Thank you, if possible, would like some more clarification, since I'm still a bit confused (if not more confused) after reading this.
Are you suggesting this isn't an introduction of new regulations per se, since it was always a deceptive statement?
Or was the law actually changed by this California department specifically because of what Lambda was doing?
I get that the finance agreement was "innovative", but either it's dischargeable under bankruptcy -- or it's not -- and if it IS dischargeable, language implying that it is not dischargeable is deceptive. My understanding is that they have no power over bankruptcy proceedings, so whether they would LIKE it to be dischargeable or not bears no interest here.
This isn't some heavy-handed regulator stepping in and stopping innovation -- as a private for-profit business, you simply can't twist existing federal law around student loans to your benefit here, and that's always been the case all along. Deception aside, which I believe the word for is "fraud"; there's been a history of predatory financing around education. I was happy when it was DeVry University getting the book, and I'm also happy when it was some "cool" startup company as well.
> Are you suggesting this isn't an introduction of new regulations per se, since it was always a deceptive statement?
It was always false and deliberately deceptive to claim that Lambda’s California Retail Installment Contracts were qualified education loans under federal law, and therefore subject to discharge only on cases of undue hardship.
Lying about that in commerce in CA was not previously something for which there was previously a clear cause of action, especially one which would allow the State to take action. It’s not, at least in purpose, classic fraud: it is designed not to induce purchases but to dissuade past purchasers from seeking bankruptcy relief.
100%. It might have been a civil cause of action before, but now it's regulated by the DPFI.
Obviously ask your lawyer if you need legal advice, don't rely on anyone commenting on HN, but just as a general rule of thumb it's a bad idea to make deceptive or misleading statements to people you do business with.
Are you suggesting this isn't an introduction of new regulations per se, since it was always a deceptive statement?
Or was the law actually changed by this California department specifically because of what Lambda was doing?
I get that the finance agreement was "innovative", but either it's dischargeable under bankruptcy -- or it's not -- and if it IS dischargeable, language implying that it is not dischargeable is deceptive. My understanding is that they have no power over bankruptcy proceedings, so whether they would LIKE it to be dischargeable or not bears no interest here.
This isn't some heavy-handed regulator stepping in and stopping innovation -- as a private for-profit business, you simply can't twist existing federal law around student loans to your benefit here, and that's always been the case all along. Deception aside, which I believe the word for is "fraud"; there's been a history of predatory financing around education. I was happy when it was DeVry University getting the book, and I'm also happy when it was some "cool" startup company as well.