On August 8, 2019, New York Attorney General Letitia James (“New York AG”) announced a settlement and consent order with a student loan debt relief company, resolving the complaint’s allegations that the company deceived borrowers into paying for debt relief services that are available to the public for free from the federal government and the consumers’ loan servicers. According to the complaint, the company’s actions violated New York General Business Law (“GBL”) § 458-a, the Federal Credit Repair Organization Act (“FCROA”), 15 U.S.C. § 1679, et seq., and the Telemarketing Sales Rule (“TSR”), 16 C.F.R. § 310, et seq. Additionally, the New York AG alleged that the company’s financing arrangement misleadingly claimed to provide open-ended credit, and therefore failed to provide complete consumer disclosures for closed-end credit required by the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq.
The settlement requires the company to stop collecting nearly $950,000 in outstanding “fees” for these services and permanently bans the company from financing the purchase of any debt relief service or product in the state of New York. The settlement claims that the company has collected $1.66 million in bogus fees from New York consumers and requires the company to pay the state of New York $225,000 within 60 days, otherwise it must pay the total $1.66 million judgment. The company will also be required to send notices to student borrowers alerting them that they no longer owe the company for any outstanding fees.
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