Fraudulent student loan service will repay students, AG Ellison announces

(FOX 9) - A California-based company offering a student loan "forgiveness" scheme that was determined to be fraudulent will refund the state's students more than $20,000, according to an announcement from Minnesota Attorney General Keith Ellison.

Minnesota Attorney General office announced today that his office has obtained a settlement that requires Direct Account Management – based in Laguna Niguel, California – after it says the company, "illegally collected fees from customers and misrepresented its services to consumers," according to the announcement.

As part of the settlement, the company will cease operations in Minnesota, while providing full refunds to its Minnesota consumers in an amount totaling $20,063.12.

"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," Ellison said in a statement. "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." 

According to the Ellison, the company would operate under the name Student Loan Advisory when speaking with consumers, while it, "pocketed exorbitant fees to enroll consumers in federal repayment programs that consumers can enroll themselves in for free."

It also charged upfront fees before performing promised services, which is illegal under Minnesota law regulating debt-settlement services. 

Ellison has previously made it a mission of the Minnesota Attorney General’s office to go after fraudulent student loans and schools.

Previously Ellison led a bipartisan coalition of nine other states in securing an agreement of $2.1 million in institutional debt from students at 12 Argosy campuses around the country.