The Consumer Financial Protection Bureau (CFPB) is continuing its recent crackdown on student loan processors and financial aid service providers.
This week the CFPB in federal court filed a complaint and a proposed consent order against Student Financial Aid Services, Inc. for illegal sales and billing practices related to its websites FAFSA.com and SFAS.com.
The Free Application for Federal Student Aid, or FAFSA, is a necessary evil for college bound young adults and their parents. The company had operated websites, including FAFSA.com and SFAS.com, and related call centers, where it offered fee-based assistance to consumers filling out the federal student aid form. The websites have since been turned over to the Department of Education, but prior to that, the company enrolled users in services plans where they were charged and annual fee without their knowledge or consent.
According to the Bureau's complaint, when consumers entered their payment information for certain financial advisory services, the company began to bill them for an annual subscription that was advertised as an "upgrade" at "no additional cost." These recurring charges typically ranged from $67 to $85 each year and were renewed annually. The company enrolled consumers in these annual subscriptions without adequate disclosures and imposed recurring fees without consumers' authorization.
Should the consent order be approved, Student Financial Aid Services would pay $5.2 million to the CFPB to be used to repay consumers hurt in the scheme and end its illegal sales and billing practices. Additionally, the company would pay a $1 fine.
Yes, $1. The agency explained that the monetary amount stemmed from the company's current financial resources and that consumers may be able eligible for additional relief from the CFPB in the future. That determination, however, has not been made.