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Financial Services Law Insights and Observations

New York AG settles with student debt relief defendants

State Issues State Attorney General Student Lending Debt Relief Usury TILA Telemarketing Sales Rule

State Issues

On June 25, the U.S. District Court for the Southern District of New York entered a stipulated final judgment and order to resolve allegations concerning an allegedly fraudulent and deceptive student loan debt relief scheme. According to the New York attorney general, the defendants allegedly sold debt-relief services to student loan borrowers that violated several New York laws, including the state’s usury, banking, credit repair, and telemarketing laws, as well as the Credit Repair Organizations Act, the Telemarketing Sales Rule, and TILA. The order imposes a $5.5 million judgment against the majority of the defendants, which will be partially suspended after certain defendants pay $250,000. The AG’s case against one of the defendants, however, will continue. The order also prohibits the defendants from engaging in unlawful acts or deceptive practices such as false advertising, and, among other things, imposes compliance and reporting requirements and permanently bans the defendants from offering, providing, or selling any debt relief products and services or collecting payments from consumers related to these products and services.

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