CFPB Takes Aim at Student Loan/Financial Aid Sector (July 28, 2015)
The CFPB has taken action against two companies over what the agency says were illegal practices related to student loans and financial aid information. The bureau last week ordered Illinois-based Discover Bank to pay a $2.5 million fine and refund $16 million to borrowers after allegedly overstating minimum payment amounts due on billing statements and withholding information customers needed to obtain tax benefits. The CFPB also claims that the bank, which neither admits nor denies the allegations in the consent order, engaged in illegal debt collection tactics, including calling consumers early in the morning and late at night.
Also last week, the CFPB filed a complaint against Student Financial Aid Services (SFAS), a Sacramento, Calif., company that provides fee-based assistance to prospective college students filling out the Free Application for Federal Student Aid (FAFSA). In its complaint, the CFPB alleges that the company misled customers about the total cost of its subscription fees and charged undisclosed and unauthorized automatic recurring fees for its services. The CFPB has proposed a consent order that would require SFAS to repay $5.2 million to affected customers and end illegal sales and billing practices. Earlier this month, the company agreed to cease operating under the URL FAFSA.com, to avoid giving the impression it was affiliated with the U.S. Department of Education.
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