Financial Aid Services Company Sentenced to Pay $ 14.7 Million in Deceptive Practices Lawsuit | Goodwin
[author: Samantha Becci]
On January 26, 2021, a California federal judge allowed the Consumer Financial Protection Bureau (CFPB) motion for default judgment against a now defunct financial aid service company. The court also partially allowed the CFPB’s motion for summary judgment against the founder of the company.
The decision resolves a complaint filed by the CFPB in 2015, previously coveredby Goodwin, alleging that the financial services company ran a nationwide scam plagued by consumer concerns about paying for college. The CFPB alleged that the company erroneously stated that it would apply for student financial aid programs on behalf of its clients. According to the recent ordinance, between 2011 and 2015, the company sent solicitation packages to 3.9 million potential consumers who were students (high school and college students) and their families, asking them to ” Submit “a” Student Aid Profile Form “to” pursue “a student aid program and” apply. ” . . financial assistance programs. The company received at least $ 4,783,064 in fees from at least 76,000 consumers who responded to solicitation packages between 2011 and October 2015. The only product the students received in return was a booklet. containing information on student financial aid programs. The company has never requested financial assistance on behalf of consumers or contacted anyone to request financial assistance on behalf of consumers.
The case was put on hold in 2016 while a criminal investigation into the company founder was underway. This suspension was lifted in May 2019. Shortly after, lawyers for the company and its founder sought to withdraw from the litigation. The court ordered the company to bring in a deputy lawyer, but the company failed to do so and in January 2020 the court declared the company by default for failure to defend itself. The CFPB requested a default judgment in August 2020 and the company did not object.
As a result of the orders, the financial aid service company and its founder must pay $ 4.7 million in restitution and a civil fine of $ 10 million, and will be held jointly and severally liable for those amounts.