Download this press release (PDF)

SACRAMENTO – The California Department of Financial Protection and Innovation (DFPI) today announced that it demand that a Tustin-based student debt relief company, Amerifed Doc Prep LLC, pay penalties and repayments totaling more than $ 1.37 million after finding that the company violated California Consumer Financial Protection Act (CCFPL) by collecting illegal advances prohibited under the Federal Telemarketing Sales Rule.

The announcement follows a wider repression which began in February against student debt relief companies bypassing the CCFPL and the Student Loan Servicing Act.

“DFPI is committed to protecting student loan borrowers from predatory debt relief scams,” Acting Commissioner Christopher S. Shultz said. “The ministry will not tolerate student debt relief companies that charge fees to California consumers who violate the law or deceive and mislead consumers. Borrowers who are having difficulty repaying their student loans should call the US Department of Education or their loan officer directly.

In a consent order, the DFPI demanded that Amerifed repay California student loan borrowers over $ 870,000 it had collected in fees and pay a penalty of $ 500,000 to the department. In the order, the company also agreed to end its illegal behavior, cancel all illegal contracts with consumers, and reimburse consumers within 60 days.

A ministry investigation found that Amerifed lured consumers by promising them to reduce or cancel their student loans in exchange for an upfront payment of up to $ 899 and an ongoing monthly fee of $ 39. The DFPI investigation found that more than 1,000 California student loan borrowers registered with Amerifed and were charged illegal upfront fees prohibited by federal telemarketing law.

The ministry recently released several other measures to end similar behavior and continue its aggressive crackdown on student loan debt relief companies violating the new consumer protection law. The DFPI recently signed another consent order with San Diego-based Libre Technology, Inc., doing business as Docupop, demanding that it reimburse consumers $ 7,379 in fees collected, pay a penalty of $ 2,500 and cease offering services of California Unlicensed Student Debt Relief.

Earlier this month, the DFPI issued cease and desist orders against two other Tustin-based student debt relief companies. The Department issued a order against Federal Document Assistance Center LLC after discovering it covered consumers with deceptive mail that falsely implied affiliation with official federal borrower assistance programs. The ministry issued another order against Higher Level Processing Inc. after discovering it was relying on social media marketing to reach vulnerable borrowers. And earlier this year, Irvine-based Optima Advocates, Inc. discovered in February that it was breaking the law, issued nearly $ 100,000 in repayments to California borrowers charges she had collected and paid the Department a fine of $ 47,500.

Consumers can request free loan deferrals, forbearance, postponement, discharge, or alternative repayment plans directly through the US Department of Education or their loan officer. For federal student loan repayment options, visit www.StudentAid.gov/repay. For private student loans, contact your loan manager. To file a complaint with the DFPI concerning a debt reduction company, go to https://dfpi.ca.gov/file-a-complaint/.

In 2020, Governor Gavin Newsom promulgated the CCFPL and extended the authority of the DFPI to regulate a wider range of consumer financial products and services, such as debt relief companies. Under the CCFPL, one of the DFPI’s goals is to protect the 3.7 million borrowers in California who owe nearly $ 125 billion in student loans. Nationally, student debt exceeds $ 1.5 trillion and is the second largest category of consumer debt behind mortgages.

In addition to debt relief companies, the DFPI authorizes and regulates state chartered banks and credit unions, commodities and investment advisers, fund issuers, mortgage services, supply and Selling Securities and Franchises, Brokers, Non-Bank Installment Lenders, Property Assessed Clean Energy (PACE) Program Administrators, Student Loan Managers, Escrow Companies, Debt Collectors, Option Lease Contractors purchasing, credit repair companies, consumer credit reporting companies, etc.


Source link

About The Author

Related Posts

Leave a Reply

Your email address will not be published.