The CFPB announced it has entered into a consent order with Student Aid Institute, Inc., a student debt relief company, and its chief executive officer. The order settles charges that the company and CEO violated the Telemarketing Sales Rule, the Consumer Financial Protection Act prohibition of unfair, deceptive or abusive acts or practices, and Regulation P (which implements the Gramm-Leach-Bliley Act) by conduct that included falsely representing an affiliation with the U.S. Department of Education (ED), charging unlawful advance fees, misleading borrowers about the benefits of the company’s services, and failing to provide required privacy notices. The settlement follows closely on the heels of another CFPB settlement with a student debt relief company and its individual owner about two weeks ago.
Under the terms of the consent order, all contracts between the company and any consumers are immediately rescinded and the company must immediately cease charging any fees under the agreements. Within 45 days of the date on which the consent order is entered, the company must permanently cease operations. The consent order permanently bars the company and CEO from participating in the debt relief industry. For any consumer who paid fees to the company since December 2012 and is enrolled in a ED income-driven repayment or forgiveness plan with an annual recertification or renewal deadline within 30 days of the date on which the consent order is entered, the company must handle all paperwork necessary for the consumer to maintain enrollment in the plan. In addition, a $50,000 civil money penalty must be paid by the company and CEO.