CFPB Seeks Ban Against Operator of Student Loan Debt Relief Scam Reboot

The Consumer Financial Protection Bureau (CFPB) took action on June 9, 2022, against the owner of a student loan debt-relief company. The owner of the student loan debt-relief company took the borrower’s money after obtaining their names and account from another student loan debt-relief scammer that was previously shut down by the CFPB.

The CFPB took this action because the company allegedly withdrew hundreds of thousands of dollars from student borrowers’ bank accounts without authorization. The proposed settlement from the CFPB, if entered by the court, would ban the owner of the student loan debt-relief company from the debt relief industry and order him to pay a penalty fine of $175,000.

CFPB Director, Rohit Chopra, said in a statement, “[the owner] brazenly rebooted a student-loan debt relief scam the CFPB shut down over six years ago.” The Director is referring to a student-loan debt relief scammer, which was shut down in 2016 because the company violated federal consumer financial protection law by charging unlawful upfront fees for student loan debt-relief services and making deceptive promises to borrowers about possible savings through reduced payments and loan forgiveness.

In 2016, before CFPB ordered the first student-loan debt relief scammer to shut down, the owner of the company subject to this complaint was the founder and sole owner of a new student loan debt-relief company in California. In CFPB’s complaint, they allege that from May 2016 to April 2017, the company was a non-bank provider of student loan debt-relief services, including recertifying the Department of Education’s student loan repayment programs on behalf of borrowers. The company did not seek new customers. Instead, they obtained student-loan account and billing information from the previous company, which shut down in 2016 without the customers’ knowledge or consent. Without authorization, as alleged in the CFPB complaint, the company collected recurring fees from customers, which were generally $39 per month. The company subject to this complaint did not enter into any contracts or agreements with the borrowers.

The company stopped collecting fees from borrowers in March 2017. On April 5, 2017, the owner closed the company. By the time the owner closed the company, they debited over $240,000 from student borrowers’ accounts.

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