Consumer Finance Insights
May 1, 2020

Minnesota AG Settles with Out-of-State Student Loan Debt Settlement Company for Full Restitution of Illegal Fees

On April 29, 2020, the Minnesota Attorney General’s Office (AG) announced that it had settled its claims against a California-based student loan debt settlement company for alleged violations of Minnesota’s Debt Services Settlement Act, Prevention of Consumer Fraud Act, and Uniform Deceptive Trade Practices Act.  Specifically, the AG alleged that the company falsely promised student loan forgiveness that can only be granted by the federal government, collected fees to enroll consumers in free federal repayment programs, and operated as a debt-settlement provider in Minnesota without the requisite state license.

In connection with the settlement, the student loan debt settlement company will pay $122,019.18 to the State, representing the entire sum of as-yet unrefunded fees it collected from Minnesota residents, which the State will use to refund consumers.  Additionally, the company will cease operations in Minnesota unless and until it acquires a state debt-settlement provider license.  In the event that the company breaches the terms of the agreement, it will be liable for a $50,000 civil penalty.