September 9, 2008; News 12 at 11
NEW YORK (AP) -- Eight student loan companies have agreed to
adopt a code of conduct that bans deceptive marketing practices.
For example, they would no longer be allowed to offer prizes to
students who sign up for loans.
The agreement was announced by New York State Attorney General
Andrew Cuomo following an investigation by the state. Cuomo says
seven lenders agreed to pay a combined 1.4 million dollars to
settle the probe.
Cuomo says the companies used bait-and-switch tactics. He says
they also pushed higher-interest private loans and marketed
products so that they appeared to be federal loans.
An eighth lender wasn't a target of the probe, but agreed to
adopt the reforms anyway.
(Copyright 2008 by The Associated Press. All Rights Reserved.)