First annual Consumer and Unfair Competition Law Award

January 2025

The California Lawyers Association’s Antitrust and Unfair Competition Law Section is pleased to announce its first annual Consumer and Unfair Competition Law Award. The inaugural Award is being given to the team of government litigators—from the Bureau of Consumer Financial Protection (CFPB), the Los Angeles City Attorney’s Office, the North Carolina Attorney General’s Office, and the Minnesota Attorney General’s Office—that prosecuted student loan refinance companies and their leadership for making false promises to help students facing substantial student loan debt. The Award will be presented at the third annual Consumer and Unfair Competition Law Institute (CUCLI) at the City Club Los Angeles on January 31.

The action, CFPB, et al. v. Consumer Advocacy Center Inc., et al., was filed in the Central District of California against Consumer Advocacy Center Inc. d/b/a Premier Student Loan Center, True Count Staffing Inc. d/b/a SL Account Management, Prime Consulting LLC d/b/a Financial Preparation Services, and individuals associated with those entities. The action alleged that the defendants operated an unlawful student loan debt relief enterprise in Los Angeles and Southern California. They allegedly violated state and federal consumer protection statutes, including the federal Consumer Financial Protection Act of 2010 (CFPA), the Telemarketing Sales Rule (TSR), and California’s Unfair Competition Law (UCL), by making misrepresentations about Premier’s student loan services. Defendants allegedly charged and collected improper advance fees, automatically put loans in forbearance, and submitted false information to loan servicers and the federal government to qualify consumers for artificially low monthly payments. It also alleged the individuals substantially assisted the student loan debt relief companies in this conduct.

At the outset of the case, in October 2019, the government agencies obtained a temporary restraining order as well as an asset freeze and a court-appointed receiver. This TRO immediately halted the allegedly fraudulent business operations, froze defendants’ assets, and appointed a receiver, who was granted immediate access to several of defendants’ locations to take over defendants’ operations. The court also entered a stipulated preliminary injunction that prohibited defendants from collecting illegal advance fees and engaging in deception and extended the receivership and asset freeze that was imposed by the temporary restraining order. The case was litigated, and settlements and default judgments were entered against numerous defendants.

On July 7, 2023, the court granted partial summary judgment against the last remaining defendant, Kaine Wen, an owner and executive at Premier, for $243 million and injunctive relief. This included holding Wen personally responsible for $148 million in total civil penalties and jointly and severally liable for $95 million in consumer restitution. The order also required Wen to turn over certain assets, including cryptocurrency, and imposed broad injunctive relief, including a permanent, industry-wide ban on Wen. Wen has appealed, and the appeal is set for oral argument in March 2025.

As a result of this consumer protection enforcement action, 87,285 consumers nationwide received over $95 million in restitution related to a wide-ranging student loan servicing fraud, including 6,546 California consumers who received more than $7.1 million in restitution.

This enforcement action was noteworthy not only for the $243 million total judgment dollar amount but also because this is the first known example of California public consumer protection prosecutors using the UCL in conjunction with the CFPA and the TSR, along with the joint efforts of the CFPB, to access the CFPB’s victims relief fund—also known as the Civil Penalty Fund—to distribute restitution to all known victims.

To attend the conference and the award reception, you can register in advance via the following link or register onsite at the conference:  https://calawyers.org/section/antitrust-unfair-competition-law/cucli/