CFPB Settles Lawsuit With Student Loan Debt Relief Company

On April 29, 2022, the Consumer Financial Protection Bureau (CFPB) announced that it reached a settlement with the CEO of a student loan debt relief company to resolve alleged violations of the Telemarketing Sales Rule (TSR), 16 C.F.R. Part 310, and the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a)(1)(A).  Specifically, the Bureau alleged that the debt relief company and its CEO charged $10.5 million in illegal upfront fees to more than 9,000 federal student-loan borrowers.  The CEO and company also allegedly used deceptive sales tactics to steer certain borrowers into signing up for debt-relief services.

The stipulated judgment and order, if entered by the United States District Court for the Central District of California, will permanently ban the debt relief company from the industry and enjoin it from obtaining referrals from companies purporting to make or arrange loans.  The order will also ban the CEO from the industry for five years and impose a $30,000 civil penalty.