The Consumer Financial Protection Bureau (CFPB) has cracked down on a student-debt relief company for predatory behavior. The company, GST Factoring, was ordered to pay $11 million to 2,600 borrowers who were charged illegal upfront fees. The company was also banned from engaging in any debt relief services going forward.
The CFPB’s investigation found that GST Factoring charged borrowers fees of up to 40% of their outstanding student loan debt, even though the Telemarketing Sales Rule prohibits companies from charging fees before debt is settled. The company also discouraged borrowers from paying their student loans, claiming that doing so would make lenders more likely to agree to a settlement.
This is not the first time the CFPB has taken action against debt relief companies. In December 2020, the agency accused five companies of violating the Telemarketing Sales Rule and collecting advance fees for help getting debt relief. The CFPB has also warned borrowers about the risks of working with debt relief companies, which often charge high fees and do not provide the promised services.
If you are struggling to repay your student loans, there are a number of resources available to help you. The Department of Education offers a variety of repayment plans, including income-driven repayment plans that can lower your monthly payments. You can also contact your loan servicer for more information about your repayment options.