WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) has taken decisive action against Western Benefits Group, a company based in Pleasanton, California, for charging illegal advance fees for student loan debt relief services. The CFPB found that Western Benefits not only charged these fees but also misled consumers about its affiliation with the Department of Education and the impact of its services on their loans.
Western Benefits began offering student loan debt relief services in January 2016. The company used aggressive marketing tactics, including email and web campaigns managed by lead generators, to lure consumers into its services.
The CFPB uncovered several violations of federal law by Western Benefits:
- Illegal Fees: Western Benefits required consumers to sign contracts imposing installment fees before any debt relief was negotiated. For instance, it typically charged between $99 to $199 just to prepare and submit a forbearance application to the Department of Education, and additional monthly fees thereafter.
- Misleading Fee Applications: The company falsely claimed that the fees paid by consumers would go toward paying off their student loans. In reality, these fees were often not used for loan payments at all.
- False Promises: Western Benefits assured consumers that it would help them consolidate their student loans, lower their monthly payments, and even achieve loan forgiveness. However, in many cases, the company failed to deliver on these promises.
CFPB Director Rohit Chopra emphasized the seriousness of these violations. “The burden of student debt has spawned scores of scams,” Chopra said. “Student loan borrowers should steer clear of outfits claiming to be affiliated with the Department of Education.”
In response to these findings, the CFPB has ordered Western Benefits to permanently cease operations and pay a $400,000 penalty, which will be deposited into the CFPB’s victims relief fund. This fund is designed to provide compensation to borrowers harmed by such illegal conduct. Additionally, all existing agreements with consumers related to Western Benefits’ student loan debt relief services are now void.
This enforcement action highlights the protections in place under the Consumer Financial Protection Act and the Telemarketing Sales Rule. The CFPB has the authority to act against institutions engaging in unfair, deceptive, or abusive practices. In this case, Western Benefits violated both the Telemarketing Sales Rule and the Consumer Financial Protection Act of 2010 by charging unlawful advance fees and misrepresenting their services.
The implications of this action are significant. It sends a strong message to other companies offering similar services that deceptive practices and illegal fees will not be tolerated. For consumers, this serves as a reminder to be cautious when seeking debt relief services and to thoroughly research any company claiming to offer such assistance.
With student debt affecting millions of Americans, the need for legitimate and trustworthy relief services is more important than ever. The CFPB’s action against Western Benefits Group is a critical step in protecting consumers from scams and ensuring that those in need of debt relief are not further exploited.
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