Consumer Finance Insights
April 11, 2018

New York Attorney General Announces $2.25 Million Settlement with Credit Union

On April 11, 2018, the New York Attorney General’s Office (AG) announced a settlement with a Tennessee-based credit union for $2.25 million over its relationship with a company that allegedly duped thousands of New York-based nursing students into purchasing ineffective study guides and academic assistance.

The AG filed a lawsuit in New York state court in June 2015 against the company and its owner, claiming that they engaged in false and deceptive business practices under New York common law and New York’s General Business Law.  The company allegedly targeted thousands of students seeking nursing degrees, creating the false impression through advertising that the company was associated with Excelsior College and offered an associate’s degree or baccalaureate in nursing.  However, when a consumer would respond to the company’s ad, company representatives would engage in “high pressure” sales tactics to get the consumer to enroll in a costly “program,” which essentially consisted of a series of study guides.

According to the AG, the sales representatives would also induce consumers to finance the cost of the program and other fees through third-party entities with which it had agreements—including the Tennessee-based credit union that provided the bulk of the loans and was also named in the June 2015 lawsuit.  The complaint further claimed that when consumers sought refunds, the company refused to cancel the consumers’ contracts, and the credit union told consumers they had to continue to make payments.

Through this settlement, the credit union will provide $2.25 million in refunds to the New York victims of these deceptive practices, and is required to “clean up the credit” of any consumers to whom the credit union reported adverse credit events.  This settlement resolves only the claims against the credit union, so the lawsuit will continue against the remaining parties.