CONSUMER FINANCIAL PROTECTION V. ARMOND ARIA ( 2022 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
No. 21-55525
CONSUMER FINANCIAL
PROTECTION BUREAU,
D.C. No.
Plaintiff-Appellee,
3:15-cv-02440-
GPC-AHG
v.
ARMOND ARIA, aka Armond Amir
OPINION
Aria, owner and CEO of Global
Financial Support, Inc.,
Defendant-Appellant,
and
GLOBAL FINANCIAL SUPPORT,
INC., dba College Financial
Advisory, Student Financial Resource
Center,
Defendant.
Appeal from the United States District Court
for the Southern District of California
Gonzalo P. Curiel, District Judge, Presiding
Argued and Submitted November 15, 2022
San Jose, California
Filed December 13, 2022
2 CONSUMER FINANCIAL PROTECTION BUREAU V. ARIA
Before: Susan P. Graber, Richard C. Tallman, and
Michelle T. Friedland, Circuit Judges.
Opinion by Judge Tallman
SUMMARY *
Consumer Financial Protection Act
The panel affirmed the district court’s summary
judgment granted to the Consumer Financial Protection
Bureau (“CFPB”) in its civil enforcement action alleging
that Armond Aria mailed deceptive solicitations to current
and prospective college students, advertising a targeted
program for assisting those students in applying for
scholarships.
Aria contended that he was not a “covered person”
subject to the CFPB’s authority because he merely provided
nonfinancial advice and free, gift-based scholarships. The
Consumer Financial Protection Act (“CFPA”) lists ten
categories of a “consumer financial product or service” and
permits the CFPB to promulgate additional definitions by
regulations. The eighth category is relevant here: “providing
financial advisory services . . . to consumers on individual
financial matters or relating to proprietary financial products
or services . . . .” 12 U.S.C. § 5481(15)(A)(viii). The panel
rejected Aria’s argument that he did not provide financial
advisory services. First, Aria was incorrect in claiming that
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
CONSUMER FINANCIAL PROTECTION BUREAU V. ARIA 3
scholarships are not financial in nature merely because they
do not have to be repaid. Second, the record establishes that
Aria’s advice extended beyond the topic of scholarships,
covering the entire field of student financial aid. Third, Aria
did, in fact, hold himself out as an expert in finance. The
panel held that Aria provided “financial advisory services,”
and the district court did not err in concluding that Aria was
a “covered person” under the CFPA.
Next, Aria contended that the district court erred by
failing to consider the net impression of his solicitations
when it determined that they were deceptive. The panel
expressly adopted the net impression test, which provides
that a solicitation may be likely to mislead by virtue of the
net impression it creates even though the solicitation also
contains truthful disclosures, in enforcement actions under
the CFPA. The panel held that Aria was incorrect that the
district court failed to consider the net impression of the
entirety of his solicitation materials. In addition, the district
court did not err by concluding that no issue of material fact
existed as to the deceptive nature of Aria’s conduct based
upon the net impression created by his entire solicitation
packet.
The panel held that Aria forfeited his challenge to the
district court’s calculation of the restitution and civil
penalties because he did not adequately raise the arguments
to preserve them below.
4 CONSUMER FINANCIAL PROTECTION BUREAU V. ARIA
COUNSEL
Tanmay Shukla (argued), Chicago, Illinois, for Defendants-
Appellant.
Derick Koo Sohn Jr. (argued) and Kevin E. Friedl, Senior
Counsels; Laura M. Hussain, Assistant General Counsel;
Steven Y. Bressler, Acting Deputy General Counsel; Seth
Frotman, General Counsel; Consumer Financial Protection
Bureau; Washington, D.C.; for Plaintiff-Appellee.
OPINION
TALLMAN, Circuit Judge:
The Consumer Financial Protection Act (CFPA)
prohibits providers of “financial advisory services” from
engaging in deceptive conduct. 12 U.S.C. §§
5481(15)(A)(viii), 5536(a)(1)(B). Armond Aria mailed
millions of solicitations to current and prospective college
students, advertising a targeted program for assisting those
students in applying for scholarships. The Consumer
Financial Protection Bureau (CFPB) filed an enforcement
action in the district court alleging the solicitations were
deceptive. The district court agreed and granted summary
judgment to the CFPB.
On appeal, Aria primarily contends that he did not
provide financial advisory services within the meaning of the
CFPA because he offered advice on gift-based scholarships
as opposed to investments or debt instruments.
Alternatively, he argues that his solicitations were not
deceptive. We disagree and affirm.
CONSUMER FINANCIAL PROTECTION BUREAU V. ARIA 5
I
A
Aria was the founder, owner, CEO, and registered agent
of the now-defunct Global Financial Support, Inc. (Global).
Operating under the names “College Financial Advisory”
and “Student Financial Resource Center,” Global mailed
millions of solicitations to current and prospective college
students from 2011 to 2016. The solicitation packets
contained a letter, an information sheet, a Demographic
Form, and a return envelope.
The letters featured official-looking letterhead with
college-themed seals and an arbitrary filing deadline. The
wording varied from year to year, but the letters generally
advised students to avoid taking out loans until they had
applied to all of the available “free” financial aid programs.
The letters asked students and their parents to disclose basic
demographic information in the Demographic Form and pay
Global a $59 to $78 “processing” fee. In exchange, the
letters vaguely promised to enroll the students in a financial
aid program. Meanwhile, the Demographic Form promised
“to provide as many targeted financial aid opportunities as
possible to each and every student.” In fine print footnotes,
the letters disclaimed any affiliation with governmental or
educational institutions.
Minus refunds, Global received $4,738,028 in fees from
at least 76,000 students. The only product or service that
students received was a booklet. Each booklet contained a
welcome memo that provided a general overview of student
financial aid with advice on topics ranging from federal
student loans to the tax implications of attending college.
The booklets also contained sections on federal and state
financial aid programs. Although Global included some
6 CONSUMER FINANCIAL PROTECTION BUREAU V. ARIA
tailored information based on students’ responses to the
Demographic Form, Aria admitted the information was
compiled “at a group level” and he “did not individually
tailor [the booklets] to” any individual student. For example,
students sometimes received the contact information for all
50 states’ financial aid agencies—regardless of the students’
residency—and were directed to Google search their home
state’s financial aid opportunities. Additionally, Aria asked
students to list their interest in playing collegiate sports, but
the booklets provided only a generic “list of scholarships
available to student athletes regardless of sport.”
Hundreds of complaints were submitted to various state,
federal, and nonprofit consumer watchdog entities, which
triggered the federal consumer fraud investigation that led to
this proceeding.
B
In October 2015, the CFPB filed a civil enforcement
action against Global and Aria. In relevant part, the CFPB
alleged that Defendants’ conduct was deceptive because it
misled students into thinking: (1) Global would provide a
program to assist them in applying for scholarships; (2)
Global would match them to individually targeted
scholarship opportunities; and (3) they would miss financial
aid opportunities by not complying with the filing deadline.
The district court stayed the case due to a pending
collateral federal criminal investigation of Aria. In May
2019, the district court lifted the stay. In August 2020, the
CFPB moved for summary judgment against Aria and
default judgment against Global. The district court granted
the CFPB’s motion for default judgment against Global after
Global failed to secure counsel to appear and defend the
CONSUMER FINANCIAL PROTECTION BUREAU V. ARIA 7
corporation and granted the CFPB’s motion for summary
judgment against Aria.
With respect to Aria, the district court held that his
conduct fell under the CFPB’s enforcement authority. The
district court also found that he deceived students from 2011
to 2015 by implying that he offered a program for financial
aid applications; he deceived students from 2011 to 2016 by
implying that he would match students with scholarships;
and he falsely implied throughout the relevant period that
students would forfeit his services if they failed to comply
with his arbitrary deadlines. The district court awarded
restitution in the form of $4,738,028 in revenues net of
refunds and imposed a civil penalty of $10 million. The
district court also awarded injunctive relief to the CFPB.
Aria appeals, arguing that he was not subject to the
CFPB’s authority because he provided nonfinancial advice
on “free” scholarships; that the net impression of his
solicitations was not deceptive; and that the district court
erred in calculating the restitution and civil penalty sums.
II
“We review a district court’s grant of summary judgment
de novo and may affirm on any ground supported by the
record.” CFPB v. Gordon, 819 F.3d 1179, 1187 (9th Cir.
2016). We likewise review questions of statutory
construction de novo. McKinney-Drobnis v. Oreshack, 16
F.4th 594, 603 (9th Cir. 2021).
III
The CFPA “makes it unlawful for a covered person [] ‘to
engage in any unfair, deceptive, or abusive act or practice.’”
CFPB v. CashCall, Inc., 35 F.4th 734, 746 (9th Cir. 2022)
(quoting 12 U.S.C. § 5536(a)(1)(B)). Aria contends that he
8 CONSUMER FINANCIAL PROTECTION BUREAU V. ARIA
was not a “covered person” subject to the CFPB’s authority
because he merely provided nonfinancial advice on free,
gift-based scholarships.
12 U.S.C. § 5481(6)(A) defines a “covered person” as
“any person that engages in offering or providing a
consumer financial product or service.” The CFPA lists ten
categories of a “consumer financial product or service” and
permits the CFPB to promulgate additional definitions by
regulation. See § 5481(15)(A)(i)-(xi). The eighth category
is relevant here: “providing financial advisory
services . . . to consumers on individual financial matters or
relating to proprietary financial products or services . . . .” §
5481(15)(A)(viii).
The CFPA does not provide a specific distinction
between financial and nonfinancial activities, and the CFPB
has yet to promulgate any relevant definitions or guidelines.
See 12 C.F.R. §§ 1001.2, 1091.101 (2022). When a term
goes undefined in a statute, we give the term its ordinary
meaning. CashCall, Inc., 35 F.4th at 746. “To determine
ordinary meaning, we consider dictionary definitions.”
Tomczyk v. Garland, 25 F.4th 638, 644 (9th Cir. 2022) (en
banc) (quoting United States v. Cox, 963 F.3d 915, 920 (9th
Cir. 2020)).
Merriam-Webster’s defines the adjective “financial” as
“relating to finance.” Financial, MERRIAM-WEBSTER’S
COLLEGIATE DICTIONARY (11th ed. 2003). It in turn
provides several definitions for the noun “finance.” Some
are narrowly defined in relation to debt instruments or
investments, but others are broadly defined as “money or
other liquid resources of [an] . . . individual” or “the
obtaining of funds or capital: FINANCING.” Id. at Finance
(n). “Financing” is likewise broadly defined as “the act or
CONSUMER FINANCIAL PROTECTION BUREAU V. ARIA 9
process or an instance of raising or providing funds.” Id. at
Financing. And the transitive verb “finance” is defined as
“to raise or provide funds or capital for” (e.g., finance “a new
house”) or “to furnish with necessary funds” (e.g., finance
“a son through college”). Id. at Finance (vt) (emphasis
added).
For several reasons, we reject Aria’s argument that he
did not provide “financial advisory services.” §
5481(15)(A)(viii). First, Aria is incorrect that scholarships
are not financial in nature merely because they do not have
to be repaid. As discussed, the ordinary meaning of financial
is broad and encompasses both cash financing and debt
financing. Indeed, the definition of “finance” specifically
contemplates raising funds, regardless of their origin, for
college tuition. Finance (vt), MERRIAM-WEBSTER’S
COLLEGIATE DICTIONARY (11th ed. 2003). Advising
students to exhaust scholarship opportunities before taking
on debt is no less “financial” than advising students to
leverage their unique access to federally subsidized loans. 1
Second, the record establishes that Aria’s advice
extended beyond the topic of scholarships, covering the
entire field of student financial aid. Although his solicitation
letters focused primarily on scholarships, the booklets that
1
Aria urges us to interpret the modifier “financial” narrowly in light of
the CFPA’s legislative history. He points out that Congress deleted
language that would have included “other related advisory services”
from an early version of the bill. Compare H.R. 4173, 111th Cong. §
4002(19)(A)(ix)(I) (Dec. 2, 2009) (as introduced in the House), with
H.R. 4173, 111th Cong. § 1002(13)(A)(viii) (May 20, 2010) (as amended
in the Senate). Even assuming “financial” should be read narrowly,
Aria’s conduct fell comfortably within the definition of “financial
advisory services.”
10 CONSUMER FINANCIAL PROTECTION BUREAU V. ARIA
Aria mailed to paying students offered advice ranging from
federal student loans, grants, and work study to tax subsidies
and health insurance. 2 He even offered advice on leveraging
a family home to pay for college, and he ultimately did
advise accepting student loans as a last resort. Aria’s advice
covered the entire gamut of financial aid and was
undoubtedly financial in nature.
Third, Aria argues that his advice cannot be considered
financial because he did not hold himself out as an expert in
finance. We need not address Aria’s legal argument that §
5481(15)(A)(viii) is limited to purported experts offering
financial advisory services because Aria did, in fact, hold
himself out as an expert in finance. His business marketed
itself as offering advisory services on financial aid. Global
first did business under the name “College Financial
Advisory” and then transitioned to “Student Financial
Resource Center.” These names naturally imply expertise in
the field of student financial aid.
We hold that on this record Aria provided “financial
advisory services” as defined in 12 U.S.C. §
5481(15)(A)(viii). Accordingly, the district court did not err
by concluding that Aria was a “covered person” under the
CFPA.
IV
Aria next argues that the district court erred by failing to
consider the net impression of his solicitations when it
determined they were deceptive. An unlawfully
2
Because the CFPB has authority over those “offering or providing a
consumer financial product or service,” we look beyond Aria’s
solicitations to determine if his conduct fell within the CFPB’s purview.
§ 5481(6)(A) (emphasis added).
CONSUMER FINANCIAL PROTECTION BUREAU V. ARIA 11
“‘deceptive’ practice is one ‘tending to deceive,’ that is, ‘to
cause to believe the false.’” CashCall, Inc., 35 F.4th at 746
(quoting Deceive & Deceptive, WEBSTER’S THIRD NEW
INTERNATIONAL DICTIONARY (2002)). In cases brought
under the similarly worded Federal Trade Commission Act,
we have explained that a “solicitation may be likely to
mislead by virtue of the net impression it creates even though
the solicitation also contains truthful disclosures.” FTC v.
Cyberspace.com LLC, 453 F.3d 1196, 1200 (9th Cir. 2006).
We have previously referenced the net impression test in
enforcement actions brought under the CFPA, see Gordon,
819 F.3d at 1193; CashCall, Inc., 35 F.4th at 740, and we
expressly adopt it here.
Aria is incorrect that the district court failed to consider
the net impression of the entirety of his solicitation materials.
The district court referenced the net impression test
throughout its analysis and concluded that “the net
impression created by Mr. Aria’s solicitation packets [was]
likely to mislead reasonable consumers.”
To the extent Aria challenges the district court’s reasons
for concluding the net impression was deceptive, his
arguments also fall short. The record establishes that Aria
promised to “proceed with [a] . . . program and apply for the
maximum . . . financial aid programs” if students submitted
the Demographic Form and paid the processing fee. Instead,
the students merely received booklets. The record also
establishes that Aria promised “to provide as many targeted
financial aid opportunities as possible.” Instead, students
received “group level” information that was “not
individually tailor[ed]” to them. Finally, the letters created
a sense of urgency by listing filing deadlines. But Aria did
not have a rule of treating late-filers differently. He simply
pocketed the money and continued business as usual.
12 CONSUMER FINANCIAL PROTECTION BUREAU V. ARIA
Aria also argues that a reasonable student could not have
been deceived after reviewing the entire solicitation packet
and responding to his request for basic, nonfinancial
demographic information. But nothing Aria cites could
possibly rescue prospective customers from the false
impressions that his solicitations were designed to create.
Reasonable students would assume that, by responding to
Aria’s requests for information, they were “proceed[ing]”
with Aria’s “program” to help them finance their college
education.
The district court did not err by concluding that no issue
of material fact existed as to the deceptive nature of Aria’s
conduct based upon the net impression created by his entire
solicitation packet.
V
Aria also challenges, for the first time before us, the
district court’s calculation of the restitution and civil
penalties. Because Aria did not adequately raise these
arguments to preserve them below, he has forfeited them.
See Momox-Caselis v. Donohue, 987 F.3d 835, 841-42 (9th
Cir. 2021).
VI
The district court properly concluded that Aria was
subject to the CFPB’s authority and that no issue of material
fact existed to undermine the deceptive nature of his
conduct. Summary judgment was warranted on this record.
AFFIRMED.