The Consumer Financial Protection Bureau asked a federal court Tuesday to shut down a student debt relief scheme that allegedly charged borrowers millions in illegal fees. 

The CFPB's complaint, filed in California's Central District Court, seeks to ban James Krause, the owner of Student Loan Processing.US, of Laguna Nigel, Calif., and the company from future involvement in debt relief and student loan services. The company also would have to refund thousands of customers and pay a civil penalty.

Student Loan Processing.US also operates under the name IrvineWebWorks Inc. and runs websites at,, and The company has been in operation since at least May 2011. A court order, if approved, would require the company to pay refunds to thousands of harmed consumers and a civil money penalty. 

In December 2014, the CFPB filed a lawsuit against Student Loan Processing.US and Krause in federal district court in California, alleging various charges, including falsely representing an affiliation with the Department of Education.  "Student Loan Processing.US and its owner, James Krause, preyed upon students looking for loan repayment help and fleeced them out of millions," said CFPB Director Richard Cordray. “The Bureau is taking action to shut down the unlawful operation permanently and to prevent the company and its owner from participating in the student lending and debt relief industries ever again."According to the CFPB's lawsuit, Student Loan Processing.US marketed and sold services promising to advise and assist borrowers applying for Department of Education student loan repayment programs. The company charged consumers an initial enrollment fee for its services of 1% of the borrower’s federal student loan balance plus a monthly maintenance fee of at least $39 per month for the entire repayment term of the borrower’s federal student loan. 

During initial enrollment calls with customers, the company’s representatives failed to disclose the recurring monthly fee before collecting payment information from the customer. The complaint alleges that the defendants also misrepresented the amount and duration of that fee. 

If the proposed ordered is entered by the court, Student Loan Processing.US and Krause must:

  • Shut down illegal operations: Student Loan Processing.US must shut down all operations within 45 days of the entry of the court’s judgment.
  • Cancel all contracts with consumers and stop charging them: The company must immediately stop charging customers any fees for its services. All contracts between Student Loan Processing.US and its customers would also be cancelled.
  • Pay consumer refunds: The order imposes a judgment for relief and damages to consumers of more than $8.2 million. A large portion of that payment, however, is suspended based on the defendants’ inability to pay. Under the terms of the order, a payment of approximately $326,000 would be sent to the Bureau and would be distributed to compensate victims of the defendants’ illegal activities.
  • Stop participating in the debt relief and student loan industries: James Krause and Student Loan Processing.US would be permanently barred from marketing or providing debt relief and student loan services. Krause and the company would also be permanently barred from assisting anyone else who markets or provides such services.
  • Ensure student loan borrowers do not miss important repayment benefits: The Department of Education requires that student loan borrowers recertify their income-driven repayment plans every year. For consumers who have recertification or renewal deadlines for these programs that are within 30 days of the entry of the judgment, the company must prepare, process, and mail to the Department of Education all paperwork necessary for recertification or renewal. The company must also mail a notice informing customers that it is shutting down and reminding them of the steps that must be taken to remain enrolled in the Department of Education’s student loan repayment programs.
  • Pay a civil penalty: The order also imposes a penalty of at least $1 to be paid into the CFPB’s Civil Penalty Fund. By requiring the defendants to pay a penalty of at least $1, victims of the defendants’ illegal practices may be eligible for additional relief from the CFPB Civil Penalty Fund in the future, although that determination has not yet been made. The Bureau is seeking this nominal penalty because of the defendants’ limited financial resources.


Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.