The Consumer Financial Protection Bureau (Bureau) settled with Timemark, Inc., a company based in Deerfield Beach, Florida, that provides debt-relief services to consumers with federal student-loan debt, and with its owners and officers, Timothy Lenihan, Sr., Mark Nagler, and Casey Gassaway. The Bureau alleged that the defendants charged illegal advance fees in violation of the Telemarketing Sales Rule (TSR) to consumers who were seeking to renegotiate, settle, reduce, or alter the terms of their loans. If entered by the court, the proposed order memorializing the settlement will permanently ban defendants from providing debt-relief services and impose a judgment totaling approximately $3.8 million in consumer redress and civil money penalties.

The Bureau’s complaint, which was filed in federal district court for the Southern District of Florida, alleged that from 2016 through October 2019, the defendants used telemarketing campaigns to convince more than 7,300 consumers to pay up to $699 in fees to file paperwork to reduce or eliminate their monthly payments for their federal student loans, through loan consolidation, forgiveness, or income-driven repayment plans. The U.S. Department of Education, however, offers these options to student loan borrowers for free. Moreover, under the TSR, it is illegal to request or receive any fees for debt-relief services sold through telemarketing before the terms of the debt are altered or settled, and the consumer has made at least one payment pursuant to the new arrangement. The Bureau alleges that the defendants violated the TSR because they requested and received payments from consumers within a few days, or at the latest, within 30 days of their enrollment—before the terms of the debts were altered.

If entered by the court, under the terms of the proposed order, the defendants would be permanently banned from providing debt-relief services. The order would impose a judgment on the defendants, jointly and severally, in the amount of about $3.8 million for consumer redress. Full payment of this amount will be suspended if, within 10 days after the order is entered, Timemark pays $5,000, Nagler pays $7,000, and Gassaway pays $10,000. The full amount of redress was suspended because of defendants’ limited ability to pay more based on sworn financial statements. The defendants would also be required to each pay a $1 civil money penalty, in light of their financial circumstances. Whenever the Bureau collects a civil money penalty through an enforcement action, that penalty is deposited into the Bureau’s Civil Penalty Fund. Assuming continued available funds, the Bureau will work to provide full redress to eligible harmed consumers from this fund.

The CFPB complaint is available at: https://files.consumerfinance.gov/f/documents/cfpb_timemark-et-al_complaint_2020-07.pdf  

The proposed stipulated judgment is available at: https://files.consumerfinance.gov/f/documents/cfpb_timemark-et-al_stipulated-final-judgement-order_2020-07.pdf  

Source: https://www.consumerfinance.gov/about-us/newsroom/cfpb-action-student-loan-debt-relief-business-illegal-advance-fees/