The California Department of Financial Protection and Innovation (DFPI) continues to flex its enforcement muscle, recently announcing actions against three student loan debt relief companies that will see them pay more than $260,000 in penalties and restitution. These actions are part of DFPI’s broader efforts to protect consumers from predatory practices in the debt relief space.
Details: The three companies targeted by this enforcement action are:
- Financial Enhancement Services, Inc.
- The Firm Alternative LLC, operating as DocuPrep Xpress
- Total Rain Inc., doing business as Student Aid Group
These companies were charged with unlawfully collecting advance fees from California consumers before performing any debt relief services, a violation of both state and federal regulations. The enforcement actions require the companies to:
- Cease all unlawful practices
- Rescind outstanding contracts with California consumers
- Refund affected consumers
The big picture: With 3.7 million borrowers in California owing nearly $125 billion in student loan debt, the DFPI is intensifying its oversight of companies offering debt relief services.
What they’re saying: “We will not tolerate student loan debt relief companies that charge fees in violation of the law or engage in deceptive practices,” said DFPI Commissioner Clothilde Hewlett.
What’s next: The DFPI has a history of targeting student loan debt relief companies. Previous enforcement actions have been taken against entities such as EDU Doc Support, Student Loan Advocates Consulting Services Inc., and Amerifed Doc Prep LLC, among others. This focus on student loan-related services suggests that the DFPI will continue to monitor and pursue companies in this sector, potentially leading to further penalties and consumer refunds.
