Illinois AG Sues Student Loan Debt Settlement Companies Under State Consumer Protection Laws

State AGs  •  Student Loans  •  UDAP/UDAAP

On May 4, 2015, Illinois Attorney General Lisa Madigan announced five lawsuits filed on behalf of the State against student loan debt settlement services companies based in Texas, California, Florida, Georgia, and Illinois. The complaints allege that the companies violated Illinois’ consumer protection laws by charging hundreds to thousands of dollars in upfront fees for debt settlement services that borrowers could have performed themselves or through government-run websites for free. According to the announcement, the complaints also target the companies’ alleged failure to perform advertised services.

The complaints filed in the Circuit Court of Cook County against the Florida and Illinois companies seek, among other remedies, civil penalties of up to $50,000 for each violation, nullification of consumers’ contracts, restitution to consumers, and preliminary and permanent injunctions against the companies’ further operations in the State of Illinois. The complaints also allege that the complanies are in violation of the state Illinois Consumer Fraud and Deceptive Business Practices Act, the Credit Services Organization Act, and the Debt Settlement Consumer Protection Act.

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