School loan

CFPB orders $8 million paid to consumers in loan scam

The Consumer Finance Protection Bureau (CFPB) has finalized a lawsuit against RAM Payment and Account Management Systems, two payment processors working with debt relief, over the collection of debt relief fees from consumers and lying on the details.

According to a CFPB Press release On Wednesday May 11, the co-founders of Account Management Systems, Gregory Winters and Stephen Chaya, were also prosecuted.

The CFPB said the companies were charging fees and lied about when fees would be paid to debt relief companies. According to the statement, they sent illegal advances to companies before they were authorized and would not have returned the funds to consumers who canceled their student debt relief agreements, which is required by law. .

AMS and RAM Payment are both Tennessee-based companies and have provided account maintenance and payment processors for those participating in debt relief programs. The providers of these services are intended to be independent and only keep the fees until the debt relief companies are ready to receive them.

As a result of these allegations, the CFPB is fining the defendants over $11 million.

“Too often, bad actors take advantage of student borrowers and others looking to get out of debt,” said CFPB Director Rohit Chopra. “Our law enforcement action prohibits enablers and their ringleaders for their illegal acts.”

PYMNTS wrote that the CFPB also recently ordered Bank of America to pay $10 million for illegally processing garnishment orders on client accounts.

Read more: CFPB: BoA must pay $10 million for illegal garnishments

The CFPB said the bank “illegally froze customer accounts, charged garnishment fees, seized funds, and sent payments to creditors based on out-of-state garnishment orders. that should have been dealt with under the laws and protections of the states where the consumers lived.”

The CFPB also said Bank of America broke the law by writing unfair and unenforceable language into contracts, limiting customers’ rights to challenge their account freezes. In addition to the fine, the bank was ordered to refund or waive the fees imposed by the garnishments and to repair its system.

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