The Consumer Financial Protection Bureau (CFPB) yesterday filed a complaint against Performance SLC, LLC (PSLC), a California debt-relief business focused on federal student loan debt; Performance Settlement, LLC (PSettlement), a California debt-settlement company; and Daniel Crenshaw, the owner and CEO of the two companies, according to a CFPB press release. The CFPB alleges that PSLC and Crenshaw charged illegal advance fees in violation of the Telemarketing Sales Rule (TSR) to student loan borrowers seeking to obtain loan consolidation, loan forgiveness, or income-driven repayment plans for their federal student loans, and that PSLC failed to make required disclosures to certain consumers in violation of the TSR. The CFPB also alleges that PSettlement and Crenshaw used deceptive tactics in violation of the Consumer Financial Protection Act (CFPA) in order to induce consumers to sign up for PSettlement’s services. The CFPB’s complaint, which was filed in federal district court for the Central District of California, alleges that from 2015 through the present, PSLC charged consumers illegal upfront fees by using telemarketing campaigns to convince thousands of consumers to sign up for services to assist them in obtaining loan consolidation, loan forgiveness, or income-driven repayment plans from the U.S. Department of Education (ED). Consumers would pay between $1,000 and $1,450 in fees to PSLC for it to file paperwork with ED, even though student loan borrowers can do this themselves for free. Under the TSR, it is illegal to request or receive any fees for debt-relief services sold through telemarketing before the terms of the debt are altered or settled, and the consumer has made at least one payment under the newly altered debt. The Bureau alleges that the PSLC and Crenshaw violated the TSR because consumers were charged at or just after enrollment, before the terms of the debts were altered. The CFPB also alleges that PSLC had some consumers pay this prohibited upfront fee through high-interest financing from a third party.
