RSSThe Consumer Financial Protection Bureau has asked a federal district court to enter a final judgment and order that would shut down a student debt relief company.
The order would ban Irvine Web Works, Inc., which does business as Student Loan Processing.US, a California corporation, and its sole owner, James Krause, from any future involvement in debt relief and student loan services.
In December 2014, the CFPB filed a lawsuit against Student Loan Processing.US and Krause in federal district court in California alleging that the defendants: charged consumers illegal upfront enrollment fees before providing any services, deceived customers about the costs of their services, and falsely represented an affiliation with the Department of Education.
According to the lawsuit, the company charged an initial enrollment fee of 1 percent of the borrower’s federal student loan balance plus a monthly maintenance fee of at least $39 over the entire repayment term of the borrower’s federal student loan. During initial enrollment calls with customers, company representatives failed to disclose the recurring monthly fee before collecting payment information. The complaint alleges that the defendants also misrepresented the amount and duration of that fee.
The order imposes a penalty for relief and damages to consumers of more than $8.2 million. A significant portion of that payment, however, is suspended based on the defendants’ inability to pay. Under the terms of the order, a payment of approximately $326,000 would be sent to the bureau to be distributed to compensate victims of the defendants’ illegal activities.
The order also imposes a penalty of at least $1 to be paid into the CFPB’s civil penalty fund. By requiring this minimum penalty, victims of the illegal practices may be eligible for additional relief from the CFPB Civil Penalty Fund in the future, although that determination has not yet been made.
“Student Loan Processing.US and its owner, James Krause, preyed upon students looking for loan repayment help and fleeced them out of millions,” said CFPB Director Richard Cordray. “The Bureau is taking action to shut down the unlawful operation permanently and to prevent the company and its owner from participating in the student lending and debt relief industries ever again.”
Student Loan Processing.US is headquartered in Laguna Nigel, Calif., with an office in Dallas, Texas. The company also operates under the name IrvineWebWorks, Inc. and runs websites at StudentLoanProcessing.us, StudentLoanProcessing.org, and slpus.org.
