Consumer Bureau Orders Scam Debt Relief Company to Cease Operations, Refund Millions to Borrowers

Enforcement action also bans co-founders from debt-relief payment processing industry

In an enforcement action this week, the Consumer Financial Protection Bureau (CFPB) ordered debt-relief payment processing company Account Management Systems (AMS) and the company's co-founders to cease operations and pay a total of $11 million in fines and customer refunds.

AMS processed debt relief payments for student loan companies. The CFPB said borrowers looking to get out of debt often turn to debt-relief companies for a solution. In this case, the borrowers were defrauded by the bad actions of the company's co-founders, Gregory Winters and Steven Chaya.

“Too often, bad actors take advantage of student loan borrowers and others who are seeking to get out of debt,” said CFPB Director Rohit Chopra. “Our law enforcement action bans the facilitators and their ringleaders for their illegal acts.”

Specifically, the CFPB found that AMS, a company owned by RAM payment, violated the law in the following ways:

Unlawfully collecting, processing, and disbursing fees: The respondents collected fees from consumers and provided those fees to student-loan debt-relief companies before the consumers’ debts had been renegotiated or a payment was made pursuant to a new debt settlement, as required by law. The respondents also disbursed illegal upfront debt-relief fees that were ostensibly for add-on services marketed by debt-relief companies as legal plan memberships.

Deceiving consumers about the fees they paid: The respondents led consumers to believe that AMS and RAM Payment would not disburse fees until student-loan debt-relief companies had earned the fees, but they failed to confirm that fees had been earned before paying them to debt relief companies.

Paying companies for referrals: The respondents paid illegal commissions to third-party marketing companies connected with student debt-relief companies and traditional debt-relief companies, for a stream of customer referrals, also in violation of rules designed to ensure that account maintenance services are independent.

The enforcement action bans Winters and Chaya from the industry and requires the company and co-founders to refund $8.7 million to borrowers and pay a $3 million fine.

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