On March 15, 2016, the Consumer Financial Protection Bureau (CFPB) announced that it had entered into a consent order and settlement with a national student debt relief company over allegations that the company charged illegal and excessive fees. According to the Complaint, the company operated online student debt management websites that offered services related to federal student loans. The company allegedly offered application and enrollment assistance to borrowers who wanted to enroll in federal programs such Income-Based Repayment or Direct Consolidation Loans. The Department of Education offers these programs for free to any person who has federal student loans and provides free enrollment assistance. The company, however, allegedly charged upfront fees and a recurring monthly charge for assisting borrowers with applications and other enrollment procedures. The company also allegedly misrepresented that it was affiliated with the Department of Education by placing Department of Education logos on its websites and printed materials. According to the CFPB, the company’s practices violated the Telemarketing Sales Rule, which prohibits deceptive marketing of student loans, including charging advance fees for enrollment in federal debt management programs. The CFPB also brought claims under the Deceptive Telemarketing Act for misrepresenting the amount and duration of the recurring fees, failing to clearly disclose fees, and misrepresenting the company’s affiliation with a government entity. Under the consent order, the company must permanently shut down all operations and pay $8.2 million in consumer relief (however, all but $362,000 of the monetary portion will be suspended due to the company’s inability to pay). The consent order is subject to final approval by the Court.
