The Illinois Attorney General, who filed suit two years ago under the Illinois Consumer Fraud and Deceptive Business Practices Act against a group of entities related to for-profit college financing, amended its complaint to add claims that the defendants engaged in unfair, deceptive and abusive acts or practices in violation of the Consumer Financial Protection Act. The Dodd-Frank Act permits state-level enforcement of the CFPA. The amended complaint alleges that the defendants engaged in unfair business practices. In particular, the complaint alleges that the defendants misled students about the financing costs and job opportunities while encouraging them to accept financing arrangements that commonly lead to default. The amended complaint also alleges that the defendants engaged in abusive business practices based on students trusting the university and its associated financing affiliates to act in the students’ interest, while the defendants allegedly provided misleading financial aid information and encouraged students to take out unreasonably risky loans. The additional claims against the defendants are based on information purportedly obtained through discovery, and many portions of the publicly available complaint have been redacted. The Illinois Attorney General joins the New York Attorney General (see April 29, 2014 Alert) as states that have used Section 1042 of the Dodd-Frank Act, which, subject to certain limitations, allows state attorneys general to bring enforcement actions under the CFPA.
Alert May 27, 2014