In its latest move to crack down on student loan debt-relief scams, California ordered Amerifed Doc Prep LLC to pay more than $1.37 million for illegally collecting advance fees from consumers looking to reduce or forgive their student loans. The California Department of Financial Protection and Innovation (DFPI) found that the Tustin-based company had violated the California Consumer Financial Protection Law (CCFPL) by promising to reduce student loans in exchange for up-front payments of up to $899, plus $39 per month.
More than 1,000 borrowers took advantage of the illegal deal. In a consent order, DFPI required Amerifed to refund the more than $870,000 it collected in fees, plus pay the Department a $500,000 penalty. The company also agreed to cease illegal conduct and cancel all unlawful contracts with consumers. “DFPI is committed to protecting student loan borrowers from predatory debt-relief scams,” said Acting Commissioner Christopher S. Shultz. “The department will not tolerate student loan debt-relief companies that charge California consumers fees that violate the law or bilk and mislead consumers.”