On April 7, 2016, the Washington Attorney General (“AG”) announced settlements with six student loan adjustment companies which were alleged to have “preyed on students” by charging excessive fees.
The Washington AG claimed that these firms violated Washington’s Debt Adjustment Act and Consumer Protection Act by overcharging 346 Washington students and collecting illegal fees for debt adjusting services. According to the AG, the companies charged students up-front fees which ranged from between 4 to 27 times the legal limit. They also allegedly withdrew money from customer bank accounts on void contracts and failed to disclose important legal rights to their customers.
The settlement requires the companies to pay $162,000 in restitution to Washington students for the illegal charges and $56,000 in legal costs and fees, and future monitoring and enforcement costs of the Consumer Protection Act. The companies also agreed in the settlement not to charge fees in excess of the legal limit or engage in deceptive business practices.
A default judgment was obtained against a seventh student loan adjustor for similar deceptive practices on March 10, 2016.