On August 9, 2021, the California Department of Financial Protection and Innovation (DFPI) announcementthat he had entered a settlement agreement with a Tustin-based student loan debt relief company, resolving allegations the company violated California Consumer Financial Protection Act (CCFPL) by collecting illegal advances under the Selling Rule of telemarketing (TSR). The settlement comes as the DFPI seeks to crack down on student loan debt relief companies that allegedly violate California’s new consumer protection law. The CCFPL prohibits the conduct of unfair, deceptive or abusive acts or practices in relation to financial products or services intended for consumers.
The DFPI alleged that the company offered to help consumers reduce or eliminate their student loans, and the company allegedly charged consumers an upfront fee of between $ 799 and $ 899 during registration as well as in some cases. cases, a monthly fee of $ 39 for its services. The DFPI alleged that the company violated the CCFPL by charging an advance fee which is prohibited under the TSR.
Under the settlement agreement, the company agreed to reimburse the student loan borrowers for $ 870,000 in fees it collected and to pay a penalty of $ 500,000 to DFPI. Additionally, the company agreed to cease its practice of collecting advances and rescinding allegedly illegal contracts with existing consumers.