A California firm and its owner would be banned from providing consumer financial products after allegedly charging unlawful upfront fees to borrowers for accessing otherwise “free” debt relief programs, the federal consumer financial protection agency said Wednesday.
The California-based firm, Student Loan Pro, would also be dissolved by its owner, Judith Noh, the Consumer Financial Protection Bureau (CFPB) said. A marketing company also owned by Noh, FNZA Marketing, LLC, would also be dissolved.
The agency is seeking a stipulated judgment from the court, which has not yet acted on the filing.
According to CFPB, Student Loan Pro telemarketed debt-relief services for consumers with federal student loan debt. The agency alleges that Student Loan Pro and Noh violated federal law by charging borrowers upfront fees to file paperwork on their behalf to access free debt-relief programs available to consumers with federal student loans.
CFPB said Noh and the firm violated the Telemarketing Sales Rule by requesting and receiving advance fees, initially running as high as $795, for its debt-relief services. “The company’s services included filing paperwork on consumers’ behalf to apply for programs that were already available to borrowers for free from the United States Department of Education,” the agency said.
The bureau contends that the firm’s advance-fee violations cost approximately 3,300 consumers nearly $3.5 million in advance fees.
According to the agency, the Telemarketing Sales Rule prohibits sellers and telemarketers from requesting or receiving advance fees for any debt-relief service before renegotiating, settling, reducing, or otherwise altering the terms of at least one of a consumer’s debts, and before a consumer has made at least one payment on such altered debt.
CFPB Bans Student Loan Pro and Owner for Fee Harvesting Scheme
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