Policy- The CFPB accused five student-debt relief companies of charging consumers unnecessary fees.
- As a result, 23,000 impacted borrowers may soon receive checks compensating them in the mail.
Thousands of student-loan borrowers might soon be getting some extra money in the mail.
On Monday, the Consumer Financial Protection Bureau (CFPB) announced that over 23,000 people who were charged "unlawful advance fees" by five student debt relief companies will receive a check in the mail from Epiq Systems — a contractor with the CFPB — starting on December 12. The total distribution amount is approximately $19 million.
The CFPB accused the five companies — Docu Prep Center, Certified Doc Prep Services, Assure Direct Services, Direct Document Solutions, and Secure Preparation Services — in a lawsuit that between 2015 and 2017, they violated the Consumer Financial Protection Act and the Telemarketing Sales Rule by deceiving borrowers about the services they offer, including misrepresenting interest rates and collecting advance fees for help getting debt relief.
It also said that Monster Loans and Lend Tech Loans, two associated mortgage companies, violated the Fair Credit Reporting Act by marketing debt relief to consumers using credit information "illegally obtained" from a credit reporting company.
—consumerfinance.gov (@CFPB) December 12, 2022
Borrowers who believe they were impacted by this action and have questions about payments can contact Epiq Systems by calling 877-899-2926 or emailing info@cfpb-monsterloans.org.
Student-debt relief companies often offer borrowers help with lowering their monthly payments or enrolling in a targeted loan forgiveness program, but that's not without a fee that may or may not be disclosed upfront. While the company might tell the borrower that they are affiliated with the government and can assist with quick relief, it can be fraudulent — especially because any related service directly affiliated with the Education Department never has a cost, and enrolling for any relief is free through the federal government.
Since President Joe Biden announced up to $20,000 in broad student-loan forgiveness at the end of August, his administration has taken a number of steps to protect borrowers from scams and fraudulent behavior in the process. The White House and Education Department released a "Do's and Don'ts" list to outline what actions borrowers should and should not take as they applied for debt relief, and last week, the Federal Communications Commission announced enforcement actions against a robocall campaign that was using Biden's debt relief as a way to get borrowers' personal information.
Still, the broad debt relief is paused at this time following two lawsuits that have blocked its implementation. While 26 million borrowers submitted their applications for loan forgiveness when the form was still available, the Education Department cannot actually discharge any student loans until the Supreme Court makes a final decision on the legality of the relief. The nation's highest court will hear arguments on the cases in February.