Settlement of $600,000 debt collection appeals MOHELA

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The Missouri Student Loan Authority has agreed to pay $600,000 to resolve claims that it violated debt collection laws with excessive appeals.

The settlement benefits Massachusetts residents who received more than two telephone calls from the Missouri State Higher Education Loan Authority (MOHELA) within seven days between May 13, 2016 and December 22, 2021. Affected Consumers will be validated using MOHELA registers customers with addresses in Massachusetts.

MOHELA is not a student lender. Instead, it handles loans for the US Department of Education. The company also provides loan refinancing services for SoFi, Laurel Road and other companies.

While collecting student loans, MOHELA may have violated Massachusetts debt collection laws.

According to a 2020 class action lawsuit against the loan servicer, MOHELA violated Massachusetts consumer protection law and Massachusetts debt collection laws by making multiple calls to customers in a short period of time. These “excessive” calls would have harassed both consumers and complainants.

Massachusetts debt collection laws prohibit excessive debt collection calls such as those allegedly made by MOHELA. Specifically, Massachusetts law limits debt collectors to two calls in a seven-day period or two calls in a 30-day period when the calls are made to a person’s work or another non-residential location.

Plaintiffs in the MOHELA class action lawsuit alleged violations of these and other regulations and sought compensation under state law. MOHELA has not admitted any wrongdoing but has agreed to resolve these allegations with a $600,000 class action settlement.

Under the terms of the settlement, class members will be eligible to receive a cash payment. No payout estimate is available as payout amounts will vary depending on the number of claims filed with the settlement.

A second payment distribution may occur if a large number of paychecks are not cashed in the first round of payments. However, if excess funds result in payouts of less than $5, those funds will be used for a charitable donation instead.

The objection deadline is March 22, 2022. The final settlement approval hearing is scheduled for May 3, 2022.

In order to obtain payment from the settlement, Class Members must submit a valid Claim Form by March 22, 2022.


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