INSIDE HIGHER ED: CFPB Blasts ‘Debt Relief’ Services
Career College Central Summary:
The U.S. Consumer Financial Protection Bureau announced Thursday that it was taking legal action against two companies offering to help students take advantage of federal loan benefits that officials said amounted to a “scam.”
The bureau said the companies engaged in predatory practices by overpromising the help they could provide borrowers and illegally charging borrowers upfront fees to help them apply for federal loan benefits that are free.
The bureau sought a court order to shut down College Education Services, which ran CollegeDefaultedStudentLoan.com and HelpStudentLoanDefault.com. Officials accused the company; its owner, Marcia Elena Vargas; and an adviser and employee, Frank Liz, of charging illegal advance fees, falsely promising lower payments, and falsely promising that it could quickly stop court-ordered wage garnishment.
In addition, the CFPB filed a lawsuit against Student Loan Processing.US, alleging that the company falsely represented its affiliation with the U.S. Department of Education, charged illegal advance fees, and deceived borrowers about the costs and terms of its services.
The company was accused of using a company logo that resembles a government seal, creating the impression that the marketing material is endorsed by the federal government. In some cases, the suit alleges, the company advised students who may have qualified for zero payments under federal loan benefits to pay $39 a month without explaining that the fee was going to the company rather than paying off their debt.
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INSIDE HIGHER ED