Nelson v. Great Lakes Educational Loan Services, Inc.

GL services repayment of Nelson's federally-insured student loans. On its website, GL tells borrowers struggling to make their loan payments: “Our trained experts work on your behalf,” and “You don’t have to pay for student loan services or advice,” because “Our expert representatives have access to your latest student loan information and understand all of your options.” Nelson alleged that when she and other members of the putative class struggled to make payments, GL steered borrowers into repayment plans that were to its advantage and to borrowers’ detriment. She alleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, constructive fraud, and negligent misrepresentation. The district court dismissed the claims as preempted by a federal Higher Education Act provision: “Loans made, insured, or guaranteed pursuant to a program authorized by ... the Higher Education Act ... shall not be subject to any disclosure requirements of any State Law,” 20 U.S.C. 1098g. The Seventh Circuit vacated. When a loan servicer holds itself out as having experts who work for borrowers, tells borrowers that they need not look elsewhere for advice, and tells them that its experts know what options are in their best interest, those statements, when untrue, are not mere failures to disclose information but are affirmative misrepresentations. A borrower who reasonably relied on them to her detriment is not barred from bringing state‐law consumer protection and tort claims. View "Nelson v. Great Lakes Educational Loan Services, Inc." on Justia Law