On December 11, 2014, the CFPB filed two actions against debt relief companies. Complaint for Permanent Injunction and Other Relief, Consumer Fin. Prot. Bureau v. IrvineWebWorks, Inc., No. 8:14-cv-1967 (C.D. Cal. Dec. 11, 2014); Complaint for Permanent Injunction, Civil Money Penalties, and Other Relief, Consumer Fin. Prot. Bureau v. Coll. Educ. Serv. LLC, No. 8:14-cv-3078 (M.D. Fla. Dec. 11, 2014). These complaints follow several other actions filed by the CFPB against debt relief firms in which the Bureau has consistently alleged violations of the Telemarking Sales Rule (TSR) and UDAAP. The defendants in the new complaints are debt relief companies focusing on student loans, and the CFPB underscored its concerns in this area in a consumer advisory issued the day the complaints were filed warning borrowers about student debt relief “scams.”
The allegations in the complaints are similar to those in earlier complaints. In the College Education Services complaint, the CFPB alleges the defendants violated the TSR, including by charging upfront fees and misrepresenting that debt consolidation would provide quick relief. The CFPB alleged violations of the deceptive prong of UDAAP based on the same alleged misrepresentations. In the complaint filed against Student Loan Processing and its owner, the CFPB alleged violations of the TSR, including by charging upfront fees, misrepresenting an affiliation with the Department of Education through the use of an official-looking logo, and misrepresenting the fees charged for services. The CFPB also alleged violations of the deceptive prong of UDAAP based on these alleged misrepresentations.
Along with similar allegations, these actions mirror the CFPB’s earlier cases filed against debt relief firms, including by:
- including the individual owners as defendants;
- filing the suits in court rather than as administrative proceedings;
- filing the Florida suit jointly with the Florida attorney general; and
- filing a proposed consent order in that action that permanently bans the defendants from providing debt relief services or assisting any person offering such services.