The Consumer Financial Protection Bureau, the government consumer protection watchdog, is taking action against two companies that allegedly scammed student loan borrowers.
According to lawsuits filed on December 11, 2014 against College Education Services LLC and Student Loan Processing.US, the companies deceived people into paying upfront fees for federal student loan repayment benefits that are available for free.
College Education Services LLC, claims the lawsuit filed by CFPB and the Florida Attorney General, violated the Telemarketing Sales Rule (TSR), the Consumer Financial Protection Act (CFPA) prohibition of unfair, deceptive or abusive acts or practices and the Florida Deceptive and Unfair Trade Practices Act. The company allegedly charged unlawful advance fees, falsely promised lower federal student loan payments, and promised relief from student loan default or administrative wage garnishment much more quickly than was possible.
Student Loan Processing.US (a fictitious business name of Irvine Web Works, Inc.), sued by CFPB in California federal district court, allegedly falsely represented that the company was affiliated with the U.S. Department of Education. CFPB claims that the company also charged unlawful advance fees, and deceived student loan borrowers about the costs and terms of the company’s services.
This is the sort of thing that makes a lawyer who helps people with student loan problems very happy – the government taking action to bring down student loan debt relief companies that promise the moon and stars in return for a steaming pile of nothing.
There’s nothing wrong with charging a fee for student loan resolution services, but not if all you’re doing is filling out forms that the government makes available at no charge. There’s a complete analysis of your financial situation that needs to take place, along with a discussion of your options. From there, you should get reliable guidance on the best course of action given your situation.
Getting you out of default on your federal student loans is no simple feat, and can be done in a variety of ways depending on your goals and circumstances. Different federal student loan repayment options are available, but which one is best for you requires a pretty deep dive into your current financial reality. Depending on your point of view, that may be something that constitutes the practice of law and requires a license.
Most student loan lawyers like me charge a fee to analyze your situation, then set you free to take action based on the results of that analysis. If your problem is something that requires my help, the analysis fee gets credited towards your legal fees.
But making you spend hundreds – if not thousands – of dollars to prepare a simple form and send it into the U.S. Department of Education or your federal student loan servicer? Clearly, there’s no value in that and should be punished. As for the part about falsely representing that you’re somehow affiliated with the U.S. Department of Education, that’s just wrong.
The only problem with the CFPB actions? That the proposed Consent Order in the Florida case provides for a fine of $25,000 and a permanent bar against College Education Services LLC or any of its owners from working in the student loan resolution field again. Seems to me that the company made a lot more than $25,000 in connection with its practices, so it’s a slap on the wrist.
Still, it’s a start.
CFPB press release can be found here: http://www.consumerfinance.gov/newsroom/cfpb-takes-action-to-end-student-debt-relief-scams/
The College Education Services proposed consent order can be found at:http://files.consumerfinance.gov/f/201412_cfpb_consent-order_the-college-education-services.pdf
The State of Florida joined the Bureau in the lawsuit against College Education Services. More information will be available at:http://www.myfloridalegal.com/newsrel.nsf/newsreleases