Consumer Finance Insights
April 4, 2016

CFPB Secures $50,000 Penalty for Student Loan Debt Relief Scam

On March 31, the Consumer Financial Protection Bureau (CFPB) announced that it entered a consent order with a student loan debt relief company, resolving allegations that the company violated the Consumer Financial Protection Act (CFPA); Telemarketing Sales Rule (TSR); and Regulation P, which implements the privacy notice requirements of the Gramm-Leach-Bliley Act (GLBA).

The company allegedly required consumers to pay illegal upfront and monthly fees for debt relief services, and falsely told consumers that it was affiliated with the Department of Education, among other misrepresentations.  According to the consent order, the company’s unlawful marketing and selling of debt relief services since 2012 caused approximately $3.6 million in harm to 4,300 consumers.

Pursuant to the consent order, the company is required to cease its debt relief operations and cancel all existing contracts with consumers.  The company must also pay a $50,000 penalty to the CFPB.

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