New Jersey Attorney General Christopher S. Porrino, pictured on the far left, announced the settlement last Friday.
On June 16, New Jersey Attorney General Christopher S. Porrino and the New Jersey Division of Consumer Affairs announced a settlement with a for-profit company that was offering student loan consolidation services to New Jersey consumers without a proper license.
Consumer Financial Resources, operating under the name Student Loan Resolve, is to refund $119,606 to 95 New Jersey consumers who used its services. Consumers will receive the restitution over eight installments from June 15, 2017 to March 15, 2019. Through the settlement, Student Loan Resolve has agreed to stop offering its services to New Jersey consumers.
This development follows charges by the New Jersey Division of Consumer Affairs, asserting that the Texas-based Consumer Financial Resources violated the New Jersey Consumer Fraud Act.
They were in violation of the act because they were offering student loan consolidation services despite not having a license as a debt adjuster with the New Jersey Department of Banking and Insurance. Additionally, only certain non-profit companies can act as debt adjusters in New Jersey in accordance with the Debt Adjustment and Credit Counseling Act.
“The 95 New Jerseyans who did business with this unlicensed company will receive all of their money back under this agreement,” said Attorney General Porrino. “Conducting business in the shadows and without a license is unacceptable. If Student Loan Resolve wants to do business in New Jersey, it must follow our laws and procedures.”
The company under scrutiny was charging New Jersey customers an initial fee of $190, in addition to a monthly fee of $19.90 for every month consumers were enrolled. Student Loan Resolve’s program would provide consolidation of a consumer’s loans through the U.S. Department of Education. Additionally, the program consisted of a re-certification of a consumer’s information for income-based repayment plans.
According to the Division, the 95 New Jersey consumers were being charged for Student Loan Resolve’s services since December of 2016. The $119,606 in restitution equals the amount the consumers had paid to the company in both initial and recurring fees.
“This settlement provides full restitution for those who were using Student Loan Resolve’s services,” said Steve Lee, Director of the Division of Consumer Affairs. “It also sends a message that our consumer fraud laws are important safeguards when it comes to proper oversight of businesses that offer various services to consumers in connection with their student loans.”
While it still isn’t technically certain if the Texas-based company was offering services with malicious intent, it is still clear they were in serious violation of consumer law. On top of that, their actions are part of a disturbing trend that is becoming more and more common throughout the United States.
As student debt rises each year, the number of college student borrowers rises along with it. With so many targets, the door is opened for companies to capitalize off the desperation felt by troubled borrowers. In fact, there are plenty of different ways to do so.
Similar to the case with Consumer Financial Resources, a company named Student Loan Processing.US was taken to court by the Consumer Financial Protection Bureau (CFPB). The consumer watchdog asserted that the company offered services related to student loans that were free of charge when done through the government.
Switching gears slightly, another company was called out by Snopes.com after offering fraudulent student loan forgiveness for a price. Cases like this involve companies banking on students to believe they can qualify for student loan discharge with help; of course, this help isn’t free.
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