On January 26, 2021, a California federal judge granted the Consumer Financial Protection Bureau’s (CFPB) motion for default judgment against a now-defunct financial aid services company. The court also granted in part the CFPB’s motion for summary judgment against the company’s founder.
The ruling resolves a complaint filed by the CFPB in 2015, previously covered by Goodwin, alleging that the financial services company ran a nationwide scam preying on consumers’ anxieties about paying for college. The CFPB alleged that the company misrepresented that it would apply for student financial aid programs on behalf of its customers. According to the recent order, between 2011 and 2015, the company sent solicitation packets to 3.9 million potential consumers who were students (both high school seniors and students enrolled in college) and their families, asking them to “submit” a “Student Aid Profile Form” to “proceed” with a student aid program and “apply for . . . financial aid programs.” The company received at least $4,783,064 in fees from at least 76,000 consumers who responded to the solicitation packets between 2011 and October 2015. The only product that students received in return was a booklet containing information about student financial aid programs. The company never applied for financial aid on behalf of consumers or contacted any person to apply for any financial aid on behalf of consumers.
The case was stayed in 2016 while a criminal investigation into the company’s founder was pending. That stay was lifted in May 2019. Shortly thereafter, counsel for both the company and its founder sought to withdraw from the litigation. The court ordered the company to secure substitute counsel, but the company failed to do so and in January 2020, the court entered default against against the company for failure to defend itself. The CFPB sought a default judgment in August 2020 and the company did not oppose.
As a result of the orders, the financial aid services company and its founder must pay $4.7 million in restitution and a $10 million civil money penalty, and will be held jointly and severally liable for these amounts.
The post Financial Aid Services Company Ordered to Pay $14.7 Million in Deceptive Practices Lawsuit appeared first on Consumer Finance Enforcement Watch.