Government Consumer Watchdog Cracks Down on Student Loan Scam

Many people are eager, even desperate, to get some relief from their student loan payments. Unfortunately, there are bad actors who are all too eager to rip those people off.

The Consumer Financial Protection Bureau (CFPB) recently cracked down on one company for engaging in shady practices to “help” people get student loan relief.

Specifically, the CFPB took Student Aid Institute, Inc. to task for charging bogus, up-front fees to people seeking relief, among other infractions.

Student Aid Institute is a debt relief services company that offers to reduce consumers’ student loan payments. The company is headquartered in San Diego, Calif. and its chief executive officer is Steven Lamont.

According to the CFPB, took Student Aid Institute:

  • Charged illegal advance fees: Federal law requires at least one debt to be renegotiated, settled, or reduced before a fee can be collected for debt relief services. But Student Aid Institute often charged consumers hundreds of dollars and required all, or a substantial portion, of its fees to be paid upfront.
  • Deceived borrowers about the benefits and terms of its services: The company misrepresented to consumers how much they would save, whether they were eligible for loan forgiveness, whether they had been preapproved for specified programs, and whether the fees were required to participate in the federal programs.
  • Failed to provide required privacy notices: The Bureau also found the company failed to provide its customers with privacy notices required by law.
  • Falsely represented an affiliation with the Department of Education: The company’s marketing materials falsely implied that it was affiliated or endorsed by the federal government.

We suspect that this isn’t the only company that engages in these, or similar practices. While the CFPB is following up on complaints, and enforcing the law, but there’s no doubt that bad actors are out there doing business today.

So, protect yourself with information. Find out more HERE.

Copyright Today’s Credit Unions