Student Loan Debt Collector Shut Down by Consumer Bureau

Ejudicate initiated fake arbitration proceedings, deceived borrowers

A company purporting to be a neutral arbiter offering to help settle student loan debt was really a debt collector working on behalf of a student loan servicer.

The Consumer Financial Protection Bureau (CFPB) found that so-called arbitration service provider Ejudicate was hired by and acting on behalf of a student loan servicer that had been previously banned by the CFPB.

Prehired was ordered to stop its student loan servicing and student loan debt collection activities in 2023. After that order, the company paid Ejudicate to "arbitrate" remaining debts.

According to the CFPB's investigation of Ejudicate, the company told borrowers it was a "neutral party" and claimed to be working to secure a fair debt resolution between a borrower and Prehired.

In fact, Ejudicate earned a commission from Prehired for every debt repayment it secured.

“Ejudicate ran bogus arbitration proceedings, deceived borrowers, and hid its financial conflicts of interest,” said CFPB Director Rohit Chopra. “Arbitration outfits cannot rig the process against consumers to enrich their corporate clients.”

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