| Debt relief and restitution was secured for 700 Virginia student loan borrowers through a settlement with Equitable Acceptance Corporation (Equitable), according to a release from Attorney General Mark R. Herring.
Under the terms of the agreement, Equitable is required to cancel over $50,000 in debt and provide $40,000 in restitution for nearly 700 Virginians. The settlement resolves allegations that Equitable violated the Virginia Consumer Protection Act (VCPA) by making loans with illegal interest rates that were used by Virginians to purchase fake student debt relief services from companies that partnered with Equitable.
“Equitable scammed Virginia student borrowers by offering them illegal loans, when they were in vulnerable positions and needed help managing their debt,” said Herring. “Tens of thousands of Virginia student loan borrowers, like so many around the country, face enormous amounts of debt once they have finished pursuing their educations. This settlement sends a strong message that my office will not tolerate debt relief scammers like Equitable and its partners who prey on Virginians who are in tough financial situations.”
Herring’s complaint alleges that from February 20, 2015 through August 24, 2018, Equitable offered closed-end installment loans in Virginia, but misrepresented that its loans were a form of open-end credit;
Equitable failed to qualify for an exemption from Virginia’s general usury cap of 12% APR, but misrepresented its ability to charge interest rates exceeding 12% APR; and
Equitable and its partners conspired to offer fake student loan debt relief services to Virginia’s student loan borrowers, and misrepresented the costs associated with those services.
The settlement includes the following key terms relating to loans Equitable made during the period in question:
Equitable remains subject to a $5.5 million civil penalty to ensure its compliance with the settlement;
Equitable agrees to pay $40,000 in restitution for 467 Virginia consumers who paid more than their loan principal plus 12% APR;
Equitable agrees to give up the collection of $51,657.92 in illegal interest it charged on loans with 225 Virginia consumers;
A payment to the Commonwealth of $10,000 for its costs and fees in investigating Equitable’s alleged violations of the VCPA; and
Permanent injunctions preventing Equitable from, among other things, financing the purchase of student loan debt relief services in Virginia.
The settlement is in the form of an Assurance of Voluntary Compliance which was filed for approval with the Circuit Court of the City of Richmond. The matter was handled by the Predatory Lending Unit of Attorney General Herring’s Consumer Protection Section.
For additional information on the settlement or to file a complaint about a consumer protection matter, contact Herring’s Consumer Protection Section by phone at (800) 552-9963 or email consumer@oag.state.va.us. |
