On November 18, 2016, the Attorney General for the State of Vermont (Vermont AG) announced that it had entered into a settlement with a California student loan debt consolidation company related to the company’s business of helping consumers consolidate their loans to reduce their student loan debt. As part of the settlement, the debt consolidation company agreed to cease doing business in the State of Vermont. The company also agreed to pay $5,022.14 to reimburse Vermont residents who used its services, and a $6,500 penalty payable to the State.
The Vermont AG alleged that the company violated the Vermont Consumer Protection Act by purportedly entering consumers into debt deferral programs, and then collecting fees and payments without forwarding those fees and payments to consumers’ creditors. As a result, consumers allegedly amassed interest charges while believing their loans were being paid. The company also purportedly collected up-front fees before performing any modification services.
The injunction that bars the debt consolidation company from doing business in Vermont will take effect within thirty days of the settlement, which was signed on November 18, 2016.