Lambda School Reaches Settlement with DFPI, Agreeing To End Deceptive Educational Financing Practices

The California Department of Financial Protection and Innovation (DFPI) today finalized a settlement with San Francisco-based Lambda, which removes deceptive language from Lambda School's student contracts, clarifying for students that this type of financing can be discharged in a bankruptcy filing. From a report: The language violates the new California Consumer Financial Protection Law (CCFPL), which took effect this year and prohibits companies from engaging in practices that are unlawful, unfair, deceptive, or abusive. As part of the settlement Lambda will (1) notify students that the bankruptcy dischargeability provision language is not accurate; (2) retain a third party to review the terms of the school's finance contract to ensure that it complies with all applicable laws; and (3) undergo a review of its marketing materials to ensure that the information is accurate and not likely to mislead consumers. The settlement is the result of a DFPI investigation that found that Lambda was engaged in conduct that violated the new law. 'California has a strong interest in protecting the rights and financial well-being of students attending private postsecondary institutions,' said DFPI Commissioner Manuel P. Alvarez. 'This action helps ensure that future students can confidently enter into educational financing contracts without being subjected to false or misleading terms.'

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