The Consumer Financial Protection Bureau yesterday announced an enforcement action against Western Benefits Group, a nonbank telemarketer based in Pleasanton, Calif., for charging illegal advance fees for student loan debt relief services and misrepresenting their affiliations and services. The CFPB’s order mandates Western Benefits to permanently cease operations and pay a $400,000 penalty to the CFPB’s victims relief fund.
Since 2016, Western Benefits marketed, sold, and administered student loan debt relief services using deceptive practices. The company misled consumers by claiming affiliations with the Department of Education and promising loan consolidation, reduced monthly payments, and loan cancellation — services they often failed to deliver. Furthermore, Western Benefits charged consumers fees before providing any debt relief, in direct violation of the Telemarketing Sales Rule. The company purportedly charged consumers as much as $199 to submit a forbearance application to the Department of Education on a consumer’s behalf and told consumers the fees they were paying would be applied toward paying off their student loans.
Nearly 6,000 consumers paid just under $1 million in fees as a result of the company’s unlawful marketing and selling of debt relief services, according to the consent order.
Along with paying the fine and agreeing to cease operations, all existing agreements between the company and consumers are rescinded as a result of the enforcement action.
“The burden of student debt has spawned scores of scams,” said CFPB Director Rohit Chopra, in a statement. “Student loan borrowers should steer clear of outfits claiming to be affiliated with the Department of Education.”
