In its second student aid-related action in one week, the Consumer Financial Protection Bureau (CFPB) fined Student Financial Aid Services (SFAS) for an illegal recurring billing scheme, the bureau announced Thursday.
CFPB filed a complaint and proposed consent order requiring the company – which provides fee-based assistance to those filling out the FAFSA and until recently operated FAFSA.com – to pay $5.2 million back to more than 100,000 customers CFPB says were misled and charged with recurring “undisclosed and unauthorized” fees.
According to a release from CFPB, customers were unknowingly enrolled in an annual subscription – ranging between $67 and $85 each year – when they entered their payment information for certain services.
The company would also be required to pay a $1 fine to CFPB’s Civil Penalty Fund. The bureau said it is not seeking a larger penalty because of SFAS’s limited financial resources. But by requiring the company to pay a $1 fee, victims of the company’s behaviors could be eligible for future relief, CFPB said.
“Student Financial Aid Services, Inc. made millions of dollars at the expense of consumers through its illegal recurring payment scheme,” CFPB Director Richard Cordray said in a statement. “Our enforcement action will put money back in the pockets of consumers who were misled while seeking to access federal student aid.”
Jeff Baker of the Department of Education’s (ED) Office of Federal Student Aid said this week during NASFAA’s national conference in New Orleans that ED had taken over the domain fafsa.com, which now redirects to the federally-operated fafsa.ed.gov page.
“Students and families applying for federal student aid shouldn’t have any confusion about whether they’re on the official FAFSA website or a commercial website,” Education Secretary Arne Duncan said in a statement. “This transfer will help provide clarity for parents and students.”
Publication Date: 7/24/2015