A recent legal opinion by Attorney General George Jepsen concludes that state law requires an out-of-state small loan lender to be licensed in Connecticut if the company solicits and makes loans by mail to Connecticut residents. The legal opinion was issued in response to a request by Department of Banking commissioner Howard Pitkin, in relation to a complaint filed with the department concerning the interest charged by such a lender.
The opinion also concludes that requiring such companies to be licensed here does not violate the Commerce Clause of the federal constitution, because (1) the licensing statute does not discriminate against out-of-state lenders in favor of in-state lenders, (2) there is a legitimate interest in restricting the maximum interest rates that small loan lenders may charge, and (3) the licensing requirement only applies if at least part of the transaction occurs in Connecticut (for example, the borrower negotiates the terms, in person or by mail, phone, or the Internet, while physically present in the state).
