On 10/30/19, the CFPB announced an action to halt a student-loan debt-relief operation engaged in allegedly unlawful conduct and consisting of several related companies. The Bureau alleges that since at least 2015, the debt-relief companies operated as a common enterprise and deceived thousands of federal-student-loan borrowers and charged over $71 million in unlawful advance fees in connection with the marketing and sale of student-loan debt-relief services to consumers.
As described in the complaint, the Bureau alleges that the debt-relief companies violated the Consumer Financial Protection Act of 2010 (CFPA) and the Telemarketing Sales Rule (TSR) by making deceptive representations about the companies’ student-loan debt-relief and modification services. Specifically, the complaint alleges that one debt relief company charged and collected improper advance fees before consumers had received any adjustment of their student loans or made any payment toward such adjusted loan. The Bureau also alleges that the defendants engaged in deceptive practices by misrepresenting: the purpose and application of fees charged by the companies, their ability to obtain loan forgiveness, and their ability to lower consumers’ monthly payments. The Bureau also alleges that the defendants failed to inform consumers that the companies automatically request that consumers’ loans be placed in forbearance so that consumers can better afford the companies’ significant fees and that the companies submit false information to student-loan servicers in loan-adjustment applications in an effort to qualify consumers for lower monthly payments.
The CFPB complaint can be found here.