WASHINGTON—The Consumer Financial Protection Bureau has taken action against two student “debt relief” scams that it said illegally tricked borrowers into paying upfront fees for federal loan benefits.
The CFPB, in a joint filing with Florida’s Attorney General, shut down student debt relief company College Education Services and separately filed a lawsuit against Student Loan Processing.US for illegally marketing student debt relief services.
The Bureau also issued a consumer advisory warning student loan borrowers to be wary of paying high fees for free federal loan benefits.
“Student loans are already a significant debt for many Americans. College Education Services and Student Loan Processing.US added to that hardship by taking advantage of troubled borrowers and failing to describe their services honestly,” said CFPB Director Richard Cordray. “When scam artists prey on student loan borrowers, we will take action to halt their illegal activity.”
The CFPB urged people with student debt to look to the U.S. Department of Education and the plans it offers to make payments more affordable.
In its action against College Education Services, the company said its owner, Marcia Elena Vargas, and advisor and employee, Frank Liz, marketed and advertised debt relief services to student loan borrowers with loans in default. Based in Tampa, Florida, the company advertised through Internet ads offering debt relief and operated several websites, and reaped millions of dollars in advance fees from thousands of consumers before it ceased operations around February 2013.
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