CFPB Files Complaint Against Student Loan Debt Settlement Company

On November 5, 2020, the Consumer Protection Financial Bureau (CFPB) announced that it had filed a complaint against a California student loan debt settlement company and the company’s CEO in the U.S. District Court for the Central District of California. The complaint alleges that the company violated the Telemarketing Sales Rule (TSR), and the Consumer Financial Protection Act (CFPA) by charging illegal upfront fees, failing to make required disclosures, and engaging in deceptive sales practices. In particular, the CFPB alleges that the company required consumers make payments prior to their debts being modified and before they made their first payment under the modified plan, in violation of the TSR. Additionally, the complaint alleges that the company required consumers to deposit funds in dedicated trust accounts but failed to disclose that the consumers owned the funds in those accounts and that they would received all the funds in those accounts, less any fees earned by the company, if they decided to withdraw those funds. The complaint further alleges that the company and its CEO engaged in deceptive acts and practices under the CFPA by misrepresenting the company as a lender in order to steer consumers to sign up for the company’s services.

The complaint seeks injunctive relief, monetary damages, civil money penalties, and costs associated with the action.