CFPB Enters Consent Agreement with Student Loan Lender Concerning Sales and Billing Practices

On July 23, 2015, the Consumer Financial Protection Bureau (“CFPB”)​ filed a complaint and proposed consent order in the United States District Court for the Eastern District of California in connection with a settlement reached with a student loan lender that offered fee-based assistance to consumers filling out the federal government’s Free Application for Federal Student Aid (“FAFSA”).​  The complaint alleges violations of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§​ 5531, 5536, the Telemarketing Sales Rule (“TSR”), 16 C.F.R. part 310, the Electronic Fund Transfer Act (“EFTA”), 15 U.S.C. § 1693e(a), and Regulation E, 12 C.F.R. § 1005.10(b).

CFPB alleges that the company used misleading information about the total cost of its subscription financial services and subsequently charged undisclosed and unauthorized automatic recurring charges.  The proposed consent order would require the company to pay $5.2 million in consumer relief, cease and cancel all recurring automatic charges, and cease misrepresenting the cost or price of its products or services.  The company would also be required to pay a nominal civil money penalty of $1 into the CFPB’s Civil Penalty Fund.  CFPB stated that it is not seeking a larger penalty because of the company’s “limited financial resources.”  CFPB has noted that the proposed consent order is not a finding or ruling that the company has actually violated the law, and is only effective if approved​ by the court.