The Consumer Financial Protection Bureau (CFPB) took action against the owner of a student loan debt relief company for allegedly withdrawing hundreds of thousands of dollars from borrowers’ bank accounts. The CFPB accused Frank Gebase Jr., who controlled this business, after obtaining his name and account information through an earlier scammer that was shut down by them. If entered into court proceedings and prove the allegations to be true, they will proceed to ban him from ever doing so again.
“There’s a reason the CFPB shut down this pyramid scheme six years ago, and it’s not just because of its fraudulent practices. The agency says that when student loan debt relief services provide unclear or inaccurate information to borrowers in distress like those affected by these schemes can be devastating for them,” said CFPB Director Rohit Chopra on behalf of his department. “This type of negligence sets up potential victims as easy targets.”
On March 30, 2016, the CFPB ordered Student Aid Institute to shut down its debt-relief operations and rescind all of its consumer agreements. That order resolved findings that SAI had violated federal consumer financial protection law by charging unlawful upfront fees for student loan debt relief services as well as making false promises about possible savings through reduced payments or forgiveness on loans owed to them.
Gebase was a long-time associate of the Student Aid Institute’s principal. When he heard about the CFPB order against his old company, Gebase founded ProcessingStudentLoans in San Diego, California in 2016 to take on some riskier loans for students who need more help than traditional bank financing offers. He was responsible for all operations of this student loan debt relief company, including its leadership position as CEO and corporate officer.
The CFPB ensures student loan debt relief companies follow consumer financial protection laws
The Consumer Financial Protection Bureau has filed a complaint against ProcessingStudentLoans for harvesting student loan accounts from an existing company without their knowledge or consent. The CFPB alleges that this firm was engaged in recertifying the U.S Department of Education’s federal repayment programs on behalf of student loan debt relief borrowers and obtaining new customers through billing information previously obtained while servicing former clients like yourself who are still making payments towards these loans.
ProcessingStudentLoans is accused of stealing money from student loan borrowers by unauthorized collection. The company processed payments without entering into any contracts or agreements with the customers, and took recurring fees at $39 per month for tens of thousands in total charges on hundreds of accounts over several years – all while claiming they were acting within policy!
In March 2017, Processingstudentloans’ business operations stopped being funded by borrowers and on April 5th of that same year Gebase closed down the company altogether.
Gebase is accused of stealing from student loan debt relief borrowers by debiting their bank accounts without authorization. The company was aware or should have been that these fraudulent withdrawals were unlawful and inappropriate, but continued anyway in order to make money off the students’ pain—until April 2017 when they unlawfully took out more than $240 thousand from several hundred accounts.
Enforcement Action
The CFPB has the authority to take action against institutions and individuals who are violating consumer financial protection laws and scamming seekers of student loan debt relief. This includes engaging in unfair, deceptive, or abusive acts or practices. The proposed settlement, if entered by the court, would require Gebase to:
- Pay a $175,000 fine: Gebase will be required to pay the $175,000 penalty to the CFPB, the latter then depositing it to their own victim’s relief fund.
- Stop participating in debt relief and other activities: Gebase will be permanently banned from offering or providing debt relief products and services, and financial advisory for their clients. They are also prohibited from advertising these related items in any way shape or form as described by the proposed final judgment.
The CFPB is dedicated to providing relief for those who have been harmed by their loans. They will work hard in order that eligible consumers can receive full compensation from this fund, no matter what type of financial distress they are experiencing now or if it happened many years ago.
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