CFPB Bans Student Loan Pro for Charging Fees on Free Government Programs

So what happened?

The Consumer Financial Protection Bureau (CFPB) announced it took action to permanently ban Student Loan Pro and its owner, Judith Noh, from offering or providing consumer financial products. The CFPB filed a proposed stipulated judgment that, if the court enters it, resolves the claims against them.

According to the CFPB:

• Student Loan Pro was a California sole proprietorship Noh formed in 2015. It telemarketed debt-relief services to people with federal student loans.
• The CFPB sued in 2021, alleging Student Loan Pro, Noh and Syed Gilani, its manager and alleged owner-in-fact, violated the Telemarketing Sales Rule (TSR) by asking for and collecting advance fees, at first as high as $795.
• The service was filing paperwork for programs borrowers could get for free from the U.S. Department of Education.
• The advance fees cost about 3,300 consumers nearly $3.5 million.

What the judgment would do

If entered by the court, the stipulated judgment would:

• Ban Student Loan Pro and Noh from offering debt relief or any other consumer financial products or services.
• Bar them from doing business with Gilani or letting him use their bank accounts.
• Require Noh to dissolve Student Loan Pro and a related company, FNZA Marketing, LLC.
• Impose a $2,000 civil money penalty, because of what the CFPB called their demonstrated inability to pay more.

Meanwhile, the case against Gilani was still pending.

Here's the thing ... the TSR rule is simple

The TSR says debt-relief sellers and telemarketers can't ask for or take fees until they've actually renegotiated, settled, reduced or changed at least one of the consumer's debts, and the consumer has made at least one payment on it.

No results, no fee. That's the rule. Am I right?

What to do this week

• If you sell debt relief by phone, don't collect upfront. Period.
• If you generate student loan leads, ask what the buyer charges and when.
• Tell people: you can apply for federal student loan programs directly through the Department of Education for free.

Do the boring stuff. It's what keeps the fun stuff alive.