Court Rules that Corinthian Engaged in Deceptive Lending Practices and Illegal Debt Collection Practices
WASHINGTON, D.C. — Yesterday, at the request of the Consumer Financial Protection Bureau (CFPB), a federal court entered a final default judgment against Corinthian Colleges, Inc., resolving a lawsuit filed by the CFPB in September 2014. The Bureau’s lawsuit against Corinthian alleged that the company lured tens of thousands of students into taking out private loans to cover expensive tuition costs by advertising bogus job prospects and career services. Corinthian then used illegal debt collection tactics to strong-arm students into paying back those loans while still in school. The court ordered that Corinthian was liable for more than $530 million and prohibited the company from engaging in future misconduct.
“Today’s ruling marks the end of our litigation against a company that severely harmed tens of thousands of students, turning dreams of higher education into a nightmare,” said CFPB Director Richard Cordray. “We all have much more work to do before current and past students who were hurt by Corinthian’s illegal practices can be made whole. We remain deeply concerned about risks facing student borrowers in the for-profit space and will continue to be vigilant in rooting out harmful practices.”
A copy of the court’s order can be found at: http://files.consumerfinance.gov/f/201510_cfpb_default-judgment-and-order-corinthian.pdf
On Sept. 16, 2014, the CFPB sued Corinthian Colleges, Inc. for luring tens of thousands of students into taking out private loans, known as “Genesis loans,” to cover expensive tuition costs by advertising bogus job prospects and career services.
Earlier this year, Corinthian Colleges filed for bankruptcy and was liquidated. Despite the court’s significant ruling against the company, Corinthian cannot pay the judgment because it has dissolved and its assets have already been distributed according the liquidation plan in its bankruptcy case. The CFPB will continue to pursue relief for consumers harmed by Corinthian’s unlawful conduct. The CFPB remains concerned about efforts to collect on loans made in association with Corinthian’s illegal conduct.
In November 2014, the ECMC Group worked with the U.S. Department of Education to reach an agreement to acquire a substantial number of Everest and WyoTech campuses, which were owned by Corinthian. In February 2015, the CFPB announced that, through an action with ECMC, the Bureau secured hundreds of millions of dollars in forgiveness for borrowers who took out Corinthian Colleges’ high-cost private student loans.
Borrowers experiencing problems repaying a student loan or dealing with a debt collector can submit a complaint to the Bureau at www.consumerfinance.gov/complaint.
The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.