The Consumer Financial Protection Bureau (CFPB) has ordered Western Benefits to permanently cease operations. In addition, it must pay a $400,000 penalty to be deposited in the CFPB’s victims’ relief fund. The CFPB order also rescinds all existing agreements with consumers.

The CFPB action against Western Benefits Group relates to the charging of illegal advance fees for student loan debt relief services. In addition, the debt relief provider misrepresented to consumers that advance fees would go toward paying down their loans. The CFPB found Western Benefits also misrepresented that it was affiliated with and endorsed by the Department of Education, and that the company would help consumers consolidate student loans, lower consumers’ monthly student loan payments, or obtain loan cancellation. “The burden of student debt has spawned scores of scams,” said CFPB Director Rohit Chopra. “Student loan borrowers should steer clear of outfits claiming to be affiliated with the Department of Education.”

Western Benefits Group is a non-bank telemarketer headquartered in Pleasanton, California. It has offered debt relief services since at least 2016.

In January 2016, Western Benefits began to market, sell, and administer student loan debt relief services to consumers. Western Benefits used lead generators to increase its inbound telemarketing calls. The lead generators marketed debt relief services to consumers through email marketing campaigns and web campaigns.

CFPB enforcement action

Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial laws. This includes engaging in unfair, deceptive, or abusive acts or practices. The CFPB found that Western Benefits violated the Telemarketing Sales Rule by requesting or receiving unlawful advance fees. It violated the Telemarketing Sales Rule and Consumer Financial Protection Act of 2010 by misrepresenting material aspects of their debt relief service.

The order also rescinds all existing agreements with consumers. It means that all agreements related to the student loan debt relief services are void effective immediately.

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