ED. DEPT. ENDS CONTRACTS WITH 5 PRIVATE COLLECTION AGENCIES FOR ALLEGEDLY PROVIDING BORROWERS INACCURATE INFORMATION

FROM:  U.S. EDUCATION DEPARTMENT
U.S. Department of Education to End Contracts with Several Private Collection Agencies
After finding high incidences of materially inaccurate representations, Department acts to protect consumers

FEBRUARY 27, 2015

Following a review of 22 private collection agencies, the U.S. Department of Education announced today that it will wind down contracts with five private collection agencies that were providing inaccurate information to borrowers. The five companies are: Coast Professional, Enterprise Recovery Systems, National Recoveries, Pioneer Credit Recovery, and West Asset Management.

The Department also announced that it will provide enhanced Fair Debt Collection Practices Act and Unfair, Deceptive, or Abusive Acts or Practices monitoring and guidance for all private collection agencies that work with the Department to ensure that companies are consistently providing borrowers with accurate information regarding their loans.

"Federal Student Aid borrowers are entitled to accurate information as they make critical choices to manage their debt," said Under Secretary Ted Mitchell. "Every company that works for the Department must keep consumers' best interests at the heart of their business practices by giving borrowers clear and accurate guidance. It is our responsibility – and our commitment – to uphold the highest standards of service for America's student borrowers and consumers."

During the past several months, the Department's Federal Student Aid (FSA) office performed a review of all private collection agencies that FSA works with. In these reviews, the Department sought to ensure that its private collection agencies were complying with the terms of the contract, which includes assurances that the agencies would not engage in unfair or deceptive practices and would comply with all applicable Federal and State laws.

In its review, the Department found that agents of the companies made materially inaccurate representations to borrowers about the loan rehabilitation program, which is an option that can create benefits to defaulted borrowers after they have made nine on-time payments in a period of 10 months. The five private collection agencies listed above were found to have given inaccurate information at unacceptably high rates about these benefits. In particular, these agencies gave borrowers misleading information about the benefits to the borrowers' credit report and about the waiver of certain collection fees.

The Department will reassign accounts held by these five agencies which are not already in repayment to other agencies. The Department will also increase monitoring to ensure that the students who began rehabilitation under the five private collection agencies will be treated fairly as they complete the rehabilitation process. Lastly, the Department will issue enhanced guidance to all remaining private collection agencies, increase internal training for FSA staff, enhance the private collection agency manual, expand monitoring for these types of issues, and refine its internal escalation practices.

FSA administers and oversees the federal student financial assistance programs, authorized under Title IV of the Higher Education Act of 1965 (HEA). These programs represent the largest source of student aid for postsecondary education in the United States. The Office of the Under Secretary manages policies, programs, and activities related to postsecondary education.

EX-IM BANK CLAIMS IT'S OPENING DOORS FOR SMALL BUSINESSES IN CHINA

FROM:  U.S. EXPORT-IMPORT BANK 

The Export-Import Bank Continues to Open Doors for U.S. Small Businesses to Export to China in 2014

Direct and indirect small business support part of record-high $1.8 billion authorizations for exports to China year-to-date

SHENZHEN, CHINA – As the Export-Import Bank of the U.S. (Ex-Im Bank) Chairman and President Fred Hochberg tours China to encourage the purchase of Made-in-America goods and services and participates in the U.S.-China Strategic and Economic Dialogue, new statistics reveal that Ex-Im Bank is on track to hit a new record for transactions supporting U.S. exports to China in fiscal year 2014. Already totaling more than $1.8 billion, Ex-Im Bank financing contributes to a more balanced trade relationship with China, where exports from American companies have nearly doubled since 2009.


”As the world’s second largest economy, and the third largest importer of U.S. goods, China represents an incredible opportunity for U.S small businesses,” said Chairman Hochberg. “Both through direct sales to China and supplying larger U.S. exporters, American small businesses, with the help of Ex-Im Bank are competing on a more level playing field while expanding their exports to China and creating jobs in the United States.”

Ex-Im Bank does not compete with private banks or lenders, but still continues to play a vital role in opening China’s vast market to U.S. small businesses through its loan-guarantee and trade-credit-insurance programs. That’s because, often times, small business exporters have shipments that are too small for commercial banks to deem worth their time. With just over 400 employees, Ex-Im Bank is nimble enough that there is no American small business exporter that is too small for Ex-Im to support.

“We are finding that the ability to talk about and offer a loan is critical to our success for fire apparatus and equipment sales in many parts of China,” said Peter Darley, vice president of W.S. Darley of Itasca, Illinois. “Due to the Ex-Im framework agreement, interested Fire Departments are able to purchase products from the U.S. and can spread out their payments, affording them the opportunity to purchase the right amount of equipment with the desired quality and technology. We have a lot of good people working for us that are employed because we are able to offer project financing that is backed by Ex-Im Bank.”

As a result of Ex-Im support, small businesses across the U.S. have been able to directly export to China in FY 2014, including:

Bassett’s Ice Cream – Philadelphia, PA. Bassett’s is a fifth-generation frozen dessert distributor and a Philadelphia tradition since 1861.

Cypress Creek Hardwoods – Austin, TX. Cypress Creek Hardwoods sells hardwood lumber to China.

Lions Gate Inc. – Honaunau, HI. Lions Gate exports Kona Coffee.

South Coast Products – Houston, TX. South Coast produces lubricants, greases, thread compound, sealants, lubrication equipment, and laboratory equipment and accessories used for testing/analysis of greases and lubricants.

Teledynamics LLC – Towaco, NJ. Teledynamics manufactures and supplies mail and material monorail systems for hospitals, libraries, and law firms.

W.S. Darley – Itasca, IL. Darley is a leading provider of firefighting equipment, rescue gear, tools and supplies.

PRESIDENT OBAMA'S STATEMENT ON UKRAINE

FROM:  THE WHITE HOUSE 

Statement by the Press Secretary on Ukraine

The United States welcomes the preliminary agreement between the Government of Ukraine and International Monetary Fund (IMF) staff on a loan program of $14-18 billion.  This represents a powerful sign of support from the international community for the Ukrainian government, as we help them stabilize and grow their economy, and move their democracy forward.  The agreement is expected to unlock roughly $27 billion in total support from the international community for Ukraine's people over the next two years, as the country implements historic reforms to address long-standing problems that have undermined Ukraine’s economic strength and prosperity.  It is important now for both the Government of Ukraine and the IMF to move expeditiously and complete the steps necessary to gain approval from the IMF Executive Board. 

Together with our allies and partners, President Obama will continue to build international support for the Ukrainian people at this critical time.  The IMF program will be a central component of a package of assistance to support Ukraine as it implements reforms and conducts free and fair elections that will allow all the Ukrainian people to determine the future of their country.  We are working alongside international partners, including the World Bank and the European Bank for Reconstruction and Development (EBRD), to disburse rapid additional assistance to complement the IMF program and ease Ukraine’s economic transition, particularly for the most vulnerable.  As part of this international effort, we are working with Congress to quickly provide a $1 billion loan guarantee and are offering technical and financial assistance to help Ukraine meet its most pressing needs.  We also remain committed to providing the IMF with the resources it needs – in partnership with Congress – to provide strong support to countries like Ukraine as well as reinforcing the Fund’s governance to reflect the global economy.

COURT IMPOSES $14.75 MILLION JUDGMENT AGAINST TELEMARKETERS

FROM:  FEDERAL TRADE COMMISSION 
Court Finds Telemarketers in Contempt; Imposes $14.75 Million Judgment
FTC Continues Aggressive Enforcement to Ensure Compliance

At the request of the Federal Trade Commission, a U.S. district court judge in Florida has issued a contempt order against Bryon Wolf and Roy Eliasson, two key individuals who operated a deceptive marketing scheme since 2009.  According to the order, the defendants violated a December 2008 permanent injunction and final order that barred them from making a range of misrepresentations to consumers, billing consumers without their authorization, and failing to make required disclosures in future business endeavors. The contempt order imposes a judgment of $14.75 million against the defendants, which is the amount they illegally took from consumers in their second scheme.

“This pair of defendants showed complete contempt, both for consumers and for a court order,” said Jessica Rich, Director of the Federal Trade Commission’s Bureau of Consumer Protection. “And this action shows that if you violate an FTC order, you’ll pay for that violation.  We put orders in place to protect consumers, and we make sure that companies follow them.”

Today’s announcement is the latest example of how the FTC protects American consumers from defendants who are recidivists.  The agency monitors every FTC order for compliance, and quickly deals with those wrongdoers who defy its orders.  In the last 12 months alone, the FTC successfully tried five contempt cases. The defendants in these actions face tens of millions of dollars in judgments and are banned from various commercial activities.

Case History

In 2007, the FTC sued Suntasia Marketing, Inc., charging the operation with deceptively marketing negative-option programs to consumers nationwide. The defendants allegedly defrauded consumers and charged their bank accounts without their consent for a variety of programs, including memberships in discount buyer’s and travel clubs.

In 2008, 14 defendants agreed to an order settling the FTC’s charges, and were required to pay more than $16 million to provide refunds to defrauded consumers. Bryon Wolf and Roy Eliasson were ordered to pay over $11 million for their role in the scheme, and were barred from a variety of unlawful acts in the future, including  misrepresenting material facts regarding an offer, failing to clearly disclose material terms during a sale, and debiting consumers’ accounts without their consent.

But according to the FTC’s motion for contempt, within months of the 2008 order, Wolf and Eliasson devised a new plan to defraud consumers through Membership Services, LLC, a firm they controlled.  In this scheme, they used deceptive phone and internet solicitations to target recent loan applicants and misled them into believing they would provide them with cash advances, loans, or lines of credit. Instead, the defendants debited the consumers’ accounts for membership in a continuity program.  Very few consumers used the program, and many cancelled when they found out the defendants had debited their accounts and planned to take additional payments from them in future months.

Based on this conduct, following a two day evidentiary hearing, the court found that the defendants had violated the terms of a court-ordered permanent injunction by engaging in some of the same kinds of deceptive tactics that led to the FTC’s prior case against them.

According to the court, while the defendants sent messages to consumers communicating they had been “approved” for a loan, none of them ever received a loan. Instead, many of their bank accounts were debited $49.95 or more a month after they provided their financial information to the defendants.

Information for Businesses and Consumers

The FTC has developed two new blog posts to help provide businesses and consumers with information about specific types of telemarketing fraud and how to avoid it. They are called (Con)tempting Fate and An Online Payday Loan Or Window to a Scam?

The contempt order was entered by the court on January 13, 2014, in the U.S. District Court for the Middle District of Florida, Tampa Division.