Devry Lawsuit Funding – Current Concerns About For-Profit Colleges & Debt Collection Practices

The Devry lawsuit is an ongoing legal battle launched by the Federal Trade Commission (FTC) against DeVry University. According to the FTC, DeVry deliberately exaggerated earning potentials and job opportunity figures of many student applicants to lure them into registering with the company. The complaint further states that the deception was discovered by the then-graduating Law School Associate at DeVry University in 2021. After uncovering the deception, the Associate alerted the Federal Trade Commission which opened an investigation into the matter. The investigation ultimately resulted in fines being imposed on DeVry and penalties being waived by the company. In light of this, is the Federal Trade Commission in violation of its duty when it launches an investigation into a law firm or college?

Devry Lawsuit

It seems the Department of Education (HUD) likely violated the duty of the Federal Trade Commission when they launched an investigation of a law school and found out that their practices violated the Federal Trade Commission’s regulations. For a bit of background, in 1998, the FTC launched a Level One Consultation on Admissions to their Student Debt Collection and Counseling Programs. The purpose of this level one consultation was to examine how agencies such as the Consumer Financial Protection Bureau and the Federal Trade Commission regulated student debt collection practices.

The Federal Trade Commission found that nine out of ten Level One Consultations resulted in Level Two complaints to the agency.

What exactly was the problem? The report determined that the majority of these complaints originated from for-profit colleges which used deceptive advertisements and failed to provide any type of consumer protection or advance notice to potential borrowers of their illegal practices. The report also found that these universities did not follow the necessary procedures to ensure compliance with federal law.

To be successful, the plaintiffs in the Devry lawsuit must show that a defendant violated the FDCPA.

They do not have to show that the defendants violated the statute itself. However, if the defendants did violate the statute, meaning that they knowingly and willfully violated the statute, then the borrowers who have been injured by the defendants can request either a permanent or temporary injunction, a jury verdict, actual damages, a permanent replacement of the loan, repayment of damages, a permanent reduction in the loan, reparations, an apology, payment of costs, and other relief described in the complaint.

Devry Lawsuit Funding is currently seeking a $100 million loan modification for its current account of more than five thousand accounts.

The plaintiffs’ claim centers on the fact that the defendants repeatedly violated the FDCPA when collecting repayment from borrowers in an attempt to retain the right to collect a future debt from those same borrowers. According to the complaint, the defendants failed to inform the borrowers that they could obtain a federal student loan without obtaining such debt through a tax-deferred interest plan. The defendants further violated the borrowers’ right to receive reasonable notice that they would be collecting certain types of debt as part of their attempt to refinance their loans. Finally, the defendants violated the borrowers’ right to seek reasonable relief from the violations of the FDCPA.

Plaintiffs will be allowed to seek either a temporary or a permanent injunction to stop the enforcement of the defendants’ unlawful actions.

A temporary injunction bars the defendants from instituting any collections activity against the borrowers while the lawsuit proceeds. (The permanent injunction will bar the university from instituting or continuing any collections activity against the plaintiff after the conclusion of the lawsuit.) If the defendants are unable to pursue collection efforts against the borrowers, then the plaintiffs will be entitled to a substantial amount of refunds. Under the terms of the agreement between Devry Lawsuit Funding and the United States Department of Education, if the defendants do not agree to settle the lawsuit before the end of the sixty days beginning on the date of service of the complaint, the United States Department of Education is authorized to assume control of the case.

The Devry Lawsuit Funding defendants have also agreed to provide the plaintiffs’ attorney with up-to-date updates on their status and progress.

In addition, the funding monies provided to the Devry Lawsuit Funding defendants will be paid to the United States Department of Education. The plaintiffs believe that this arrangement is fair to both the borrowers and the prospective students. Further, the United States Department of Education has been a successful litigation partner in helping to provide plaintiffs with the funds they need to pay for their educations.

It should be noted that the plaintiffs are not seeking any damages from the defendants. Rather, they are asking the court to require the defendants to stop all collections activities related to this case. If the defendants violate this agreement, then the judge can temporarily suspend their operations and order them to repay the United States Department of Education. The defendants have forty-five days to respond to this claim. This request is currently pending court approval.

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