The Consumer Financial Protection Bureau announced on Tuesday (March 15) that it is taking action to bring down a student debt relief scheme that illegally charged millions of dollars to borrowers through upfront fees for federal student loan services.
The requested ruling has the potential to officially ban Student Loan Processing.US from being involved in any future debt relief and student loan services, the organization said.
“Student Loan Processing.US and its owner, James Krause, preyed upon students looking for loan repayment help and fleeced them out of millions,” CFPB Director Richard Cordray explained in a press release. “The bureau is taking action to shut down the unlawful operation permanently and to prevent the company and its owner from participating in the student lending and debt relief industries ever again.”
The company in question also operates under the name IrvineWebWorks and runs a variety of online sites geared toward student debt relief services.
The CFPB confirmed that the lawsuit was brought against Student Loan Processing.US and Krause in federal district court in California, alleging that the company “charged consumers illegal upfront enrollment fees before providing any services, deceived customers about the costs of their services and falsely represented an affiliation with the Department of Education,” the statement continued.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is empowered to bring action against entities engaged in deceptive acts or practices or those that are violating federal consumer financial laws.
If judgement against Student Loan Processing.US and Krause goes through, the CFPB can launch the following enforcement actions: ending illegal operations, canceling any and all contracts with consumers, refunding consumers, shutting down participation in debt relief and loan processing, supporting borrowers in achieving repayment benefits and paying a civil penalty.