NY Attorney General stops one of largest U.S. debt collectors from unlawful practices against students

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NEW YORK (WWTI) — Following a recent investigation through the Office of the Attorney General in New York State, one of the largest debt collectors in the U.S. has been found to violate state and federal laws.

Attorney General Letitia James concluded that the company Transworld Systems, Incc, has been in violation of multiple federal and state consumer and protection laws, which subjected student borrowers to misleading and unlawful actions.

According to James, Transworld made false, misleading and deceptive statements in National Collegiate Student Loan Trusts lawsuits and in communication with borrowers. The company implemented strategies to rely on litigation to collect defaulted debts. This required lawsuits against borrowers to speed up the process from complaint to judgement.

“For years, Transworld used fraud and deception to pursue defaulted borrowers and obtain default judgments on a massive scale,” stated Attorney General James. “Our investigation not only is putting hundreds of thousands of dollars back into the pockets of student borrowers, but brought about concrete changes by Transworld, which is now finally providing consumers struggling with defaulted student loan debt all the protections required by law.”

Under the settlement agreement released on September 14, 2020, Transworld will pay $600,000 as a restitution to New York borrowers and penalties to the state, as well as make changes to its practices.

The investigation handled by Assistant Attorneys General Sarah E. Trombley and Christopher L. McCall, under the supervision of Deputy Bureau Chief Laura J. Levine and Bureau Chief Jane M. Azia.

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