On May 20, 2024, the CFPB took action against Western Benefits Group for charging illegal advance fees for student loan debt relief services and misrepresenting to consumers that advance fees would go toward paying down their loans. In addition, the company is alleged to have misrepresented that it was affiliated with and endorsed by the Department of Education, and that it would help consumers consolidate student loans, lower consumers’ monthly student loan payments, or obtain loan cancellation.
Western Benefits Group is a nonbank telemarketer that has offered debt relief services since at least 2016. Western Benefits used lead generators to increase its inbound telemarketing calls. However, the CFPB found that the company violated federal law by:
Charging fees regardless of success in loan relief. Western Benefits made consumers sign a contract to pay fees upfront before helping negotiate debt relief. For instance, they charged $99 to $199 upfront to handle paperwork to delay loan payments and kept taking more fees monthly from consumers in their program.
Misrepresenting how fees would be applied. The company promised consumers that fees paid would go toward paying off student loans but often did not happen as promised.
Misleading consumers into thinking their services would lower debt. Western Benefits claimed it would help consumers consolidate their student loans, would help lower monthly loan payments, and would help consumers achieve loan forgiveness, but often did not fulfill any of these claims.
The CFPB that Western Benefits violated the Telemarketing Sales Rule by requesting or receiving unlawful advance fees and violated the Telemarketing Sales Rule and Consumer Financial Protection Act of 2010 by misrepresenting material aspects of their debt relief service. The company was ordered to permanently cease operations and pay a $400,000 penalty to the CFPB’s victims relief fund.
Read the CFPB’s news release here.
The consent order can be found here.