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CFPB Comes Out On Top In Predatory Lending Case

The Consumer Financial Protection Bureau, a watchdog that has had its share of controversy, has won a legal victory over what it held up as an example of predatory lending on Wednesday (Oct. 28).

In a release by the bureau, details emerged that a federal court entered a final default judgment against Corinthian Colleges, ending a lawsuit that had been filed slightly more than a year ago by the CFPB. Under the allegations of the suit, the CFPB alleged that the education company “lured tens of thousands of students into taking out private loans to cover expensive tuition costs,” all the while advertising what amounted to “bogus job prospects and career services.” The company, said CFPB, then used what it classified as “illegal debt collection tactics” that strong-armed students into repayment even while still attending the Corinthian College schools.

[bctt tweet=”The CFPB claims a victory over predatory lending.”]

Under the ruling handed down by the court, Corinthian Colleges was found liable for as much as $530 million, and the company has been prohibited from moving forward with any future misconduct.

Corinthian Colleges, as was widely reported, filed for bankruptcy in 2015. With assets dissipated and distributed, there is no ability to pay the monies estimated as liabilities by the court. The CFPB said in its statement that it “remains concerned about efforts to collect” on loans tied to the now-defunct operations.

In November of last year, the ECMC Group, in partnership with the U.S. Department of Education, struck a deal to acquire several campuses under the Everest and WyoTech names, which had been owned by Corinthian Colleges. The bureau has stated that that partnership has helped garner forgiveness for hundreds of millions of dollars tied to private student loans borrowed from Corinthian, a significant number of which were deemed high-cost loans.

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