E3 ZUEEHAR 1-7 PM 3153 mm: coma)? :nPEmua mum CLERK . SEATTLE. WA STATE OF WASHINGTON KING COUNTY SUPERIOR COURT STATE OF WASHINGTONPlaintiff, SUMNIONS v. UNITED ADVISORS GROUP, LLC, Defendant. TO DEFENDANT: UNITED ADVISORS GROUP, LLC A lawsuit has been started against you in King County Superior Court by the State Of . Washington, Plaintiff. Plaintist claims are stated in the written Complaint, a copy Of which is served upon you with this Summons. In order to defend against this lawsuit, you must respond tO the Complaint by stating your defense in writing and by serving a copy upon the undersigned attorney for Plaintiff within sixty (60) days after service Of this Summons, excluding the day of service, or a default judgment may be entered against you without notice. A default judgment is one where Plaintiff is entitled to what it asks for because you have not responded. If you serve a notice of appearance on the undersigned person, you are entitled to notice before a default judgment may be entered. You may demand that the Plaintiff file this lawsuit with the court. If you do so, the demand must be in writing and must be served upon the person signing this Summons. Within 4' ATTORNEY GENERAL OF WASHINGTON Consumer Protection Division 800 Fifth Avenue, Suite 2000 Seattle, WA 98104?3188 (206) 464-7745 fourteen (14) days after you serve the demand, the Plaintiff must ?le this lawsuit with the Court, or the service on you of this Summons and Complaint will be void. If you Wish to seek the advice of an attorney in this matter, you should do so so that your written response, if any, may be served on time. This Summons is issued pursuant to Rule 4 of the Superior Court Civil Rules of the State of Washington and Revised Code of Washington Section 4.28.180 DATED this 17 day of March, 2016. SUMMONS-Z ROBERT RGUSON Attorn al . NELSON, WSBA #45724 BEN AMIN J. ROESCH, WSBA #39960 Assistant Attorneys General Attorneys for Plaintiff State of Washington ATTORNEY GENERAL OF WASHINGTON Consumer Protection Division 800 Fifth Avenue, Suite 2000 Seattle, WA 98104-3188 (206) 464-7745 17 Pa 3: ?53 rims COUNTY :JUPEi-iiljiti CLERK WA STATE OF WASHINGTON KING COUNTY SUPERIOR COURT STATE OF WASHINGTON, NoPlaintiff, COMPLAINT - i A V. UNITED ADVISORS GROUP, LLC, Defendant. I. PLAINTIFF 1.1 The Plaintiff is the State of Washington. 1.2 The Attorney General is authorized to commence this action pursuant to RCW19.86.080, RCW 19.86.140, and RCW 18.28.200. The Attorney General brings this action to address practices that violate the Consumer Protection Act and the Debt Adjusting Act: charging fees for debt adjusting that are well in excess of those allowed under Washington law, and failing to inform consumers of important rights, most notably, their three day right to cancel. I II. DEFENDANT 2.1 Defendant United Advisors Group, LLC (?Defendant?) is a California limited liability company headquartered at 16808 Ave., Suite 220, Irvine, CA 92606. Defendant provides, or purports to provide, counseling, advice, management and assistance to COMPLAINT 1 ATTORNEY GENERAL OF WASHINGTON Consumer Protection Division 800 Fifth Avenue, Suite 2000 Seattle, WA 98104-3188 (206) 464-7745 student loan' borrowers applying for US. Department of Education federal student loan repayment programs, including Direct Consolidation Loans and the Income-Based Repayment Plan. . A JURISDICTION 3.1 The State ?les this complaint and institutes these proceedings under the provisions of the Consumer Protection Act, RCW 19.86. 3.2 The Defendant has engaged in the conduct set forth in this complaint in King County and elsewhere in the state of Washington. IV. VENUE 4.1 Venue is proper in King County. pursuant to RCW 4.12.020 and 4.12.025, and Court Rule 82 because Defendant transacts business in King County to wit: entering into contracts with consumers located in King County. V. FACTS Federal Student LoanRepayment Programs 5.1 The US. Department of Education offers numerous repayment plans to eligible borrowers with federal student loans, all whichilare designed to help borrowers manage their student loan debt and/or make repayment of student loans more affordable. These plans include its Graduated Repayment Plan, Income-Based Repayment Plan, and Pay As You Earn Repayment Plan. The amount the borrower will pay and the repayment term can vary. depending on the repayment plan in which the borrower enrolls. 5.2 To access certain repayment plans, some borrowers will ?rst combine their multiple eligible federal student loans into a single Direct Consolidation Loan. Eligible borrowers can apply electronically for a Direct Consolidation Loan through the US Department of Education?s website at or by mailing a completed paper application to the US Department of Education. COWLAINT 2_ ATTORNEY GENERAL OF WASHINGTON Consumer Protection Division 800 Fifth Avenue, Suite 2000 Seattle, WA 98104-3188 (206) 464-7745 5.3. The process of federal student loan consolidation also involves paying off . multiple existing student loans liquidating them and replacing them with a new, single federal student loan. This process may be used by borrowers to manage indebtedness, and is available as a tool for defaulted federal student loanborrowers to become current on their loans and escape default. I I 5.4 The US. Department of Education does not charge borrowers any fee to apply for a Direct Consolidation Loan or any US. Department of Education repayment plan or program. Additionally, its website includes numerous self-help materials and for use by individual borrowers during the consolidation process. 5.5 Signi?cant help with federal conSolidation and other programs is available for ?ee. First, the government provides instructions for consumers looking to consolidate their federal student loans and/or apply for an income-driven repayment plan.1 Borrowers with questions can call 1?800?557?7392. Second, non?profit organizations such as the National Consumer Law Center?s Student Loan Borrower Assistance program also provide helpful information and may also assist borrowers directly.2 Defendant?s Debt Adjustment Services 5.6 Since at least 2012 to the present, Defendant has marketed and advertised for.- cost services to advise and assist student loan borrowers applying for US. Department of Education federal student loan repayment programs, including the Income?Based Repayment Program, and Direct Consolidation Loans. 5.7 In exchange for a fee of approximately $945.00, Defendant purported to perform a variety of student loan debt relief services for its customers. Defendant collected all 1 See (last visited January 6, 2016); (last visited January 6, 2016 2 See (last visited January 6, 2016). COWLAINT 3 GENERAL OF WASHINGTON Consumer Protection Division 800 Fifth Avenue, Suite 2000 Seattle, WA 98104-3188 (206) 464-7745 SDOOQQUIAUJNH -N r?l 1?t r?a or part of its fee from each of its Washington clients before those clients? federal student loans were consolidated, and before those clients? loans were enrolled into an alternative repayment plan, such as income-based repayment. 5.8 Defendant?s ?Client Agreement? described the ?Services? provided as follows: analyze your student loan debt situation, research potential repayment restructuring/consolidation options that may be available to you through the DOE, present you with the results of such researchand offer options, if applicable to you, apply for a student loan consolidation/repayment restructure through the DOE on your behalf and after you?ve been approved for your requested loan restructure/consolidation, to continue to assist you with your student loan(s). by periodically ?ling the necessary paperwork to the DOE or your loan servicer to help you obtain maximum bene?ts offered by the DOE under its various repayment and consolidation programs, and, on an ongoing basis, determine and seek to obtain the best repayment plan available for you based on your circumstances and using current DOE plans and programs. 5.9 Defendant used other client agreements at various times, but each of these provides for essentially?the same services. For example, Defendant?s'current ?Client Services Agreement? states that ?we are a service provider who is in the business of assisting student loan-borrowers with the management of their student loans and improving their student loan repayment terms.? The ?Services? provided are described as follows: analyze your student loan debt situation, research potential repayment restructuring/consolidation options that may be aVailable to you, (0) present you with the results of such research and offer options, if available to you, arrange for a student loan consolidation/repayment restructure through the DOE and once arranged continue to manage said loans on your behalf by periodically ?ling the necessary paperwork to the DOE or your loan servicer to help you obtain maximum bene?ts offered by the DOE under its various repayment and consolidation programs, determine and seek to obtain the best repayment plan available for you based on your circumstances and using current DOE plans and programs, and consolidate your student loan payments and our fees into one payment through a third party payment collection service by which our fees and your student loan payments (if applicable) will be collected and paid automatically each month. 5.10 The $945.00 initial fee charged by Defendant for its services to Washington consumers was in excess of $25. Defendant collected this fee before its Washington clients? loans were consolidated, or their repayment plan changed. COWLAINT 4 ATTORNEY GENERAL OF WASHINGTON Consumer Protection Division 800 Fifth Avenue, Suite 2000 Seattle, WA 98104-3188 (206) 464-7745 Defendant?s Marketing of Debt Adjustment Services 5.11 Defendant operated an active URL to advertise its student loan debt relief services: 5.12 Upon information and belief, Defendant also engaged in additional advertising, including paid advertisements on the internet and direct mailing targeted at Washington consumers. 5.13 Defendant has entered into at more than 241 contracts with Washington residents for debt adjusting services, and has received in excess of $85,273.54 in total fees from Washington consumers. VI. COUNT I VIOLATION OF WASHINGTON DEBT ADJUSTING ACT 6.1 The State incorporates Paragraphs 1.1 through 5.13 herein as if set forth in their entirety. I 6.2 RCW 18.28.010(2) provides that adjusting? means the managing, counseling, settling, adjusting, prorating, or liquidating of the indebtedness of a debtor, or receiving funds for the purpose of distributing said funds among creditors in payment or'partial payment of obligations of a debtor.? The term ?debt adjuster? is de?ned to include ?any person known as a debt peoler, debt manager, debt consolidator, debt prorater, or credit counselor, is any person engaging in or holding himself or herself out as engaging in the business of debt adjusting for compensation.? RCW 6.3 Defendant liquidated the student loan debts of its Washington clients by replacing their multiple federal student loans with a single consolidation loan through the US. Department of Education. Defendant is therefore engaged in ?debt adjusting? services as de?ned by the DAA. 6.4 Defendant?s contract with consumers promises that it will if applicable to you, apply for a student loan consolidation/repayment restructure through the DOE on your behalf . Defendant assisted its Washington clients in consolidating their federal student loans in COMPLAINT 5 - ATTORNEY GENERAL OF WASHINGTON Consumer Protection Division 800 Fifth Avenue, Suite 2000 Seattle, WA 98104-3188 (206) 464-7745 exchange for compensation. Defendant is therefore a ?debt consolidator? and a ?debt adjuster? as de?ned by the DAA. 6.5 Defendant?s contract with consumers promises that it will research potential repayment resu'ucturing/consolidation options that may be available to you through the DOE, (0) present you with the results of such-research and offer Options, . . . [and] and, on an ongoing basis, determine and seek to obtain the best repayment plan available for you based on your circumstances and using current DOE plans and programs.? Defendant is a ?credit counselor? and a ?debt adjuster? providing ?debt adjusting? services as de?ned by the DAA. 6.6 Defendant?s website explains that ?United Advisors Group is a student loan management company . . . Defendant?s website also instructs clients who need to change their repayment plan to contact their ?Loan Manager.? And the service agreement requires clients to acknowledge ?that you have authorized us to act on your behalf in connection with applying for the DOE programs and assisting you with the management of your student loan repayment plan applications and renewals.? Another service agreement obligates Defendant to ?arrange for a student loan consolidation/repayment restructure through the DOE and once arranged continue to manage said loans on your behalf.? (Emphasis added.) Defendant is a ?debt manager,? and therefore a ?debt adjuster? as de?ned by the BAA. I 6.7 Defendant?s website states: ?United Advisors Group takes over your burden of dealing with student loans! . . We work for you to make sure that your loans are in the most affordable and manageable repayment plan possible.? Its service agreement explains that ?[w]hen we commence working on your case, we will contact your student loan servicer(s) and/or the DOE on your behalf to initiate and complete your application for Your Requester Repayment Plan.? Defendant is a ?debt adjuster? as de?ned by the BAA. 6.8 The DAA places strict limits on the fees that a debt adjuster may charge for its services. First, RCW 18.28.0800) provides that ?[t]he debt adjuster may make an initial charge of up to twenty??ve dollars which shall be considered part of the total fee.? Each?and every one COWLAINT 6 ATTORNEY GENERAL OF WASHINGTON Consumer Protection Division 800 Fifth Avenue, Suite 2000 Seattle, WA 98104-3188 (206) 464-7745 the more than 241 contracts between Defendant and Washington consumers provides for an initial fee in excess of $85,273.54. As a result, Defendant took an initial fee of well over the legal limit, and each and every one of these contracts is inpviolation of RCW 6.9 The DAA includes strict consequences for those who violate the fee limitations. RCW 18.28.090 provides [i]f a debt adjuster contracts for, receives or makes any charge in excess of the maximums permitted by this chapter, except as the result of an accidental and bona ?de error, the debt adjuster?s contract with the debtor shall be void and the debt adjuster shall return to the debtor the amount of all payments received from the debtor or on the debtor's behalf and not distributed to creditors. 6.10 Defendant?s contracts for, and receipt of charges in excess of the maximums permitted by the DAA are not accidental or the result of a bOna ?de error. For example, Defendant structured its contracts in such a way. that the initial fee was far greater than the allowable $25 fee. 6.11 As a result of Defendant?s illegal fees, the?State seeks a declaration that each and every contract between Defendant and its Washington customers is void, and an order directing Defendant to return all payments made to it by Washington consumers. 6.12 In addition to violating the fee limitations explained above, Defendant also failed to comply with the notice requirements of RCW 18.28.100. Speci?cally, in its stande form contracts, Defendant failed to include the following noti?cations to borrowers, as required by law: a. Do not sign this contract before you read it or if any spaces intended for the agreed terms are left blank. - b. You are entitled to a copy of this contract atthe time you sign it. c. You may cancel this contract within three days of signing by sending notice of cancellation by certi?ed mail return receipt requested to the debt adjuster at his or her address shown on the contract, which notice shall be posted not later than midnight 'of the third day (excluding Sundays and holidays) following your signing of the contract COMPLAINT 7 ATTORNEY GENERAL OF WASHINGTON . Consumer Protection Division 800 Fifth Avenue, Suite 2000 Seattie, WA 98104-3188 (206) 464?7745 [6.13 By leaving these important consumer noti?cations out of its contracts, Defendant violated the Debt Adjusting Act and also prevented its customers from making informed decisions; - 6.14 RCW 18 28. 200 provides that ?[n]otwithstanding any other actions which may be brought under the laws of this state, the attorney general or the prosecuting attorney of any county within the state may bring an action in the name of the state against any person to restrain and prevent any Violation of this chapter.? Consequently, the State seeks an injunction prohibiting Defendant from entering into or collecting fees on contracts with Washington consumers that violate RCW 18.28. VII. COUNT VIOLATION OF WASHINGTON CONSUNIER PROTECTION ACT (Per se violation through the Debt Adjusting Act) 7.1 The State incorporates Paragraphs 1.1 through 6.14 herein as if set forth in their entirety. I 7.2 RCW 18.28.185 provides that violation of this chapter constitutes an unfair or deceptive act or practice in the conduct of trade .or commerce under chapter 19.86 As a result, each of the acts or practices set'forth above that violate the BAA are also violations of RCW 19.86.020. I . 7.3 Defendant?s acts or practices also took place in trade or commerce because they advertised their services to, entered into consumer contracts with, and received fees from, Washington residents. - 7.4 Defendant contracted with and cellected illegal fees ?'om at least 241 Washington consumers, advertised to additional- Washington consumers in the manner described above, and the acts and practices herein were undertaken as part of their regular business practices. In addition, unless restrained, these acts have a substantial potential for repetition and to injure additional Washington consumers. Defendant?s acts or practices affect the public interest. 1 COWLAINT 8 ATTORNEY GENERAL OF WASHINGTON Consumer Protection Division 800 Fifth Avenue, Suite 2000 Seattle, WA 98104-3188 (206) 464-7745 1-7 187.5 The State requests that the Court declare the acts and practices described above are unfair or deceptive under RCW 19.86.020, and violate the CPA. I 7.6 RCW 19.86.080(1) provides in relevant part that ?[t]he attorney general may bring anaction in the name of the state, or as parens patriae on behalf of persons residing in the state, against any person to restrain and prevent the doing of any act herein prohibited or declared to be unlawful.? Accordingly, the State requests that the Court enjoin Defendant from entering into contracts with Washington consumers Without strictly complying With RCW 18.28. 7.7 RCW 19.86.080(2) provides that court may make such additional orders or judgments as may be necessary to restore to any person in. interest any moneys or property, real or personal, which may have been acquired by means of any act herein prohibited or declared to be unlawful.? Accordingly, the State requests that the Court issue an order requiring Defendant to return to Washington consumers all sums obtained in violation of the BAA and the CPA, or pursuant to void contracts. . 7.8 RCW 19.86.1140 provides ?Every person who violates RCW 19.86.0?20 shall forfeit and pay a civil penalty of not more than th0 thousand dollars for each violation.? Accordingly, the State requests that the Court impose a penalty of $2,000. per violation of the CPA. I - COUNT ALTERNATIVE VIOLATION OF THE CONSUMER PROTECTION ACT (Deceptive Advertising and Systematic Failure to Perform ContractualServices) 8.1 The State incorporates Paragraphs 1.1 through 7.8 herein as if set forth in their entirety. 8.2 Defendant advertised and agreed with Washington consumers to perform services that place it squarely within the meaning of a ?debt adjuster? performing ?debt adjusting? services as those terms are de?ned in RCW 1828010, for the reasons stated above. Consumer Protection Division 800 Fi?h Avenue, Suite 2000 Seattle, WA 98104-3188 (206) 464-7745 COMPLAINT 9 I ATTORNEY GENERAL OF WASHINGTON 26. 8.3. In the alternative, if Defendant did not perform the services advertised on its website and agreed to in its contracts with Washington conSumers, then Defendant has engaged in false advertising, and. systematic failure to deliver the services it promised to' Washington consumers. - 8.4 For example, Defendant?s website explains that ?United Advisors Group is a student loan management company . . . If it is not a debt management company, or does not provide?debt management services, then its Website advertising is deceptive. 8.5 A business?s practice of misrepresenting its services in advertisements, including on its web?site, is a deceptive act or practice. Such misrepresentations have the capacity to deceive a substantial portion of the public because they are. made publicly, and may lead potential customers to misunderstand the service that they will receive if they become a client of Defendant. Similarly, misrepresentations in the parties? contracts themselves about the nature of services to be provided are also deceptive, and have the capacity to deceive a substantial portion of the public because they are made to each and everyone of Defendant?s more than 241 Washington clients. 8.6 A business?s practice of systematically failing to deliver the goods or se'rvices?it advertises or contracts to perform is an unfair act or practice. 8.7 In addition, Defendant?s website makes deceptive statements about consumers? options. For example, it states that qualify for any roan Forgiveness programs you must be in this [income based repayment] program or the Income Contingent Program.? In fact, payments made under the 10-year Standard Repayment Plan count toward Public Service Loan Forgiveness (although if all 120 payments are made on this plan there will be no balance to forgive), and' payments made under the Pay-As-You-Eam Plan also count toward public interest student loan forgiveness. See . service#qua1ifving?navment. In addition, it is not necessary to be enrolled in any income-driVen repayment program to become eligible for. the teacher loan forgiveness. See AINT 10 I ATTORNEY GENERAL 0P WASHINGTON . Consumer Protection Division 800 Fifth Avenue, Suite 2000 Seattle, WA 98104-3188 (206) 464-7745 v?I r?A I?l These deceptive statements may cause consumers to believe incorrectly that they need to change payment plans or engage Defendant?s services. 8.8 Defendant?s website also falsely states that only loans ?taken out during or after the borrOwer became disabled? may be discharged. In fact; the Department of Education has imposed no prohibition on disability discharge for borrowers who received their federal student loans before becoming totally and permanently disabled. See 8.9 Defendant?s unfair or deceptive acts or practices were conducted in trade or commerce because they relate to the sale of Defendant?s services. 8.10 Defendant?s unfair or deceptive acts or practices affect the public interest because they were distributed widely through advertisements, and numerous Washington consumers engaged Defendant?s services. - 8.11 . The State therefore seeks a declaration that Defendant?s acts or practices described above are unfair or .deceptive, in violation ?om RCW 19.86.020; (2) an injunction prohibitingDefendant from engaging in these unfair or deceptive acts or practices; (3) a civil penalty of $2,000 for each unfair or deceptive act or practice; and (4) the State?s costs and. reasonable attorney?s fees incurred in bringing this action. IX. FOR RELIEF Wherefore, the State prays for the following relief: 9.1 A declaration that each and every contract between Defendant and Washington consumers is void, pursuant to RCW 18.28.090; 9.2 An order requiring Defendant to return to Washington consumers all funds received from the consumers which were not forwarded on to the consumers? creditor(s), pursuant to RCW 18.28.090; CONIPLAINT 1 1 .. ATTORNEY GENERAL OF Consumer Protection Division 800 Fi?h Avenue, Suite 2000 Seattle, WA 981046188 (206) 464-7745 9.3_ An injunction against Defendant prohibiting it ?'om entering into contracts that require payments in excess of those allowed under RCW 18.28.080(1) or which violate any other provision of the Debt Adjusting Act, RCW 18.28, pursuant to RCW 18.28.200; 9.4 A declaration that Defendant?s acts described above are unfair or deceptive acts or practices in trade or commerce, affecting the public interest, and in Violation of the Consumer Protection Act, RCW 19.86; 9.5 An injunction preventing United Advisors Group or anyone acting in concert with them ?om violating the Debt Adjusting Act and the Consumer Protection Act'in the manner described above, pursuant to RCW 9.6 An order necessary to restore to any person an interest in any moneys or property, real or personal, which may have been acquired by means of an act prohibited by the Consumer Protection Act, pursuant to RCW 9.7 An award of a civil penalty in the amount of $2,000 ?for each and every violation of Washington?s Consumer Protection Act, pursuant to RCW 19.86.140; 9.8 An award'of the State?s reasonable costs and attorney?s fees incurred in this action, pursuant to RCW 19.86.0800); and i 9.9 Any other award the Court determines is just and equitable. this ?ay of March, 2016. ROBERT W. FERGUSON Attorney Gen . JOHN A. NELSON, WSBA #45724 BENJAMIN J. ROESCH, WSBA #39960 AsSistant Attorneys General Attorney for Plaintiff, State of Washington COMPLAINT 12 ATTORNEY GENERAL OF WASHINGTON Consumer Protection Division 800 Fifth Avenue, Suite 2000 Seattle, WA 98104-3188 (206) 464-7745