CFPB Obtains Bans Against Student Debt Relief Companies and Their CEOs | Hudson Cook, LLP
- The CFPB has filed a proposal for final judgment stipulated to resolve the allegations against the debt relief affiliates and their senior executive regarding alleged abusive billing and deceptive telemarketing practices in violation of the Consumer Financial Protection Act and the telemarketing sales rule.
- Without admitting or denying liability, the defendants each consented to industry bans and the entry of a monetary judgment in excess of $11 million, although all but the $30,000 civil penalty were stayed.
- This resolution is another example of the CFPB’s recent focus on potential wrongdoing by debt relief companies and student borrowers, and the imposition of industry bans is another example of the Director Chopra’s strict enforcement stance.
On April 29, 2022, the CFPB announced a proposed resolution set forth in a case it originally filed on November 5, 2020 in federal court in California against a general debt settlement company, a debt relief firm student debt and their co-CEO. The CFPB alleged that the student debt relief company charged more than 9,000 consumers about $10.5 million in illegal upfront fees. In addition, the CFPB alleged that the debt settlement company used deceptive sales tactics to enroll certain customers for debt relief services, including through a “ruse” in which sales agents falsely announced to clients that they were being considered for new loans. Finally, the Bureau alleged that the senior official participated directly in the violations and had the power to control them as CEO of the two companies, sole owner of the student debt relief company and majority owner of the general company. debt settlement.
In addition to $11 million in monetary relief, all of which is suspended, and a $30,000 civil penalty payable by the CEO, the order imposes industry prohibitions on each defendant.
You can view all relevant court documents and press releases at The CFPB Application page..