AG Ellison shuts down fraudulent student-loan debt-settlement company; provide full refunds to MN consumers
(ABC 6 News) – Minnesota Attorney General Keith Ellison announced Tuesday that his office has obtained a settlement in the shutting down of a California-based fraudulent student-loan debt-settlement company operating in Minnesota.
The settlement requires, Direct Account Management – a company based in Laguna Niguel, California – to provide full refunds to its Minnesota consumers and to cease operating in Minnesota after illegally collecting fees from customers and misrepresented its services to consumers in the state.
The company is alleged to have falsely promised consumers student-loan forgiveness, when only the federal government can do so.
AG Ellison alleges that the company — which sometimes used the name Student Loan Advisory when speaking with consumers — pocketed exorbitant fees to enroll consumers in federal repayment programs that consumers can enroll themselves in for free. It also charged up-front fees before performing the promised services, which is illegal under Minnesota law regulating debt-settlement services.
Additionally, Direct Account Management was operating without registering as a debt-settlement service provider, as required by Minnesota law.
The settlement, filed in Ramsey County District Court, requires Direct Account Management to immediately pay the State $20,063.12 — the full amount it has collected from Minnesota customers — which the Attorney General’s Office will use to provide full restitution to consumers.
The settlement also requires Direct Account Management to cease operating in Minnesota unless and until it registers as a debt-settlement service provider. Attorney General Ellison’s Office alleges in the settlement that Direct Account Management violated Minnesota’s Debt Services Settlement Act, Prevention of Consumer Fraud Act, and Uniform Deceptive Trade Practices Act.
“Minnesotans take out student loans in good faith so they can get educations that will help them better afford their lives. My office is showing once again that when companies take advantage of that good faith to rip Minnesotans off, we will come after them,” Attorney General Ellison said. “I encourage any Minnesotan who’s been preyed upon by this company or others like it to contact my office so we can hold these bad actors accountable.”
This settlement marks the 13th time the Minnesota Attorney General’s office has shut down a fraudulent student-loan debt-relief company in Minnesota while recovering and returning $1.4 million to consumers victimized by fraudulent student loan debt settlement companies.