By Maya Patel

In re Commissioner of Financial Protection and Innovation v. The Firm Alternative LLC: On September 17, 2024, the California Department of Financial Protection and Innovation (DPFI) entered into a consent order with The Firm Alternative LLC d/b/a DocuPrep Xpress (DocuPrep), resolving allegations of unlawful practices related to student loan debt relief services. The Consent Order, which includes financial penalties, consumer refunds, and mandated changes to the company’s business practices, marks an important moment in the state’s efforts to protect consumers from deceptive practices in the financial services industry.

Since January 1, 2019, DocuPrep has marketed itself as an online provider of student loan document preparation services—claiming it would provide financial advisory services to borrowers with preparing loan documents, securing new interest rates, and qualifying for government loan forgiveness programs (Debt Relief Services). Between January 2019 and September 2021, DocuPrep enrolled 218 California consumers in its debt relief services. However, despite promises to assist with loan modifications and debt relief, the company charged significant advance fees, ranging from $166 to $999, before providing any tangible debt relief—receiving “all or a portion of the servicing fee before DocuPrep negotiated, reduced, or otherwise altered the terms of a customer’s existing student loan debt.” Over this period, DocuPrep collected over $170,668.76 in fees from these California consumers.

The Commissioner deemed DocuPrep’s conduct violated both state and federal laws, namely the California Consumer Financial Protection Law (CCFPL) (Cal. Fin. Code section 90000 et seq.) and the federal Telemarketing Sales Rule (TSR) (16 C.F.R. sections 310.1–310.9) of the federal Telemarketing and Consumer Fraud and Abuse Prevention Act (15 U.S.C. sections 6101–6108). The Commissioner concluded that DocuPrep failed to adhere to the TSR’s prohibition against upfront fees for debt relief services. By charging consumers before renegotiating their loan terms or achieving debt reductions, DocuPrep engaged in deceptive and unlawful practices and thus violated the CCFPL.

DocuPrep agreed to a Consent Order without admitting or denying the findings. The consent order requires DocuPrep to immediately cease violating the CCFPL, issue partial refunds to affected California consumers who paid upfront fees between January 2019 and the effective date of the Consent Order, pay a $10,000 penalty to the DFPI within 30 days of the Consent Order’s effective date, and rescind all contracts between DocuPrep and California consumers related to its Debt Relief Services.