The Consumer Finance Protection Bureau (CFPB) has filed lawsuits against several companies offering to forgive student loan debt for allegedly obtaining peoples’ data illegally, charging unlawful fees and engaging in “deceitful conduct,” an announcement said.
According to the CFPB, Monster Loans violated the Fair Credit Reporting Act between 2015 and 2017, when it obtained information on millions of customers with student loan debt from a major credit bureau. The CFPB said Monster Loans pretended to use the data to offer mortgage loans. In reality, the CFPB said it provided the information to debt-relief companies to use in marketing.
Other companies did the same, such as Lend Tech Loans, between 2017 and 2019.
The CFPB also alleged that several defendants made “deceptive representations” about the services they would provide. Reportedly, the defendants promised victims that they’d have their interest rates reduced and credit scores improved, and that the U.S. Department of Education would become their servicer. Some defendants, the CFPB said, charged and collected as much as $15 million before customers received any adjustment to their loans.
Furthermore, the CFPB said a litany of companies and individuals had been involved in the practices, listing Chou Team Realty, “which does business as Monster Loans,” Lend Tech Loans and several student loan debt relief organizations, such as Docu Prep Center (which does business as DocuPrep Center and Certified Document Center), Assure Direct Services, Direct Document Services and Docs Done Right, among others.
The CFPB filed the lawsuit on Jan. 9 in the U.S. District Court for the Central District of California. It is seeking an injunction against the defendants, damages, redress to customers, disgorgement of any gains deemed to be ill-gotten, and the imposition of civil money penalties.
Unpaid student loans have been rising in the U.S., according to reports last summer. While the total student loan debt fell from $1.49 trillion to $1.48 trillion, the number unpaid was higher. PYMNTS reported that 63.1 percent of students late on their loan payments worked a full-time job as of last summer.