Bogus student loan debt relief scam busted by CFPB
WASHINGTON (4/1/16)--A student loan debt relief operation is alleged to have illegally tricked borrowers into paying fees for loan benefits, resulting in action from the Consumer Financial Protection Bureau (CFPB).
The CFPB is ordering the student debt relief company, Student Aid Institute, Inc., and its chief executive officer, Steven Lamont, to pay a $50,000 penalty, halt debt relief services and stop charging affected customers. The agency has permanently barred the company and Lamont from the debt relief industry.
The CFPB alleges that Student Aid Institute marketed and advertised debt relief services to struggling student loan borrowers. The company deceived customers about the benefits of their services and misrepresented that fees were required to participate in federal student loan programs when those programs were, in fact, free, according to the CFPB.
The company ultimately reaped millions of dollars in advance fees from thousands of consumers. The bureau also found that the company failed to provide legally required privacy notices.