CFPB Files Complaint against Operators of Student Financial Aid Scam

CFPB Files Complaint against Operators of Student Financial Aid Scam
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October 29, 2015

The Consumer Financial Protection Bureau (CFPB) filed a complaint against a company allegedly running a financial aid scam that has ripped off tens of thousands of students and families.

In its federal court complaint, the CFPB claims that Student Financial Resource Center and College Financial Advisory made millions of dollars when they scammed students into paying for financial aid opportunities that didn't exist.

The defendants allegedly send millions of deceptive letters to students and their families claiming to match them with targeted financial aid assistance programs for a fee. In reality, many consumers receive nothing in exchange for their fee and the scheme reaps millions of dollars in illegal fees. The companies operate under the guise of a government or university-affiliated operation.

Many consumers still don't fully understand how to use free financial aid resources provided by the Department of Education. The Free Application for Federal Student Aid (FAFSA) is a national program that enables students to apply for college loans and grants. The defendants, claim the agency, exploit this lack of understanding.

The companies tricked consumers into thinking they were applying for financial aid services by sending letters that instructed students to fill out and return the application, with a fee. In exchange the company allegedly promises it will conduct extensive searches to target or match consumers with individualized financial aid opportunities.

When students hesitated to apply, representatives pressured them by creating a false sense of urgency using fake deadlines and deceptive statements. The sales reps tell students that if they don't apply by a specific date, they will lose their opportunity to receive financial aid.

A copy of the complaint can be found here.