On August 21, 2020, Colorado’s Attorney General announced that the Denver District Court ruled in the state’s favor and found that a for-profit college violated the Colorado Consumer Protection Act (“CCPA”) and the Uniform Consumer Credit Code (“UCCC”) in operating its institutional loan program. The matter was initiated after a two-year investigation that began in 2012, resulting in this lawsuit being filed in 2014 and a four-week trial in the fall of 2017.
In its ruling, the Court found that the college violated the CCPA by knowingly making false and misleading representations about its loan program. Specifically, the Court found that the college advertised its loans as “affordable” even though it knew that most students could not afford the loans. According to the Court, the evidence showed that a vast majority of students were defaulting on their loans, and that students, after enrolling, frequently told financial aid administrators and the college that they could not afford their payments.
The Court also found that an the loan program was unconscionable under the UCCC because the college reasonably should have known of the inability of particular consumers to receive substantial benefits from the transactions, and because the college knowingly took advantage of the inability of some consumers to reasonably protect their interests by reason of mental infirmities, ignorance, illiteracy, or inability to understand the language of the agreements. Finally, the college was also found to have a business practice of creating loans and waiving student signatures without showing the loan or its terms to the students.
The Court ordered injunctive relief that required major changes to the college’s marketing and disclosures practices. The college was also ordered to forgive the loans of various students and pay $3 million in civil money penalties.