On February 14, 2023, the Minnesota Attorney General (AG) announced a settlement with a California-based student-loan debt relief company to resolve allegations that the company operated a fraudulent student loan debt forgiveness scheme.
The AG alleged that the company violated Minnesota’s Debt Settlement Services Act, Minn. Stat. §§ 332B.03-.12, the Prevention of Consumer Fraud Act, Minn. Stat. § 325F.69, et seq., and the Uniform Deceptive Trade Practices Act, Minn. Stat. § 325D.43, by charging consumers exorbitant fees for enrolling them in federal repayment programs, even though consumers could enroll in these same programs for free themselves. The AG also alleged that the company misrepresented its services to consumers by promising that federal student loans would be forgiven when, in fact, only the federal government can forgive federal student loans. The company is also alleged to have violated Minnesota law by charging up-front fees before performing promised services and by operating in the state without registering as a debt settlement service provider.
Under the settlement, the company agreed to pay the state $20,063.12, which constitutes the full amount collected from Minnesota consumers. The company will also cease all operations in Minnesota unless and until it registers as a debt settlement service provider. The company is subject to a $10,000 civil penalty if it violates any provisions of the settlement.