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Class Action Settlement with Financing Company that offered Sham “Student Debt Relief” to Federal Student Loan Borrowers

Williams v. Equitable Acceptance Corporation

This class action lawsuit challenged Equitable Acceptance Corporation (EAC) and its President Jeffrey Henn’s practice of financing sham “debt relief services,” including the false promise of student loan “forgiveness.”

The case claimed that EAC worked with more than 40 companies, called Dealers, to sell “debt relief services” to student loan borrowers. These companies did not tell the borrowers that all the services they provide are already available for free from the federal government. Instead, the companies charged borrowers about $1,300, told them they could pay with a “payment plan,” and sent borrowers to EAC, which gave them an entirely new loan in the form of a maxed-out line of credit—with sky-high 21% interest.

NYLAG worked with co-counsel Quinn Emanuel Urquhart & Sullivan, LLP to file this case on behalf of Vanessa Williams and Kory Turner, two student loan borrowers and a class of approximately 80,000 other borrowers who entered contracts with EAC. NYLAG and EAC reached a settlement that secured important benefits for the class. Under the settlement, EAC agreed to stop collections, delete all credit reporting, and pay $1 million to fund damages to the class. Because EAC cannot collect any more money from Class Members and cannot sell any remaining balances to another company, thousands of borrowers across the country who were paying to EAC do not have to choose between paying for essentials and paying EAC. This settlement was particularly favorable because EAC had almost run out of money, and it might have been impossible to get any money from EAC later because EAC was winding down its business. The settlement did not affect class members’ obligation to pay their federal student loans. For more information about the case and terms of the settlement, please review the Settlement Agreement and Final Approval Order.

If you are a federal student loan borrower who has worked with Equitable Acceptance Corporation and have questions about the settlement or your federal student loans, please contact NYLAG’s Student Borrower Advocacy Project at 212-946-0346 or contactsbap@nylag.org.

More Information:

Name: Williams v. Equitable Acceptance Corporation et al.

Dkt. #: 18 Civ. 7537 (S.D.N.Y. 2018)

Judge: Hon. Naomi Buchwald

Co-Counsel: Quinn Emanuel Urquhart & Sullivan, LLP

Status: Settlement reached.

Claims:

Violations of Racketeer Influenced and Corrupt Organizations Act (RICO), the Truth in Lending Act, Fraud, State Consumer Protection law, and Usury.

Highlights:

  • The Court granted final approval to the settlement on August 3, 2021.
  • Parties reached a settlement in February 2021.
  • The court granted preliminary approval to the settlement on April 27, 2020.
  • Plaintiffs filed the Complaint in August 2018, and Amended Complaints in January 2019 and July 2020.
  • Plaintiffs successfully opposed both Defendants’ Motions to Dismiss the RICO claims.
  • After this suit was filed, multiple law enforcement agencies, including the Federal Trade Commission and the New York Attorney General, also sued Equitable Acceptance over similar practices.
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