Dive Brief:
- The Consumer Financial Protection Bureau has filed a complaint against Student Financial Aid Services Inc., alleging it misled consumers and illegally billed more than 100,000 people.
- The CFPB’s proposed consent order would require the company to pay $5.2 million, which would go back to consumers, as well as a civil penalty of $1 to the CFPB’s Civil Penalty Fund.
- The complaint alleges Student Financial Aid Services enrolled consumers in auto-renewing service charges without informing them or telling them amounts, dates of charges, or ways to avoid them.
Dive Insight:
The proposed consent order is a draft judgment a district court judge must approve before SFAS pays any fines. One of the stipulations of the consent order is that SFAS does not have to admit or deny any of the allegations by the Consumer Financial Protection Bureau. The $1 suggested penalty to be paid to the Civil Penalty Fund is in recognition of the company’s limited financial ability to pay a larger amount after sending more than $5 million to affected customers.
Separate from the CFPB order, SFAS is transferring its website FAFSA.com to the U.S. Department of Education. Officials expect this transfer to lead to greater clarity over the free financial aid application process for parents and students.