WASHINGTON– The CFPB and the FTC have issued a joint statement saying they are working to stop illegal evictions, especially those resulting from economic hardships due to COVID-19.
Separately, the CFPB has filed suit against a student loan debt relief company, its owner, and manager for allegedly charging thousands of consumers more than $3.5 million in illegal upfront fees.
According to a recent CFPB report, the Bureau found more than 11-million families are behind on their rent or mortgage payments: 2.1 million families are behind at least three months on mortgage payments, while 8.8 million are behind on rent.
The Centers for Disease Control and Prevention also announced an extension of its moratorium on residential evictions to keep people in their homes, out of shelters, and to stop the spread of COVID-19.
“Renters have struggled to exercise their rights under the CDC’s eviction moratorium, and news reports indicate many renters have been forced out of their homes despite federal protections,” the CFPB said.
Illegal Practices ‘Not Tolerated’
In a joint statement, CFPB Acting Director Dave Uejio and Federal Trade Commission Acting Chairwoman Rebecca Slaughter stated, “We have directed our staff to investigate eviction practices, particularly by major multistate landlords, eviction management services, and private equity firms, to ensure that they are complying with the law. Evicting tenants in violation of the CDC, state, or local moratoria, or evicting or threatening to evict them without apprising them of their legal rights under such moratoria, may violate prohibitions against deceptive and unfair practices, including under the Fair Debt Collection Practices Act and the Federal Trade Commission Act. We will not tolerate illegal practices that displace families and expose them—and by extension all of us—to grave health risks.”
Keeping Consumers Informed
In the statement, the CFPB and FTC said they are working with CDC to make renters aware of their rights under the eviction moratorium and to help them to understand how to complete declarations needed to stop evictions.
Action Against Student Loan Company
Separately, the CFPB has filed suit against a student loan debt relief company, its owner, and manager for allegedly charging thousands of consumers more than $3.5 million in illegal upfront fees.
The lawsuit filed in federal district court accuses California-based Student Loan Pro, Judith Noh, and Syed Gilani of violating the Telemarketing Sales Rule (TSR). FNZA Marketing, LLC, is also named as a relief defendant. Student Loan Pro, which operated from 2015 through 2019, provided federal student loan debt-relief services to consumers nationwide. The CFPB alleges the company charged borrowers the illegal upfront fees to file paperwork on their behalf to access free debt-relief programs available to consumers with federal student loans. The CFPB’s lawsuit seeks monetary relief for consumers, and asks the court to end the illegal conduct.
“Student Loan Pro preyed on thousands of borrowers, charging illegal upfront fees in clear violation of the Telemarketing Sales Rule,” said CFPB Acting Director David Uejio. “The CFPB will use all the tools at its disposal, including litigation, to protect struggling borrowers and put an end to unlawful debt-relief schemes.”
The CFPB is alleging Student Loan Pro, Noh, and Gilani violated the Telemarketing Sales Rule by requesting and receiving advance fees, initially running as high as $795, for its purported debt-relief services. The CFPB also alleges that FNZA received some portion of the unlawful advance fees obtained by Student Loan Pro without a legitimate claim to the funds.
Prohibition Ordered
The TSR prohibits sellers or telemarketers from requesting or receiving advance fees for any debt-relief service before renegotiating, settling, reducing, or otherwise altering the terms of at least one of a consumer’s debts, and before a consumer has made at least one payment on such altered debt. Student Loan Pro’s advance-fee violations cost approximately 3,300 consumers more than $3.5 million in advance fees, the CFPB said.
The CFPB is seeking injunctive relief, consumer redress, and civil money penalties against Student Loan Pro, Noh, and Gilani, and seeks to have FNZA disgorge the funds it received from Student Loan Pro.
Student Loan Pro was the subject of a 2017 settlement with the state of Washington.
The complaint is not a final finding or ruling that the defendants have violated the law.
A copy of the complaint can be found here.