By Andrew A. Turner, J.D.
The Consumer Financial Protection Bureau has made a concerted effort to help borrowers with student loan issues. The latest point of emphasis is an operation that allegedly “ripped off students and families applying for college financial aid.” The CFPB contends that Global Financial Support, Inc., and its owner, Armond Aria, exploited uncertainty over how to use free federal financial aid resources.
The company, operating under the names of College Financial Advisory and Student Financial Resource Center, is accused of running a nationwide student financial aid scam with false promises to match students and families with targeted financial aid assistance programs for a fee. The CFPB is seeking a halt to the unlawful practices alleged in the complaint, penalties for their illegal conduct, and restitution to harmed consumers.
The Consumer Financial Protection Bureau charges that the company tricked consumers into thinking they were applying for financial aid services, falsely represented an affiliation with the government or academic institutions, and pressured consumers with threats of losing financial aid opportunities. “Students and families were looking for information on how to pay for college, instead they were illegally charged millions of dollars for sham financial services, said CFPB Director Richard Cordray.
The business ran a deceptive scheme to persuade high school seniors, enrolled college students, and their families to pay a fee to participate in a student financial aid “program,” according to the CFPB. Through the use of an official-looking seal, artificial filing deadlines, references to students’ universities, a “Student Aid Profile Form,” and a strategically worded letter, the CFPB says they exploit consumers’ unfamiliarity, anxiety, and confusion about the Free Application for Federal Student Aid (FAFSA) and the student financial aid process generally.
Services. The letters allegedly instruct students to fill out and return an application and a fee—ranging from $59 to $78—to apply for the maximum merit- and need-based financial aid programs. In reality, the complaint claims, consumers either receive nothing in exchange for sending in their application and fee, or they get a generic booklet that fails to provide individualized advice.
Affiliations. According to the CFPB, the company uses logos and seals to make consumers think that its materials are sent or endorsed by the government. The company includes the name of the student’s university to give the impression that the letter is endorsed by the student’s university.
Deadlines. The company allegedly tells consumers that unless they send their application and pay a fee by a specified deadline, consumers will lose their opportunity to receive student financial aid, when in reality their deadlines are meaningless.
Other recent CFPB action. In July, in another matter raising similar issues, the CFPB filed a complaint against Student Financial Aid Services, Inc. (SFAS) for alleged illegal sales and billing practices. The CFPB alleged unfair and deceptive acts or practices on the part of the company for luring in consumers with misleading information about the total cost of its subscription financial services and then charging them with undisclosed and unauthorized automatic recurring charges.
SFAS operated websites, including FAFSA.com and SFAS.com, and related call centers, where it offers fee-based assistance to consumers filling out the federal government’s Free Application for Federal Student Aid. These websites were not at that time affiliated with the federal government’s FAFSA program. Under the proposed settlement, the company agreed to pay $5.2 million to the CFPB for distribution to harmed consumers.
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