Attorney General William Tong and Department of Banking Commissioner Jorge Perez cautioned federal workers on Wednesday to avoid predatory online payday lenders who may seek to exploit the struggling workers during the partial government shutdown.
In a time where many Connecticut financial institutions are stepping up to the plate to provide financial assistance to furloughed federal workers during the ongoing government shutdown, officials want to warn workers to avoid predatory online payday lenders who even disguise themselves as participants in Governor Lamont‘s zero-percent public-private loan program passed by the legislature on Tuesday.
Payday loans are small-dollar, short-term loans that borrowers promise to repay within a short period of time. They typically have extremely high interest rates and are typically marketed to minorities, the working poor and others who may be viewed as struggling financially.
Under Connecticut Banking Law, payday loans, also called small loans, for $15,000 or less and charge an interest rate greater than 12 percent per annum, are void and unenforceable.
Banks, credit unions and those who hold a small loan license through the Department of Banking, are exempt from this provision.
The Department of Banking considers predatory payday loan companies as unlicensed small loan lenders. Before signing on the dotted line, consumers are encouraged to contact the Department of Banking or visit its website at portal.ct.gov/DOB to check whether a lender is legitimate and avoid falling into a payday lending trap.
Users can also determine if the unit is licensed by the Department of Banking as a Small Loan Company using NMLS Consumer Access.
Complaints about unlicensed payday lenders can be made to the Department of Banking through their online consumer complaint form. Consumers can also contact the Office of the Attorney General’s Finance Department at 860-808-5270 with any questions.
The Connecticut Bankers Association has informed Gov. Lamont’s office that as of 2 p.m. Wednesday, this is the list of banks that are participating in the state’s newly created loan program for federal employees who have been impacted by the shutdown. More banks may be added at a later time:
– Collinsville Savings Society
– Fairfield County Bank
– Guilford Savings Bank
– Ion Bank
– Liberty Bank
– Litchfield Bancorp
– Newtown Savings Bank
– Northwest Community Bank
– People’s United Bank
– Savings Institute Bank & Trust
– Thomaston Savings Bank
– Torrington Savings Bank
– Webster Bank
– Windsor Federal Savings