CFPB Orders Western Benefits Group to Cease Operations, Pay $400,000

The Consumer Financial Protection Bureau ordered Western Benefits Group to permanently cease operations and to pay a $400,000 penalty.

The agency’s order also rescinds all the company’s existing agreements with consumers, the CFPB said in a Monday (May 20) press release.

The CFPB said in the release that it took these actions after finding that Western Benefits, a debt relief provider headquartered in Pleasanton, California, charged illegal advance fees and misled student loan borrowers.

A representative for Western Benefits Group did not immediately reply to PYMNTS’ request for comment.

Western Benefits began to market, sell and administer student loan debt relief services to consumers in 2016, according to the release.

The CFPB found that the company violated federal law by charging fees regardless of its success in obtaining loan relief, misrepresenting how fees would be applied and misleading consumers into thinking the company’s services would lower debt, the release said.

Specifically, the agency said Western Benefits began collecting installment fees before it negotiated debt relief on their behalf; often did not apply fees paid by consumers toward paying off their student loans, despite saying it would do so; and, in “many instances,” did not fulfill its promises to help consumers consolidate their student loans to lower their monthly payments and help them achieve loan forgiveness.

“The burden of student debt has spawned scores of scams,” CFPB Director Rohit Chopra said in the release. “Student loan borrowers should steer clear of outfits claiming to be affiliated with the Department of Education.”

In another move in the student loan space, the CFPB said May 6 that it filed a complaint against the National Collegiate Student Loan Trusts and Pennsylvania Higher Education Assistance Agency (PHEAA), alleging that they ignored student loan borrowers seeking payment relief.

Reached for comment by PYMNTS, the PHEAA said at the time in an emailed statement: “While we maintain that PHEAA had no authority to decision unique borrower requests without instruction from 2016-2021, we are pleased to bring this multi-year review by the CFPB to a resolution.”

In January, the CFPB said that it is monitoring the experiences of student loan borrowers and has notified loan servicers that they may be violating federal consumer financial protection law.