The Bureau joined with state and city law enforcement officials to take action against the organization for deceptive practices.
The Consumer Financial Protection Bureau has filed suit and requested a temporary restraining order against a student loan debt relief organization for deceptive practices that violate the Consumer Financial Protection Act and Telemarketing Sales Rule. The Bureau announced the action taken jointly with Minnesota Attorney General’s Office, North Carolina Department of Justice, and the Los Angeles City Attorney in the suit against the organization, which consists of several companies allegedly operating as a common enterprise. According to the complaint, the enterprise deceived thousands of federal-student-loan borrowers and charged more than $71 million in unlawful advance fees in connection with the marketing and sale of student-loan debt-relief services to consumers. The complaint seeks an injunction against the organization, damages, redress to consumers, disgorgement of ill-gotten gains, and civil money penalties.
"Predatory debt-relief companies that prey on students’ hopes and dreams are unconscionable," North Carolina Attorney General Josh Stein said about the action. "The cost of student loans that too many people have to take out to do that is already too high. It boils my blood when fraudsters then come along and prey on them," Minnesota AG Keith Ellison said in his release. Los Angeles City Attorney Mike Feuer added, "Students and families in L.A. and across California confront crushing student loan debt. The last thing they need is to have their burdens compounded by the so-called debt relief practices we allege here."
The debt relief organization consists of the following related companies: Consumer Advocacy Center Inc., which does business as Premier Student Loan Center; True Count Staffing Inc., also known as SL Account Management; and Prime Consulting LLC, known as Financial Preparation Services. Individual defendants include Albert Kim, Kaine Wen, and Tuong Nguyen, whom the Bureau alleges substantially assisted the student-loan debt-relief companies. In its complaint, the Bureau charges that Premier, along with its company co-defendants, violated the CFPA and TSR by making deceptive representations about the companies’ student-loan debt-relief and modification services.
Premier charged and collected improper advance fees before consumers had received any adjustment of their student loans or made any payment toward such adjusted loan, according to the CFPB. The Bureau also alleges that the defendants engaged in deceptive practices by misrepresenting the purpose and application of fees charged by the companies, their ability to obtain loan forgiveness, and their ability to lower consumers’ monthly payments. The defendants also failed to inform consumers that the companies automatically request that consumers’ loans be placed in forbearance so that consumers can better afford the companies’ significant fees, and that the companies submit false information to student-loan servicers in loan-adjustment applications in an effort to qualify consumers for lower monthly payments, according to the complaint.
The court has scheduled a hearing on the Bureau’s request for a preliminary injunction for Nov. 4, 2019. The Bureau said it is seeking to keep this relief in place while the case proceeds.
Companies: Financial Preparation Services; Premier Student Loan Center; SL Account Management
MainStory: TopStory CaliforniaNews CFPB ConsumerCredit EnforcementActions Loans MinnesotaNews NorthCarolinaNews UDAAP
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