The Consumer Financial Protection Bureau filed a motion yesterday to vacate the stay and proceed with a lawsuit it had filed against a student loan debt relief operation that was accused of charging consumers millions of dollars in upfront fees in violation of federal law. The lawsuit was paused when the leadership of the Bureau changed in February, but now the Bureau has decided to move forward. This is one of the few cases that were filed under former Director Rohit Chopra that the new leadership of the Bureau has not dismissed.
The Bureau initially filed this lawsuit in the District Court for the Central District of California back in 2021. Last December, one of the owners and the company that were named as defendants agreed to a stipulated judgment with the Bureau, leaving one remaining defendant, Syed Gilani. It is against Gilani that the Bureau announced in its motion that it wishes to continue.
The CFPB’s suit alleged that Student Loan Pro’s actions caused approximately 3,300 consumers to collectively pay nearly $3.5 million in illegal advance fees. Student Loan Pro’s services included filing paperwork for loan consolidation and other debt-relief programs that borrowers could access without charge from the federal government. It accused the company, Judith Noh, the owner, and Gilani, of violating the Telemarketing Sales Rule by charging borrowers upfront fees for services related to student loan debt relief — services that were already available for free through the Department of Education.
Russell Vought, the CFPB’s acting director, greenlit the resumption of the lawsuit last month, at which point the Bureau reached out to the defendants to inform them of the decision. “Good cause exists to grant the motion because, after review to ensure that the matter is consistent with the Administration’s priority goals, the Acting Director authorized the continued prosecution of this enforcement action,” the CFPB said in its filing.
