CFPB suit says CA student loan debt relief firm collected more than $3.5 million fees in violation of Telemarketing Sales Rule

A student loan debt relief company, its owner, and manager charged some 3,300 consumers more than $3.5 million illegal up-front fees in violation of the Telemarketing Sales Rule (TSR) from 2015 to 2019, the consumer financial protection agency said in a suit filed Tuesday that seeks injunctive relief, civil money penalties and more.

The TSR prohibits sellers or telemarketers from requesting or receiving advance fees for any debt-relief service before renegotiating, settling, reducing, or otherwise altering the terms of at least one of a consumer’s debts, the agency noted, and before a consumer has made at least one payment on such altered debt. In this case, the Consumer Financial Protection Bureau (CFPB) said the California-based Student Loan Pro, Judith Noh, and Syed Gilani violated the rule by requesting and receiving advance fees, initially running as high as $795, for its purported debt-relief services ad. It said also that FNZA Marketing LLC, also named in the suit, received some portion of the unlawful advance fees without a legitimate claim to the money.

Noh was the sole proprietor of Student Loan Pro, created in 2015, the bureau said, and Gilani was the manager and owner-in-fact of the firm. FNZA is a California limited liability company of which Noh is the sole member but which is “controlled in fact” by Gilani, the suit states.

The CFPB in its complaint notes that Student Loan Pro (which ceased to operate in November 2019) had already settled an investigation with the Washington state attorney general over complaints of up-front fees.

The CFPB filed its suit Tuesday in the U.S. District Court for the Central District of California. In it, the bureau seeks injunctive relief, consumer redress, and civil money penalties against Student Loan Pro, Noh, and Gilani; and to have FNZA disgorge the funds it received from Student Loan Pro.

CFPB Takes Action Against Operators of An Unlawful Student Loan Debt-Relief Scheme