On January 14, 2021, Minnesota Attorney General Keith Ellison (Minnesota AG) announced that his office reached a settlement with a California-based student loan debt-relief company that allegedly collected unlawful fees from customers and made misrepresentations to them regarding its ability to forgive student loans.
According to the Minnesota AG, the company allegedly made false promises to consumers that it could forgive their federal student loans, when only the federal government is in the position to do that. The Minnesota AG alleged that the company also charged unlawful initial and monthly fees for its services in enrolling consumers in federal repayment programs that they could have otherwise enrolled in themselves for free. Furthermore, the Minnesota AG alleged that the company had been operating in the state without registering as a debt-settlement service provider. The Minnesota AG concluded that the company’s actions violated the state’s Debt Services Settlement Act, Prevention of Consumer Fraud Act, and the Uniform Deceptive Trade Practices Act.
Under the settlement agreement, the company has agreed to pay restitution in the amount of $11,499, representing the full amount of fees that is has collected but not refunded to its Minnesota customers. Furthermore, the company will cease its operations in Minnesota until it properly registers as a debt-settlement service provider. If the company fails to comply with the terms of the settlement agreement, the Minnesota AG may petition the court to impose a $50,000 civil money penalty.