Were You Charged Fees for Student Loan Debt Relief Services? You May Get a Check in the Mail
by Erin Shaak
The Consumer Financial Protection Bureau (CFPB) announced on December 12 that thousands of student loan borrowers who were charged unlawful fees by certain debt relief companies can expect to get a check in the mail.
The payments are part of the resolution of a lawsuit filed by the CFPB against five student loan debt relief companies—Docu Prep Center (which does business as Certified Document Center), Certified Doc Prep Services, Assure Direct Services, Direct Document Solutions, and Secure Preparation Services—and two associated mortgage companies, Monster Loans and Lend Tech Loans.
The lawsuit will provide nearly $19.7 million to over 23,500 people who were impacted by the companies’ allegedly illegal conduct. Keep reading to find out who the action covers and what to expect.
Who will get a check from the CFPB lawsuit?
According to court documents, the lawsuit will provide payments for all consumers who, since January 1, 2015, were charged fees by any of the following student loan debt relief companies:
There’s no need to file a claim in order to receive a check. The defendants should have records of everyone who paid fees to them, and that information will be used to mail the checks to affected individuals.
How much will consumers get?
The total distribution amount, according to the CFPB, is $19,696,107.70 and will be distributed among 23,505 consumers.
As part of the lawsuit, the CFPB submitted “competent evidence” to the court that consumers had paid nearly $19.7 million in fees to the five debt relief companies, and the court ordered that the companies pay back the amounts they each received.
While it’s unclear how much each person will get, the CFPB stated that payments will come from the Civil Penalty Fund, a victims’ relief fund used to pay consumers “full compensation for their harm” when the defendants in an action do not have enough money to pay them directly.
When will the checks be sent?
According to the CFPB’s website, checks began to be mailed out on December 12, 2022.
I got a check in the mail. How do I know if it’s legit?
The check should have come from EPIQ Systems, the company with whom the CFPB has contracted to administer payments.
If you have any questions or want to verify your check, you can contact EPIQ using the information listed here.
You can also review the CFPB’s tips on how to make sure your check is not a scam.
Was this a class action lawsuit?
No, the CFPB case was not a class action. A class action lawsuit, which involves one or a few private citizens filing a lawsuit on behalf of a larger group, is only one way for a group of consumers to get relief for violations of the law.
Some federal agencies, such as the Consumer Financial Protection Bureau, are authorized to bring enforcement actions against companies or individuals who are alleged to have broken a law. This may involve filing a lawsuit in state or federal court, and the court may order the defendant to take certain actions to address harm to consumers, including by providing compensation.
Not all enforcement actions provide monetary relief for consumers, but in this case, the defendants were ordered to collectively pay millions to compensate their victims.
Check out the Consumer Financial Protection Bureau’s website and the Federal Trade Commission’s website to see lists of the recent actions that have resulted in payments for consumers.
What was the lawsuit about?
The CFPB filed a lawsuit on January 9, 2020 in California federal court against the debt relief and mortgage companies mentioned on this page and several other companies and individuals.
The lawsuit alleged that the student loan debt relief companies, between 2015 and 2017, violated the Consumer Financial Protection Act and Telemarketing Sales Rule by misleading consumers about their services. Specifically, it was alleged that the companies misrepresented to student loan borrowers that their interest rates would be reduced, their credit scores would increase, and the U.S. Department of Education would become their loan servicer. The lawsuit also claimed that the debt relief companies illegally collected fees from customers before providing services.
The case also stated that the debt relief companies, Monster Loans, and Lend Tech Loans violated the Fair Credit Reporting Act by illegally accessing credit report information about consumers in order to market debt relief services to them.
A default judgment was entered against the five debt relief companies on May 7, 2021 after the companies had failed to answer, appear or otherwise defend the lawsuit, and final judgments were entered against Monster Loans, Lend Tech Loans and some of the other defendants.
In addition to repaying consumers, the debt relief companies were also ordered to pay civil penalties totaling $11,382,136 and have been banned from offering debt relief services in the future. The defendants are also “permanently restrained” from using or obtaining consumer reports and disclosing, using or benefiting from the consumer information they’ve already obtained.
You can read more about the case here.
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