WASHINGTON–The Consumer Financial Protection Bureau said payments are now being made to consumers from a $3.5 million settlement reached three years ago over the charging of illegal fees charged to ostensibly reduce or eliminate federal student loans.
The CFPB said it was distributing the payments resulting from the settlement it reached in July 2020 with Timemark, Inc. for violating the Bureau’s Telemarketing Sales Rule.
The agency alleged that from 2016 to 2019 the
company used telemarketing campaigns to convince people with federal student loans to pay up to $699 in fees to file paperwork to reduce or eliminate their monthly payments, through loan consolidation, forgiveness, or income-driven repayment plans.
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However, the CFPB said, the U.S. Department of Education offers the same options to student loan borrowers for free.
The CFPB further alleged that Timemark used extensive marketing campaigns--including websites, YouTube videos, and Google ads--to market its services for fees.
“Each of these marketing channels provided a phone number for consumers to call to sign up for Timemark Inc.’s services,” the CFPB said in a statement.
Violations of Rule
The CFPB said under that rule it is illegal to request or receive any fees for debt-relief services sold through telemarketing before the terms of the debt are altered or settled and the consumer has made at least one payment pursuant to the new arrangement.
“Timemark, Inc. violated the Telemarketing Sales Rule because it requested and received payments from consumers within a few days, or at the latest, within 30 days of their enrollment—before the terms of the debts were altered,” the CFPB said.
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