The Consumer Financial Protection Bureau (CFPB) has taken action against some student loan assistance companies that are selling programs to consumers saying they can offer great benefits to those with student loans.
The CFPB went so far as to say they “took action to put an end to two student “debt relief” scams that illegally tricked borrowers into paying upfront fees for federal loan benefits.”
The two companies in the crosshairs have passed over my keyboard before. Both Student Loan Process.US and College Education Services raised concerns for me early on and had been the target of other reports as well.
Back in February of 2013 I wrote this article warning consumers about dubious student loan assistance outfits. The tea leaves were very clear on what was about to happen to consumers. It seemed the sales outfits that had been pushing debt settlement had moved on to now target those with student loans. It is/was almost like shooting fish in a barrel.
And ironically, it was the very government loan servicers that were driving consumers into the hands of scammers by not knowing what programs were in their quivers or being properly incentivized to offer them.
Rohit Chopra of the CFPB said, “We have previously noted that problems in student loan servicing can create the opportunity for scammers to flourish – similar to the “foreclosure rescue” scams that grew in number as homeowners struggled with their mortgage servicers.”
And with the recent action against those two companies the CFPB says they are “issuing a consumer advisory today warning student loan borrowers to be wary of paying high fees for free federal loan benefits.”
“Student loans are already a significant debt for many Americans. College Education Services and Student Loan Processing.US added to that hardship by taking advantage of troubled borrowers and failing to describe their services honestly,” said CFPB Director Richard Cordray. “When scam artists prey on student loan borrowers, we will take action to halt their illegal activity.”
College Education Services, its owner, Marcia Elena Vargas, and advisor and employee, Frank Liz, marketed and advertised debt relief services to student loan borrowers with loans in default. Based in Tampa, Florida, the company advertised through Internet ads and operated websites including CollegeDefaultedStudentLoan.com and HelpStudentLoanDefault.com. The company reaped millions of dollars in advance fees from thousands of consumers before it ceased operations around February 2013. Specifically, College Education Services:
College Education Services entered into a consent order with the CFPB. This agreement bans Vargas and Liz from “(1) offering, marketing, selling, or providing any Debt-Relief Service, whether directly or indirectly, (2) assisting any person offering, marketing, selling, or providing any Debt-Relief Service, including by consulting, brokering, planning, investing, or advising, and (3) receiving any monies or consideration from, holding any ownership interest in, providing services to, or working in any capacity for any person engaged in or assisting in the offering, marketing, selling, or providing of any Debt-Relief Service.”
The CFPB also took action against what I think was the larger player in this announcement, Student Loan Processing.US.
Student Loan Processing.US, a fictitious business name of Irvine Web Works, Inc., is headquartered in Laguna Nigel, California, with an office in Dallas, Texas. The CFPB alleges that since at least July 2011, the company and its owner, James Krause, has been marketing and advertising services to advise and assist borrowers applying for Department of Education federal student loan repayment programs. The company operates websites under the names StudentLoanProcessing.us, StudentLoanProcessing.org, and slpus.org. In the complaint filed today, the Bureau is accusing the company and Krause of:
The folks behind Student Loan Processing did not enter a consent order with the CFPB and are headed down the long road towards a trial.
The complaint the CFPB filed let’s us know the CFPB alleges:
The enrollment calls typically began with staff at Student Loan Processing.US telling the consumer that they were “prequalified” for certain federal student loan repayment and forgiveness programs. During the call, the “specialists” directed the consumer to divulge their confidential 4-digit PIN information for the U.S. Department of Education’s National Student Loan Data System, collected information about the borrower’s federal student loan balances and annual income, and then quoted the new expected federal student loan monthly payment amount for borrowers who enroll.
Defendants then gathered banking information from the borrower for payment of the enrollment fee, which was generally collected from the consumer’s debit/credit card or bank account during the initial enrollment call. If a consumer needed to schedule payment of the enrollment fee or to break the enrollment fee into more than one payment, Defendants’ employees were directed to ask the consumer about the frequency with which they were paid, as well as their next expected payday, in order to schedule the enrollment fee payment around that date.”
If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.