On June 10, the CFPB moved to reopen its 2021 enforcement action against the final remaining defendant in a student debt relief case involving over $3.4 million in alleged illegal advance fees. The Bureau, under Acting Director Russel Vought, told the U.S. District Court for the Central District of California it will proceed against the individual defendant following a four-month stay.Continue Reading CFPB Moves Forward with Debt Relief Suit Over $3.4M in Alleged Advance Fees
On March 13, the CFPB filed a brief in an Illinois federal court, reinforcing its arguments for a $43 million judgment against the founder of a now-defunct debt relief company. The CFPB contends that the company’s founder controlled its deceptive telemarking operations and should be held personally liable under the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act (CFPA). Continue Reading CFPB Pushes Forward in Debt Relief Action
On December 16, the CFPB released a special edition of its Supervisory Highlights, which detailed findings from the Bureau’s recent examinations of student loan markets. The report identifies a range of violations related to student loan refinancing, private lending and servicing, debt collection, and federal loan servicing.Continue Reading CFPB Report Highlights Widespread Violations in Student Loan Sector
On December 9, the CFPB entered into a consent order with a debt collection agency for alleged unlawful student loan debt collection practices against defaulted borrowers. The debt collection agency’s allegedly improper practices included delaying borrowers’ loan rehabilitation processes to generate and collect fees that cost individual borrowers thousands of dollars. These actions were in violation of the CFPA’s prohibitions on unfair and abusive acts or practices and the FDCPA. See 12 U.S.C. §§ 5563, 5565;15 U.S.C. § 1692l(b)(6).Continue Reading CFPB Bans Debt Collection Agency Over Student Loan Abuses
On December 3, the CFPB filed a proposed settlement to resolve a long running lawsuit against a student loan relief company and its owner (collectively, the “Defendants”). The settlement bars the company from offering or providing debt settlement products. In addition, the Defendants must pay $2,000 in civil monetary penalties, an amount determined based on their inability to pay more.Continue Reading CFPB’s Settlement Imposes Permanent Ban on Defunct Student Loan Relief Company and Its Owner
Starting in February 2025, providers of (1) debt settlement services, (2) student debt relief services, (3) private postsecondary education financing, and (4) income-based advances (a/k/a earned wage access (EWA) products) must begin registering and conform to annual reporting requirements in order to operate in California. We previously discussed this rule here.Continue Reading California DFPI Poised to Fill Potential Regulatory Gap Amid Anticipated CFPB Leadership Shift
On October 22, the California DFPI announced the state’s approval of registration regulations enacted under the CCFPL, which will require providers of (1) debt settlement services, (2) education financing, (3) income-based advances (including earned wage access products), and (4) student debt relief services to register with the state and comply with data submission requirements. Financial service providers covered by the new regulations must file an application to register by February 15, 2025, to continue operating legally in the state.Continue Reading California DFPI Rolls Out Registration Requirements for Debt Settlement, EWA, and Student Loan Relief Providers
On September 17, the California Department of Financial Protection and Innovation (DFPI) announced enforcement actions against three student loan debt relief companies. The companies were ordered to cease unlawful practices, including charging upfront fees prior to providing services. They were also required to cancel all outstanding contracts with California consumers, issue refunds, and collectively pay $260,000 in penalties.Continue Reading DFPI Cracks Down on Illegal Student Loan Debt Relief Practices
On September 24, the CFPB announced the release of its annual report on the most pressing financial concerns facing servicemembers. This edition highlights that servicemembers are encountering student debt-related difficulties such as struggling to get help from student loan servicers, and transcript withholding by colleges or universities as a means to collect on student debt.Continue Reading CFPB Report Highlights Student Loan Struggles Facing Servicemembers
On September 12, 2024, the Consumer Financial Protection Bureau (CFPB) filed a proposed order which, if entered by the court, will ban a student loan servicer from servicing federal student loans and require it to pay $120 million—$20 million in civil money penalties and $100 million in redress for harmed borrowers—for what is described as “wide-ranging student lending failures” resulting in violations of the Consumer Financial Protection Act, the Fair Credit Reporting Act, and the Fair Debt Collection Practices Act.Continue Reading CFPB Settles Action Against Student Loan Servicer with Industry Ban
On July 11, the Federal District Court for the Middle District of Florida granted the FTC’s request for a temporary restraining order against operators of a debt relief enterprise that unlawfully charged consumers illegal advance fees.
In the FTC’s July 9 complaint, the Commission alleges that the company and its owners falsely promised to enroll consumers in programs that guaranteed low monthly loan repayments followed by a lump-sum loan forgiveness. In exchange for enrollment in their program, the operators charged consumers advance fees of several hundred dollars followed by monthly fees of as much as $29. The FTC alleges that while the company stated it would apply consumers’ monthly payments to their loan balances, in reality it kept the consumers’ money and moved it offshore. As part of their scheme, the defendants falsely claimed that they were affiliated with the Department of Education.Continue Reading FTC’s Shuts Down Operators of Debt Relief Enterprise