On August 4, 2020, the Pennsylvania Office of Attorney General (Pennsylvania AG) announced that it reached a settlement with a company providing financing to consumers seeking student-loan debt relief. According to the Pennsylvania AG, the company violated the Pennsylvania Consumer Protection Law and the federal Truth in Lending Act (TILA) through its alleged misrepresentations and its failure to provide required disclosures.
According to the settlement agreement, the financing company partnered with student-loan debt-relief companies to offer third-party financing to their customers. Among other allegations, the Pennsylvania AG alleged that the company misrepresented their closed-end credit transactions as revolving credit plans, provided financing to consumers when it knew or should have known that they were not actually receiving debt-relief services, and misled consumers as to the nature of their obligations.
In connection with the settlement, the financing company is required to comply with the Consumer Protection law and TILA, is banned from financing student-loan debt-relief services in Pennsylvania, must forgive any debts owed by Pennsylvania consumers, and must pay a deferred civil penalty of $900,000, as well as $30,000 in enforcement costs for public protection and educational purposes.