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Published: Jul 23, 2015 4 min read
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A company that charged families for help in filling out the Free Application for Federal Student Aid (FAFSA) engaged in deceptive sales and billing practices, according to a complaint filed today by the federal Consumer Financial Protection Bureau (CFPB).

The bureau says that Student Financial Aid Services, Inc. used its websites— and—to lure customers with misleading information about the cost of its services and then it charged them automatic, recurring annual fees. Under the CFPB's order, the company would be fined $14.5 million for the alleged violations. Full payment will be suspended if the company meets certain obligations, including paying $5.2 million in refunds.

FASFA is the U.S. Department of Education's form to apply for financial aid, and it's also used by many states and colleges to determine students' eligibility for aid. The official website,, is run by the government. But the similarly named was owned by Student Financial Aid Services, Inc. from at least July 2011 until earlier this month, when the web domain was turned over to the Education Department.

On its website, SFAS offered paid FAFSA preparation that included access to an experienced financial aid adviser who would answer questions about the financial aid process, according to the CFPB complaint. The company charged consumers up to $80 for online FAFSA preparation and as much as $100 for help over the phone.

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Two of the company's programs put customers on a renewal plan that charged their accounts for subsequent years, regardless of whether they continued to use SFAS’s services. But those terms weren't clear to consumers when they signed up for the services, according to the CFPB.

In its five years of operation, SFAS collected money from about 206,000 accounts of customers who didn't use the company to file a FAFSA that year. The recurring fees ranged from $67 to $85 and were charged to consumers' cards or bank accounts for up to four years, unless they actively asked to be taken out of the program.

To take effect, the CFPB's order needs to by approved by a U.S. District Court judge in California, where the complaint was filed.

In an emailed statement, SFAS denied any illegal activity or wrongdoing, saying that the CFPB hasn't provided evidence to support its claims and that it settled with the bureau to avoid drawn out legal action.

"SFAS is not aware of a single consumer complaint to the CFPB about its services," the statement reads.

The move against SFAS marks the second CFPB action in the student financial aid industry in as many days. On Wednesday, the bureau announced an $18.5 million payment from Discover Bank to settle allegations that its student loan servicing and debt collection practices were illegal. The bureau said Discover overstated the minimum amount due on borrowers' statements, misrepresented information about tax benefits available to borrowers, and called borrowers, sometimes excessively, in the early mornings and late at night. Of the fine, $16 million will go toward refunds to the borrowers.

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