In 2015, the CFPB sued Student Financial Aid Services, alleging that the company “illegally signed up consumers for student financial assistance and proceeded to automatically bill them annually.”_ The firm agreed to pay $5.2 million in restitution and a $1 civil penalty to the CFPB.
- Cases 2:15-at-00821 and 2:15-cv-01581-GEB-KJN were filed in the U.S. District Court for the Eastern District of California Sacramento Division. Student Financial, a “Sacramento, Calif.-based” company, “operates call centers and websites such as FAFSA.com and SFAS.com to offer fee-based assistance for consumers who want to apply for the Federal Student Aid called FAFSA.” At the time, Student Financial was not directly associated with any government agency. [Rachel Witkowski, “CFPB Charges Firm Restitution, $1 Penalty (Yes, $1),” American Banker, 07/24/15]
- “The_CFPB_filed a proposed consent order and complaint” against the firm for allegedly using “one of its websites, FAFSA.com, to lure consumers into a fee-based service in order to get advice on a federal student loan program that has a free application process.” The lawsuit alleged “that Student Financial did not properly disclose that consumers were signing up for a subscription and the fees that would be charged, nor did it get authorization to perform automatic recurring charges.” Charges “ranged from $67 to $85 per year.” [Rachel Witkowski, “CFPB Charges Firm Restitution, $1 Penalty (Yes, $1),” American Banker, 07/24/15]
- In addition to agreeing “to pay $5.2 million” in a settlement, Student Financial Aid Services was required to pay a $1 civil penalty to the CFPB “because the company could not afford more.” In July 2015, the company transferred the “FAFSA.com Internet domain name to the U.S. Department of Education.” [Rachel Witkowski, “CFPB Charges Firm Restitution, $1 Penalty (Yes, $1),” American Banker, 07/24/15]
Inactive or Resolved