier of the date of actual receipt, or seven days after mailing or sending.  The enclosed Appearance and Request for Hearing Form must be completed and mailed to the above address.  If any Respondent will not be represented by an attorney at the hearing, please complete the Appearance and Request for Hearing Form as “pro se”.  Once a written request for a hearing is received, the Commissioner may issue a notification of hearing and designation of hearing officer that acknowledges receipt of a request for a hearing, designates a hearing officer and sets the date of the hearing in accordance with Section 4-177 of the Connecticut General Statutes and Section 36a-1-21 of the Regulations of Connecticut State Agencies.  If a hearing is requested, the hearing will be held on July 6, 2011, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.
 
The hearing will be held in accordance with the provisions of Chapter 54 of the Connecticut General Statutes, unless Respondents fail to appear at the requested hearing.  At such hearing, Respondents will have the right to appear and present evidence, rebuttal evidence and argument on all issues of fact and law to be considered by the Commissioner.

If CreditAnswers does not request a hearing within the time prescribed, the Commissioner will issue an order that CreditAnswers cease and desist from violating Section 36a-671(b) of the Connecticut General Statutes, and may order a civil penalty in an amount not to exceed Ten Thousand Dollars ($10,000) be imposed upon CreditAnswers.
 
If CreditArbitrators does not request a hearing within the time prescribed, the Commissioner will issue an order that CreditArbitrators cease and desist from violating Section 36a-671(b) of the Connecticut General Statutes, and may order a civil penalty in an amount not to exceed Ten Thousand Dollars ($10,000) be imposed upon CreditArbitrators.


Dated at Hartford, Connecticut
this 27th day of May 2011.                ________/s/_________
                                                    Howard F. Pitkin
                                                    Banking Commissioner



CERTIFICATION

I hereby certify that on this 27th day of May 2011, the foregoing Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing was sent by registered mail, return receipt requested to CreditAnswers, LLC a/k/a Debt Mediation Initiative, Attention:  William Loughborough, Member, 6200 Tennyson Parkway, Suite 200, Plano, Texas 75024, registered mail no. RB028037748US; CreditArbitrators, LLC, Attention:  William Loughborough, Managing Member, 6200 Tennyson Parkway, Suite 200, Plano, Texas 75024, registered mail no. RB028037822US; and Richard A. Burton, Registered Agent for CreditAnswers, LLC a/k/a Debt Mediation Initiative and CreditArbitrators, LLC, 6200 Tennyson Parkway, Suite 200, Plano, Texas 75024, registered mail no. RB028020172US.

                                                    ________/s/_________
                                                    Stacey L. Serrano
                                                    Prosecuting Attorney 


Administrative Orders and Settlements