A complaint against a debt-relief firm, debt-settlement firm, and the owner of both was filed Thursday by the Consumer Financial Protection Bureau (CFPB), which alleges one of the firms and the owner charged illegal advance fees to student loan borrowers for its services in violation of the Telemarketing Sales Rule (TSR) and that the other, with the owner, engaged in deceptive tactics in violation of the Consumer Financial Protection Act (CFPA).
The CFPB’s complaint names Performance SLC, LLC (PSLC), a California debt-relief business focused on federal student loan debt; Performance Settlement, LLC (PSettlement), a California debt-settlement company; and Daniel Crenshaw, the owner and CEO of the two companies.
The CFPB said its complaint, filed in federal district court for the Central District of California, alleges that:
- From 2015 through the present, PSLC charged consumers illegal upfront fees by using telemarketing campaigns to convince thousands of consumers to sign up for services to assist them in obtaining loan consolidation, loan forgiveness, or income-driven repayment plans from the U.S. Department of Education.
- Consumers would pay between $1,000 and $1,450 in fees to PSLC for it to file paperwork with the Department of Education, even though student loan borrowers can do this themselves for free.
- It is illegal under the TSR to request or receive any fees for debt-relief services sold through telemarketing before the terms of the debt are altered or settled, and the consumer has made at least one payment under the newly altered debt.
- The PSLC and Crenshaw violated the TSR because consumers were charged at or just after enrollment, before the terms of the debts were altered. PSLC had some consumers pay this prohibited upfront fee through high-interest financing from a third party. Some consumers paid a portion or all of their fee into a trust account, but PSLC failed to provide them with disclosures required by the TSR.
- PSettlement and Crenshaw, from as early as 2019, engaged in deceptive acts and practices in violation of the CFPA by representing to consumers that PSettlement, a debt-settlement company that does not make loans, had considered and rejected those consumers for personal loans to induce them to sign up for PSettlement’s debt-relief services.
- Crenshaw substantially assisted PSLC in requesting or receiving fees illegally and PSettlement in engaging in deceptive acts and practices.
The complaint seeks redress to consumers, injunctive relief, and the imposition of civil money penalties against the defendants.