Consumer Alerts

OAKLAND – Attorney General Rob Bonta today announced joining a bipartisan coalition of 30 attorneys general in submitting a comment letter to the Federal Trade Commission (FTC) emphasizing the importance of federal-state partnerships in protecting consumers from fraud. On October 10, 2022, President Biden signed into law the FTC Collaboration Act of 2021, which directed the Commission to “conduct a study on facilitating and refining existing efforts with State Attorneys General to prevent, publicize, and penalize frauds and scams being perpetrated on individuals in the United States” and to provide the opportunity for public comment. On June 7, 2023, the FTC published a request for public information; the comment letter responds to that request.

“Since taking office, protecting consumers from fraud has been one of my top priorities. While the California Department of Justice has many tools at its disposal to hold unscrupulous actors accountable, we have long benefited from collaborating with the FTC and vice versa,” said Attorney General Bonta. “I join my fellow attorneys general in highlighting the importance of this federal-state partnership. Consumers and the marketplace have been better off because of it.”

In the comment letter, the attorneys general:

• Note that the states, the FTC, and other federal partners have worked in concert for decades to benefit businesses and individual consumers.
• Explain that the states benefit significantly from the FTC’s expertise, resources, as well as its national reach, which facilitates cross-border enforcement. For example, in United States of America and the States of California, Illinois, North Carolina, and Ohio v. Dish Network, L.L.C., the attorneys general from California, Illinois, North Carolina, and Ohio combined resources and utilized an FTC expert witness to analyze millions of call detail records which was critical to successfully proving the government’s case. The court found that Dish had violated federal and state telemarketing and related laws and awarded the plaintiffs $280 million.
• Explain that federal-state collaboration has similarly allowed the FTC to take advantage of the broader array of remedies available under state consumer protection laws and that it has given the FTC access to state investigative resources, witnesses, and expertise. For example, on August 30, 2022, Attorney General Bonta, along with the FTC and five other state attorneys general, announced a lawsuit against Roomster, a roommate- and room-finding app, for violations of state and federal consumer protection laws.
• Detail how the U.S. Supreme Court’s AMG Capital Management, LLC v. Federal Trade Commission decision negatively impacts effective collaboration between the states and the FTC. The decision held that Section 13(b) of the FTC Act did not provide the Commission with the authority to obtain consumer restitution in certain cases.

In submitting the comment letter, Attorney General Bonta joins the attorneys general of Arizona, Colorado, Connecticut, Delaware, Florida, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Vermont, Washington, Wisconsin, and American Samoa and the District of Columbia. 

A copy of the comment letter can be found here.

OAKLAND – California Attorney General Rob Bonta today issued legal guidance to local governments, reminding them of the strict requirements under state law for enacting so-called “urgency zoning ordinances.” The Housing Justice Team within the California Department of Justice has observed that some local jurisdictions have responded to state housing laws passed in recent years by enacting urgency zoning ordinances in an apparent attempt to limit or circumvent state housing mandates. Under California Government Code Section 65858, urgency zoning ordinances require written “legislative findings that there is a current and immediate threat to the public health, safety, or welfare” demanding immediate action. In today’s guidance, Attorney General Bonta underscores that local governments should review any urgency zoning ordinances they have enacted, or are considering enacting, for compliance with those limited emergency circumstances. 

“Under California law, urgency zoning ordinances can only be enacted if a high bar is met. Unfortunately, we are seeing urgency zoning ordinances that fall short of meeting that high bar,” said Attorney General Bonta. “As I’ve said time and again, every community must do its part to build housing — unless there's a real emergency, they cannot use urgency zoning ordinances to stop housing developments. I encourage local governments take a good look at their urgency zoning ordinances for compliance with the guidance we are providing today. My office is committed to taking legal action against those who frustrate California's goals of increasing housing supply and affordability.”

Among the state housing laws providing for streamlined approval of certain housing developments are Senate Bill 9 (SB 9) and Assembly Bill 2011 (AB 2011). Under SB 9, local agencies must provide a “ministerial” approval process for any proposed duplex within a single-family residential zone, or for any proposed lot split of a single-family residential parcel. Under AB 2011, which took effect July 1, 2023, “ministerial” review is similarly required for affordable housing projects located in commercial zones. Ministerial review is where a public official, such as local planning staff, ensures that the proposed development meets all the applicable objective standards for the proposed action but uses no special discretion or judgment in reaching a decision.

In today's guidance, Attorney General Bonta includes the following information:

• Written legislative findings are required to support claims that SB 9 or AB 2011’s requirements could pose a threat to public health, safety, or welfare. Such findings must be made with specificity; otherwise, an urgency zoning ordinance is likely invalid. Laws requiring ministerial approval of housing development, such as SB 9 or AB 2011, do not by themselves constitute a current and immediate threat to public health, safety, or welfare. Generalized concerns about visual or aesthetic standards are insufficient to support an urgency ordinance.
• In addition, urgency zoning ordinances must demonstrate immediate need, meaning that local agencies face immediate threats.
• To keep an urgency zoning ordinance prohibiting multifamily housing in place beyond 45 days, local jurisdictions must identify a significant, quantifiable, direct, and unavoidable impact based on objective policies in existence at the time the ordinance is adopted. Local jurisdictions must also demonstrate that there is no feasible alternative that would mitigate or avoid the adverse impact “as well or better, with a less burdensome or restrictive effect,” than the urgency ordinance.

Attorney General Bonta is committed to enforcing California’s housing laws and ensuring that communities throughout the state work in good faith to build their fair share of housing. On November 3, 2021, he announced the creation of a Housing Justice Team within the California Department of Justice. On April 1, 2022, he issued a consumer alert reminding California’s tenants of their rights and protections under state law. On July 13, 2022, he issued legal guidance about steps law enforcement officers should take to prevent and respond to unlawful lockouts and self-help evictions. On March 9, 2023, he filed a lawsuit against the City of Huntington Beach for violating state housing laws. On May 1, 2023, he filed a lawsuit against the City of Elk Grove, challenging the city’s denial of a proposed supportive housing project in the city’s Old Town Special Planning Area. On June 16, 2023, he announced a settlement against Green Valley Corporation, a San Jose-based housing developer and property manager, to resolve allegations that the company violated the California Tenant Protection Act by issuing unlawful rent increases to nearly 20 of its employee tenants and serving unlawful eviction notices to six of those employee tenants. On June 27, 2023, he announced filing a comment letter that identifies serious legal issues concerning the proposed Airport Gateway Specific Plan in the Inland Empire Cities of Highland and San Bernardino.

A copy of the guidance can be found here.

OAKLAND — California Attorney General Rob Bonta today led a coalition of 21 attorneys general in submitting a comment letter to the U.S. Department of Education, applauding its strongest-ever proposed Gainful Employment Rule. Originally issued by the Obama Administration in 2012, the Gainful Employment Rule aims to protect students by, among other things, establishing expectations that graduates of for-profit colleges and of career-training programs at nonprofit colleges earn enough money to meaningfully pay back their federal student loans. In doing so, the Gainful Employment Rule also protects taxpayers by ensuring that low-quality programs — largely concentrated at for-profit institutions — are cutoff from access to taxpayer funds in the form of federal student aid. Former Education Secretary Betsy DeVos was hostile to the Obama-era Gainful Employment Rule and repealed the entire Rule in 2019. The Biden Administration is now proposing a new Gainful Employment Rule that strengthens federal efforts to hold accountable predatory colleges.

“It's a no-brainer: any institution that wants access to federal financial aid must provide some value to its students,” said Attorney General Bonta. “With its proposed Gainful Employment Rule, the U.S. Department of Education is taking bold, necessary action to make that goal a reality. I commend Education Secretary Miguel Cardona and the Biden Administration, and I look forward to continuing to work with them to ensure our students are not taken advantage of by unscrupulous for-profit schools.”

Under the Higher Education Act, post-secondary institutions are required to “prepare students for gainful employment in a recognized occupation.” If an institution does not, it risks losing access to federal financial aid. The U.S. Department of Education announced its latest proposed Gainful Employment Rule on May 17, 2023 and requested public comment. Today’s letter responds to that request.

In its proposed Gainful Employment Rule, the U.S. Department of Education would establish the following protections:

• A debt-to-earnings ratio that post-secondary institutions must pass. This includes a requirement that graduates must earn more than a typical high-school graduate in the state between the ages of 25 and 34.
• An expansion of disclosure requirements — such as a new website that would provide students and their families with information on the costs of a particular program, how much they are likely to earn after graduation, and typical borrowing amounts in federal and private loans — to empower them to make informed decisions; and
• A requirement that schools certify they are in compliance with certain state consumer-protection laws.

In their comment letter, the attorneys general commend the above proposals, and also:

• Urge the U.S. Department of Education to both expand and clarify its proposed requirements regarding institutional compliance with state consumer-protection laws by, among other things, requiring schools that offer programs in multiple states to comply with all state consumer-protection laws in each state where the school enrolls students; and
• Urge the U.S. Department of Education to limit any relaxation of standards within the Gainful Employment Rule — like the decreased earnings threshold it is proposing for programs serving students in economically disadvantaged locales — to avoid institutional abuse. The attorneys general underscore that online programs, which can provide instruction to students outside a particular locale, should not be subject to any such reductions.

In submitting the comment letter, Attorney General Bonta was joined by the attorneys general of Arizona, Colorado, Connecticut, Delaware, the District of Columbia, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and Wisconsin.

A copy of the comment letter can be found here.

OAKLAND – Attorney General Bonta filed an amicus brief in the Ninth Circuit Court of Appeals in defense of California laws protecting consumers from false and misleading advertising. The brief was filed in support of the plaintiff in Souter v. Edgewell Personal Care Co, who alleged in a false advertising lawsuit that defendants’ Wet Ones Antibacterial Hand Sanitizing Wipes do not in fact “kill 99.99% of germs” as their labels claim. Plaintiff alleged that the products are in fact ineffective against many common, harmful viruses, and bacteria.

“It is challenging enough for consumers to make healthy, well-informed purchasing decisions without worrying that advertisers might be making deceptive claims about their products,” said Attorney General Bonta. “When companies make claims about their products, they have a responsibility to ensure those claims are fully accurate, and when consumers raise plausible allegations that advertising is misleading, they have a right to their day in court. I urge the Ninth Circuit to reverse the district court’s decision and allow this case to move forward.”

The case is currently being heard on appeal in the Ninth Circuit of appeal. The case was originally presented before the United States District Court for the Southern District of California, but the district court dismissed the plaintiff’s claims that the manufacturer had engaged in deceptive advertising. In the brief, Attorney General Bonta argues that the district court erred in dismissing the case prior to receiving evidence, and failed to properly consider real-world consumer behavior in reaching its decision. The brief takes no position on the ultimate outcome of the case at trial. 

In the brief, Attorney General Bonta argues the district court erred in dismissing Souter’s case for two reasons. First, deceptive advertising claims generally present questions of fact that are not appropriate for dismissal in the initial stages of litigation, except in rare circumstances not present here. Second, courts must consider how reasonable consumers actually behave in the real-world context in which they make every day purchasing decisions. As cited in the Psychological Foundations of Marketing, “the average package only has one tenth of a second to make an impression on the shopper.”  Reasonable consumers prioritize easily accessible information right in front of them over additional or contradictory information that might require research or expertise. 

Attorney General Bonta is committed to enhancing consumer protections. In March 2022, the Attorney General filed a similar brief in Moreno v. Vi-Jon, LLC, a case centering around false advertising relating to claims made on the front and back labels of Vi-Jon’s hand sanitizer products. 

A copy of the amicus brief is available here.

SACRAMENTO – California Attorney General Xavier Becerra today issued a consumer alert following the Governor’s declaration of a state of emergency in Sonoma and Los Angeles Counties due to the Kincade and Tick fires. Attorney General Becerra reminds all Californians that price gouging during a state of emergency is illegal under Penal Code Section 396.

“Families in Sonoma and Los Angeles Counties are in the midst of dealing with devastating wildfires. They shouldn’t have to worry about whether they’re being illegally cheated out of fair prices,” said Attorney General Becerra. “Our State’s price gouging law protects people impacted by an emergency from illegal price gouging on housing, gas, food, and other essential supplies. I encourage anyone who has been the victim of price gouging, or who has information regarding potential price gouging, to immediately file a complaint through my Office’s website or call (800) 952-5225, or to contact their local police department or sheriff’s office.” 

California law generally prohibits charging a price that exceeds, by more than 10 percent, the price of an item before a state or local declaration of emergency. This law applies to those who sell food, emergency supplies, medical supplies, building materials, and gasoline. The law also applies to repair or reconstruction services, emergency cleanup services, transportation, freight and storage services, hotel accommodations, and rental housing. Exceptions to this prohibition exist if, for example, the price of labor, goods, or materials has increased for the business.

Violators of the price gouging statute are subject to criminal prosecution that can result in a one-year imprisonment in county jail and/or a fine of up to $10,000. Violators are also subject to civil enforcement actions including civil penalties of up to $2,500 per violation, injunctive relief, and mandatory restitution. The Attorney General and local district attorneys can enforce the statute.

SACRAMENTO – California Attorney General Xavier Becerra today issued a consumer alert following the Governor’s declaration of a state of emergency in Los Angeles and Riverside Counties due to several fires, including the Saddleridge, Eagle, Sandalwood, Reche, and Wolf fires. Attorney General Becerra reminds all Californians that price gouging during a state of emergency is illegal under Penal Code Section 396.

“Families in Los Angeles and Riverside counties are dealing with devastating and destructive fires threatening their homes and safety,” said Attorney General Becerra. “These communities shouldn’t have to worry about being cheated while dealing with the effects of these emergencies. Our State’s price gouging law protects people impacted by an emergency from illegal price gouging on housing, gas, food, and other essential supplies. I encourage anyone who has been the victim of price gouging, or who has information regarding potential price gouging, to immediately file a complaint through my Office’s website or call (800) 952-5225, or to contact their local police department or sheriff’s office.”

California law generally prohibits charging a price that exceeds, by more than 10 percent, the price of an item before a state or local declaration of emergency. This law applies to those who sell food, emergency supplies, medical supplies, building materials, and gasoline. The law also applies to repair or reconstruction services, emergency cleanup services, transportation, freight and storage services, hotel accommodations, and rental housing. Exceptions to this prohibition exist if, for example, the price of labor, goods, or materials has increased for the business.

Violators of the price gouging statute are subject to criminal prosecution that can result in a one-year imprisonment in county jail and/or a fine of up to $10,000. Violators are also subject to civil enforcement actions including civil penalties of up to $2,500 per violation, injunctive relief, and mandatory restitution. The Attorney General and local district attorneys can enforce the statute.

SACRAMENTO – California Attorney General Xavier Becerra filed a lawsuit in the Alameda County Superior Court against Paul Blanco’s Good Car Company, a network of motor vehicle dealerships, and its chief executive Paul Blanco (Paul Blanco) alleging that the company engaged in a variety of unlawful business practices. These practices include false advertising regarding credit and discount programs, making false statements on credit applications, and deceiving customers regarding add-on products and additional charges. The company operates a network of seven dealership locations in California and mostly sells used vehicles. Paul Blanco targets vulnerable predominantly low-income consumers with subprime credit. For many of these consumers, a vehicle is a necessity and can be the most expensive one-time purchase they ever make. Paul Blanco’s deceitful and unlawful conduct put these families at risk.

“A car is one of the largest, and most important purchases for many families, allowing people to get to work, school, and connect to their communities,” said Attorney General Becerra. “Far from a good car company, Paul Blanco’s abhorrent conduct put vulnerable families at risk, through deceitful advertising and illegal sales and lending practices. It’s disgraceful and it’s unlawful. Working families make every dollar count. Today’s action is about protecting our families from deception and unlawful practices that swindle these dollars away, leading to unaffordable debt.”

The lawsuit charges Paul Blanco with making false statements on credit applications, including by deceiving lenders about the value of vehicles and the consumer’s ability to repay the loans. This allowed the company to boost their profits through improperly financed sales and increased the risk that the consumers would be saddled with loans that they could not afford. Paul Blanco also tricked customers into paying thousands of dollars for extra add-on products, such as service contracts and GAP insurance, by telling customers that these add-ons were required by law, or by simply concealing the extra charge. These practices increased the cost of an already substantial purchase, almost always made by taking out an expensive loan.

The company also ran numerous false and deceptive advertising campaigns on television, radio and the internet promising falsely low interest rates even for consumers who wouldn’t normally qualify for such rates to lure unsuspecting consumers to their dealership.

Attorney General Becerra stands strong to protect California consumers. In October 2017, he announced a lawsuit against the retailer Curacao for unlawfully preying on consumers across California. In November 2017, Attorney General Becerra sued for-profit Ashford University for allegations that the school engaged in unlawful business practices. Attorney General Becerra sued Navient Corporation in June 2018, charging the student loan servicer with misconduct in the servicing and collection of federal student loans. In April 2019, Attorney General Becerra secured $4.6 million in a settlement with Advantage Rent A Car and its affiliate E-Z Rent-A-Car to resolve allegations the company overbilled consumers for rental car damages. In June 2019, Attorney General Becerra sued telecommunications giants Sprint and T-Mobile to block an unlawful merger, which would reduce competition and increase costs for consumers. Attorney General Becerra has also challenged the Consumer Financial Protection Bureau (CFPB), including denouncing the agency’s rollback of the Payday Lending Rule on February 6, 2019, and submitting a comment letter opposing the CFPB's proposed Debt Collection Practices Rule on September 19, 2019.

Click here for a copy of the Paul Blanco complaint.

Consumers who wish to file a complaint about Paul Blanco may do so at http://www.oag.ca.gov/report.

SACRAMENTO – California Attorney General Xavier Becerra today, as part of a nationwide coalition of 51 attorneys general, announced an agreement with 12 telecommunications (telecom) providers on a set of principles intended to limit and prevent robocalls. The providers have agreed to incorporate these principles into their business practices. This agreement comes from the work of the coalition of attorneys general who in 2018 formed the Robocall Technologies Working Group. The group collaborated with telecom providers to make it more difficult for scammers to use robocall technologies to intrude upon and defraud consumers.

All 50 states, and the District of Columbia have joined this agreement with the following telecom companies: AT&T, Bandwidth, CenturyLink, Charter, Comcast, Consolidated, Frontier, Sprint, T-Mobile, U.S. Cellular, Verizon, and Windstream.

“We applaud the efforts of these telecommunications companies to stop unwanted robocalls,” said Attorney General Becerra. “Robocalls initiated from fake numbers are more than just a nuisance – they’re illegal. Today’s announcement is a useful step toward eliminating these types of calls, which far too often lead to identify theft and financial loss. Consumers must continue to be vigilant. However, today’s commitment by our industry partners is a step in the right direction to provide every landline and wireless customer with access to free and effective call-blocking tools.”

Illegal and unwanted robocalls harm consumers and interrupt our daily lives. Consumer fraud often originates with a robocall. Robocalls and telemarketing calls are currently the number one source of consumer complaints to both the Federal Communications Commission (FCC) and the Federal Trade Comission (FTC). During 2018, according to the FTC, consumers reported a total loss of $429 million as a result of these phone-based frauds.

The efforts of the Robocall Technologies Working Group represent a positive step towards combatting scams perpetrated through robocalls. The adopted principles commit the providers to:

• Offer free call blocking and labeling to stop robocalls before they reach consumers;
• Implement STIR/SHAKEN to ensure that numbers are not illegally spoofed and to prevent scammers from providing a number they are not authorized to use;
• Analyze and monitor network traffic to identify and monitor patterns consistent with robocalls;
• Investigate suspicious calls and calling patterns and seek to identify the party and take appropriate action;
• Confirm the identity of commercial customers by collecting information such as location, contact persons, state or country of incorporation, federal tax ID, and nature of the customer’s business;
• Require traceback cooperation in call interconnection contracts by seeking language requiring voice service providers to identify the upstream carrier from which a suspected illegal robocall entered its network or to where the call originated in its network;
• Cooperate in traceback investigations by dedicating resources to respond to requests from law enforcement and the US Telecom’s Industry Traceback Group, so that scammers can be identified and prosecuted; and
• Communicate with state attorneys general about scams and trends in illegal robocalling.

The Attorney General has also repeatedly called on the FCC to take action to stop robocalls, and he continues to urge the FCC to take actions consistent with today's agreement between state attorneys general and telecommunications carriers. That includes support for the FCC's orders authorizing carriers to implement call blocking systems, as well as support for the FCC's stated intention to mandate the implementation of STIR/SHAKEN by the end of 2019 if it is not voluntarily implemented. 

A copy of today’s agreement can be found here.

Consumers may begin filing claims at www.equifaxbreachsettlement.com

SACRAMENTO – California Attorney General Xavier Becerra today encouraged consumers to begin the process of applying for restitution and submitting documentation for claims from the Equifax Settlement. The settlement resolved allegations that the credit reporting agency improperly exposed the personal information of 147 million consumers, including 15 million Californians, after a massive data breach in 2017. Data exposed by the breach included names, Social Security numbers, birth dates, addresses, and in some instances, driver’s license numbers. Equifax did not disclose the breach, which lasted from mid-May through July 2017, until September 2017. The settlement requires Equifax to pay up to $425 million into a restitution fund and  $175 million in state penalties, and offer benefits like credit monitoring and consumer assistance for eligible customers.

“On top of holding Equifax accountable for one of the most devastating data breaches to face our nation, we have now recovered hundreds of millions of dollars to help our families who fell victim,” said Attorney General Becerra. “Our credit status impacts nearly every aspect of our lives – from purchasing a home or a car to finding a job. The same Americans who had to immediately protect themselves from fraudsters or identify thieves will have to be vigilant for the rest of their lives. We encourage every eligible person to apply for the relief they are entitled to as part of our settlement.”

Depending on eligibility, consumers may receive one or more of the following:

• Cash reimbursement for time or money spent trying to avoid or recover from fraud or identity theft because of the breach, and out of pocket losses resulting from the data breach;
• Free credit monitoring services for up to 10 years, or, alternatively, a payment of up to $125 for buying a different credit monitoring service;
• Reimbursement for up to 25 percent of the cost of Equifax credit monitoring paid for in the year leading up the data breach announcement; and
• At least seven years of free identity restoration services to help remedy the effects of identity theft and fraud.

Consumers may visit www.equifaxbreachsettlement.com to file a claim, learn more about eligible benefits, determine whether their information was impacted by the breach, or contact the settlement administrator. The webpage, documentation, and the claims process are managed by the settlement administrator, not by Equifax. Affected consumers may also call the settlement administrator at 1-833-759-2982 and request to receive information by mail.  

California consumers to receive $21 million in relief

SACRAMENTO – California Attorney General Xavier Becerra today announced a settlement with Student CU Connect CUSO, LLC (CUSO) resolving allegations related to its involvement in an illegal private loan scheme to benefit itself at the expense of its students. CUSO provided private loans for students to attend the now-defunct, predatory ITT Technical Institute (ITT Tech). With substantial assistance from CUSO, ITT Tech conducted a coordinated scheme to misdirect student borrowers towards expensive student loans that borrowers struggled to repay. The settlement will provide $168 million in relief to 22,000 borrowers - 4,000 of whom are in California. Many of these students were low-income and the targets of aggressive and misleading sales tactics by the school.

“ITT Tech, aided by CUSO, ripped off thousands of students in this illegal and coordinated scam,” said Attorney General Becerra. “In addition to grossly overcharging vulnerable students for a sham education, the companies guided students toward expensive and unwieldy loans that were nearly impossible to pay back. Students should be worrying about homework, not predators looking to exploit them for a quick buck.”

ITT Tech – one of the most expensive for-profit post-secondary institutions – received revenues from student tuition and fees. As required by federal law known as the 90/10 Rule, private for-profit schools may receive no more than 90 percent of their revenue from federal public loans, with the remainder originating from other sources. ITT Tech enlisted CUSO to provide ITT Tech students with private loans for this purpose. It then steered borrowers toward the lender. This scheme was designed for ITT Tech to enhance its financial statements, its appearance with investors, and to facilitate compliance with the 90/10 Rule.

The loan program issued $189 million in loans to ITT Tech students between 2009 and 2011. ITT Tech staff targeted students through aggressive tactics, including pulling students from class, withholding course material or transcripts, and rushing students through financial aid appointments. The company projected that more than 60 percent of students would default on the loans, which carried interest rates as high as 16.25 percent. These loans covered tuition gaps for which ITT Tech had previously offered short-term loans called “Temporary Credits.” Temporary Credits were zero-interest loans payable in nine months, but were presented to students as loans payable upon graduation. The credits had a high default rate, as students were unable to repay the full amount in such a short time. By extending loans through CUSO, ITT Tech could remove these unpaid credit balances from its financial reports.

Besides requirements that CUSO provide $168 million to student borrowers, the settlement includes restitution and borrower relief. CUSO will cease conducting business, including acquiring or issuing student loans, and cease all collection activities. CUSO will also cancel all outstanding balances of consumer loan accounts and will direct credit reporting agencies to delete these balances from consumers’ credit reports. CUSO will implement a consumer redress plan to notify consumers of the settlement.

A copy of the final judgment can be found here.