CFPB Allocates $10.9M to Consumers Affected by Student Loan Debt-Relief Business

CFPB Allocates $10.9M to Consumers Affected by Student Loan Debt-Relief Business

February 22, 2024 : The Consumer Financial Protection Bureau (CFPB) announced a significant victory for student loan borrowers on February 15th, 2024. Following legal action against a deceptive student loan debt-relief company, the Bureau will distribute over $10.9 million in restitution to misled and financially harmed consumers.

Performance SLC and Performance Settlement, the targeted entities, engaged in several illegal practices. They charged exorbitant upfront fees for services readily available for free through the Department of Education, misled consumers about their qualifications for specific programs, and employed deceptive tactics to pressure them into signing up. These actions resulted in significant financial losses for thousands of borrowers.

The CFPB, acting on behalf of consumers, filed a lawsuit against the companies in 2021. The resulting settlement permanently barred Performance SLC from offering debt-relief services and imposed significant financial penalties. Additionally, the agreement mandated the creation of a restitution fund to compensate harmed consumers.

The distribution of these funds marks a significant milestone in the CFPB’s efforts to protect student loan borrowers from predatory practices. It demonstrates the Bureau’s commitment to holding companies accountable for misconduct and relieving consumers who have been wronged.

However, the incident also highlights the ongoing vulnerability of student loan borrowers to deception and exploitation. The ease with which Performance SLC and Performance Settlement were able to exploit borrowers underscores the need for continued vigilance and proactive measures to protect consumers from similar scams.

The CFPB advises borrowers to be wary of any company offering quick fixes for student loan debt and to thoroughly research before committing to any service. Additionally, borrowers should be aware of their rights and utilize the resources available through the Department of Education to navigate their loan repayment options.