Consumers to Receive Refunds in Student Loan Debt Relief Scam

23,000 consumers will receive a total of nearly $20 million to resolve debt relief scam

The Consumer Financial Protection Bureau (CFPB) has announced that some 23,000 student loan borrowers will receive a cumulative sum of nearly $20 million as a case against debt relief companies comes to a close.

The borrowers paid advance fees to these debt relief companies in exchange for purported settlement or reduction of their student loan debt. Such fees violate existing consumer protection laws. As a result, the borrowers who paid these fees will receive refunds of the full amount paid.

Specifically, the CFPB's action holds accountable the following companies: Certified Document Center, Certified Doc Prep Services, Assure Direct Services, Direct Document Solutions, and Secure Preparation Services. All of these companies were associated with Monster Loans and Lend Tech Loans.

The CFPB notes that payments sent from EPIQ Systems will be sent to impacted borrowers starting on December 12, 2022.

The companies violated consumer protection laws and engaged in unfair and deceptive practices, according to the CFPB.

Specifically, the CFPB alleged that the companies misrepresented to consumers that their interest rates would be reduced, their credit scores would improve, and that the U.S. Department of Education would become their servicer. The lawsuit also alleged that the five companies violated the TSR by unlawfully collecting advance fees for debt relief services.

The CFPB also noted the companies violated the Fair Credit Reporting Act (FCRA) by marketing debt-relief services to millions of consumers using credit report information that was illegally obtained from a nationwide credit reporting company.

Photo byDom Fou/Unsplash