You have /5 articles left.
Sign up for a free account or log in.
In its latest move to crack down on student loan debt-relief scams, California ordered Amerifed Doc Prep LLC to pay more than $1.37 million for illegally collecting advance fees from consumers looking to reduce or forgive their student loans. The California Department of Financial Protection and Innovation (DFPI) found that the Tustin-based company had violated the California Consumer Financial Protection Law (CCFPL) by promising to reduce student loans in exchange for up-front payments of up to $899, plus $39 per month.
More than 1,000 borrowers took advantage of the illegal deal. In a consent order, DFPI required Amerifed to refund the more than $870,000 it collected in fees, plus pay the Department a $500,000 penalty. The company also agreed to cease illegal conduct and cancel all unlawful contracts with consumers. "DFPI is committed to protecting student loan borrowers from predatory debt-relief scams," said Acting Commissioner Christopher S. Shultz. "The department will not tolerate student loan debt-relief companies that charge California consumers fees that violate the law or bilk and mislead consumers."
Amerifed is the latest California student loan debt-relief company to come under fire since Governor Gavin Newsom, a Democrat, signed the CCFPL into law last year and expanded the DFPI's authority to cover the industry. Earlier this month, the DFPI issued a desist and refrain order against the Federal Document Assistance Center LLC in Tustin for sending consumers mailers that falsely implied it had an affiliation with official federal borrower assistance programs. Higher Level Processing, also based in Tustin, was hit with a similar order for using social media marketing to reach vulnerable borrowers. And in February, the Irvine-based Optima Advocates, Inc., was ordered to repay Californians nearly $100,000 in illegally collected fees, as well as pay a $47,500 penalty.
