On March 3, Virginia’s Attorney General announced that the state reached a settlement with a student debt relief company for alleged Virginia Consumer Protection Act (VCPA) violations. The simultaneously filed complaint alleged that from February 2015 through August 2018, the company misled nearly 2,200 student borrowers into purchasing student debt relief services that were already available to them at no cost and promised to enroll student borrowers into programs that they were ineligible for. Additionally, the company allegedly made loans that had interest rates above Virginia’s usury cap of 12% APR. The complaint alleged that this behavior violated the VCPA’s prohibition against the misrepresentation of goods or services and the use of deception, fraud, false presentence, false promise, or misrepresentation in connection with a consumer transaction.
Under the settlement, the company agreed to pay $40,000 in restitution and forgive $51,657.92 in student loans. Additionally, the company agreed to pay the state $10,000 in enforcement costs and is enjoined from financing the purchase of student loan debt relief services in Virginia. The company is also subject to a $5.5 million civil penalty if it fails to comply with the settlement.