Policy- Student-loan borrowers in Minnesota are getting over $17,000 in refunds through a recent settlement.
- The attorney general accused a company, Docupros, of pocketing illegal fees over the false promise of debt relief.
Another day, another settlement for student-loan borrowers.
On Wednesday, Minnesota Attorney General Keith Ellison announced the state has shut down Docupros, a company it accused of scamming student-loan borrowers and requiring them to pay for debt relief services the government offers for free. Borrowers who paid the company will receive $17,824.68 in refunds in total, and according to the press release, the California-based company is no longer able to operate in Minnesota until it officially registers as a debt-settlement service provider.
Docupros was one of the 52 student-debt relief companies Ellison recently announced he was investigating, and it's the 14th company that has so far been ordered to cease operations in the state.
"When companies fraudulently get Minnesotans who are already struggling under crushing student-loan debt to pay them money for fake debt 'forgiveness,' I will shut them down," Ellison said in a statement. "I encourage any Minnesotan who's been preyed on by an outfit like this to contact my office so we can hold these bad actors accountable."
Docupros did not admit any wrongdoing. According to Ellison's office, the company "pocketed exorbitant fees" to enroll borrowers in government-run student-loan forgiveness programs that normally do not cost any money, along with charging up-front fees for those services, which is in violation of Minnesota law.
This is far from the only settlement over fraudulent student-debt relief practices. Along with Ellison's efforts, government agencies have been scrutinizing companies that are misleading borrowers into unnecessarily paying for debt relief services. For example, the Federal Trade Commission and Justice Department in August announced that over 22,000 borrowers would receive $9 million in refunds after a different company was charging illegal fees.
Now that federal student-loan payments have resumed, scam risks have increased for borrowers. After an over three-year pause, borrowers are once again paying a monthly student-loan bill, and many of them have reported confusion with the process. Additionally, borrowers have faced hours-long hold times with their servicers, leaving many of their questions unanswered as they attempt to make their new monthly payments.
The Consumer Financial Protection Bureau and Education Department have put out resources for borrowers on what scams might look like, with the key point being no borrower should have to pay for help enrolling in any government program, whether it be Public Service Loan Forgiveness or an income-driven repayment plan. Borrowers who believe they were subjected to a scam can file a complaint with the CFPB or their state's attorney general's office.