CFPB targets reboot of student loan debt relief scam – Financial Services

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On June 9, the CFPB filed a complaint and proposed order in California federal district court seeking final judgment against the owner of a student debt relief company for allegedly withdrawing more than $240,000 from the bank accounts of student borrowers without authorization.

According to the complaint, the defendant, through his company, obtained student loan account and billing information from hundreds of borrowers without the borrowers’ knowledge or consent from another transaction. student loan debt relief that the CFPB had previously closed, and then used that information to withdraw unauthorized funds from student borrowers’ bank accounts. The Bureau alleges that, through his actions as Chief Executive Officer of the Company, Defendant engaged in and materially contributed to unfair acts and practices in violation of the CFPA, particularly that in addition to control the company and facilitate the debits, the defendant knew or should have known that the debits were not authorized given that she had obtained information about the borrowers from the previously closed company without the knowledge of the borrowers or without their consent, and collected recurring fees from borrowers without authorization or entering into contracts or agreements with the borrowers.

If approved by the court, the defendant would be required to pay a fine of $175,000 to the Bureau and would be permanently prohibited from offering, providing, or assisting others to offer or provide any products or services. debt relief, financial counseling and other consumer financial services. products or services.

put into practice: The CFPB has recently taken other enforcement actions against student loan debt relief companies (We have discussed these actions in previous blog posts here and here.) According to CFPB Director Rohit Chopra , this recent execution action serves as a reminder that “[w]When student loan servicers fail to provide clear and accurate information to borrowers, it sets the stage for scammers to swoop in. “Student loan and debt relief companies should heed the CFPB administrators’ comments here and ensure they protect themselves against potentially burdensome transfers of sensitive borrower information.

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