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Massachusetts District Court Denies Credit Repair Company’s Motion to Dismiss in Case Brought by the CFPB | Troutman Pepper



A federal district court judge in Massachusetts denied a credit repair company’s motion to dismiss a case brought by the Consumer Financial Protection Bureau (CFPB) and the state of Massachusetts alleging that the company made false representations about customers’ ability to improve their credit rating and requested payment in advance of full performance, in violation of Telemarketing Sales Rule (TSR), 16 C.F.R. § 310 et. seq., the Consumer Financial Protection Act (CFPA), 12 U.S.C. §§ 5531, 5536, and state law. Consumer Financial Protection Bureau and Commonwealth of Massachusetts v. Commonwealth Equity Group, LLC d/b/a Key Credit Repair and Nikitas Tsoukales, Case No. 1:20-cv-10991-RWZ (Mass. August 10, 2021)

Defendant Tsoukales’ company, Key Credit Repair, offers assistance in removing negative information from customers’ credit reports and improving their credit rating. Customers learn about their services through the company website and advertising and call the company if they choose to engage in these services. Customers are required to pay a monthly fee before obtaining the promised results. On its website, the company promises to “fix unlimited negative terms” from a credit report, achieve an average “90 point increase in 90 days,” and to “dramatically increase credit scores.” Plaintiffs allege that these representations are false. They allege further that, from 2016 through 2019 alone, Key Credit Repair enrolled nearly 40,000 consumers nationwide, and since 2011, collected at least $23 million in fees from consumers.

In support of its motion to dismiss, the defendants argued that the TSR is secondary to the Credit Repair Organizations Act (CROA) and any conflict between the statute and the regulation should result in conflict preemption, such that the TSR should not apply. Concluding that the TSR and CROA did not actually conflict, the court found this argument unpersuasive. Id., at 2.

Next, the defendants contended that the TSR violates the Due Process Clause because its definition of “telemarketing” is vague and fails to provide fair notice as to who is covered by the regulation. Id., at 4. The rule defines telemarketing as “a plan, program, or campaign which is conducted to induce the purchase of … services … by use of one or more telephones and which involves more than one interstate telephone call.” Id at 4 citing 16 C.F.R. §310.2 (gg). Defendants claimed that the terms “plan”, “program,” and “campaign” would apply to all vendors and service providers who communicate with customers over the telephone yet acknowledged that TSR exempts liability for the vast majority of businesses, but expressly declines to exempt credit repair organizations like Key Credit. Id. at 5 citing 16 C.F.R. §310.6 (b)(5). In rejecting this argument, the court relied on Hoffman Estates v. Flipside, Hoffman Estates, 455 U.S. 489, 495 (1992) which held “[a] party who engages in some conduct that is clearly proscribed cannot complain of the vagueness of the law as applied to the conduct of others.” Id.

Defendants further asserted that TSR’s definition of telemarketing placed a content-based restriction of speech by burdening credit service providers with a restriction as to when they collect payment for their services. The court disagreed, opining that the restriction is on conduct — the timing of the payment, not on speech. Id., at 6.

Defendants also claimed that the Federal Trade Commission (FTC) exceeded its authority in promulgating rules targeting their conduct, arguing that Congress intended for only unsolicited telemarketing calls to be addressed by the FTC’s regulations. The court found the defendants’ interpretation narrow, holding that the definition does not require that the calls be unsolicited but only requires the use of a telephone — which can both make and receive calls. Id., at 6 (citing 15 U.S.C. § 6016(a)(1)).

Finally, the defendants argued that the CFPB overstepped its authority following the Supreme Court’s ruling in Sella Law LLC v. Consumer Financial Protection Bureau, 140 S. Ct. 2183 (2020). The court rejected this argument, quoting Bureau of Consumer Fin. Prot. v. Citizens Bank, N.A., 504 F. Supp. 3d 39, 51 (D.R.I. 2020), which held, “[t]hough the Seila Law decision is still young, the two courts to address this issue thus far have determined that a CFPB enforcement action pending at the time of Seila Law may continue if the action is ratified by the Director.” The court concluded that the amended complaint, filed after the Seila Law decision, served as ratification of the action, and accordingly there was no basis for dismissal on this ground.

This case highlights CFPB’s close oversight of the credit repair industry and potential deceptive and abusive telemarketing practices. Troutman Pepper will continue to monitor this case.

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Are Sallie Mae Student Loans Federal or Private?



When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances



Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit



Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.



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