The Consumer Finance Protection Bureau (CFPB) has ordered a California debt relief service operator in California to cease operations permanently after finding that it violated federal law by misleading student loan borrowers about its ability to help lower their debt and charging them advance fees illegally.
The oversight group also requires that Western Benefits Group, which lists a Dublin, Calif., headquarters online and purported to negotiate debt relief with the Department of Education on behalf of student loan borrowers, to pay a $400,000 fine to the CFPB's victims relief fund, according to a statement from the oversight agency.
Western Benefits Group initiated contracts requiring that student loan borrowers sign an installment agreement that charged between $99 and $199, in addition to other monthly fees, the CFPB said. The company also misrepresented how the fees would be applied, saying they would be used to help repay their student loans, and told consumers that it could help lower their monthly debt servicing obligations by consolidating their loans, the CFPB said.
These tactics violated the Telemarketing Sales Rule and the Consumer Financial Protection Act of 2010, according to the bureau.
Several attempts to reach Western Benefits Group, including online, were unsuccessful.
"The burden of student debt has spawned scores of scams," according to a statement from CFPB Director Rohit Chopra. "Student loan borrowers should steer clear of outfits claiming to be affiliated with the Department of Education."
