The California Department of Financial Protection and Innovation yesterday announced it had assessed $1.4 million in fines and penalties against a student loan debt relief company that was accused of collecting illegal advance fees that are prohibited under federal law.
The debt relief company, Amerifed Doc Prep LLC, will refund California customers $870,000 and pay a fine of $500,000 to the DFPI. The company also agreed to cease its illegal conduct, cancel all unlawful contracts, and refund consumers within the next 60 days.
Amerifed was accused of charging initial payments as high as $899 and ongoing fees of $39 per month. More than 1,000 residents of California signed up for the service, according to the DFPI, and were charged the fees, which is a violation of the Telemarketing Sales Rule.
In announcing the enforcement action against Amerifed, the DFPI also announced several other enforcement actions against other student loan debt relief companies with penalties that were lower than that impost on Amerifed.
Other companies that were accused include:
- Libre Technology, which was doing business as Docupop, for offering student loan debt relief services in California without a license
- Federal Document Assistance Center for falsely implying an affiliation with federal borrower assistance programs
- Higher Level Processing, for relying on social media marketing to reach vulnerable consumers
- Optima Associates, for charging upfront fees to consumers
“The DFPI is committed to protecting student loan borrowers from predatory debt-relief scams,” said Acting Commissioner Christopher Shultz in a statement. “The Department will not tolerate student loan debt-relief companies that charge California consumers fees that violate the law or bilk and mislead consumers. Borrowers with challenges repaying student loans should call the U.S. Department of Education or their loan servicer directly.”
