SACRAMENTO, Calif. (CN) - Delaware-based Student Financial Aid Services charges students for help filling out federal financial-aid documents year after year whether the service is used or not, the Consumer Financial Protection Bureau says in Federal Court.
The suit - filed Thursday in Sacramento - charges violations of the federal Consumer Financial Protection Act, the Telemarketing Sales Rule and the Electronic Fund Transfer Act.
Consumer Financial Protection Bureau is an independent agency of the U.S. government.
The bureau alleges that from 2011 to the present, SFAS has offered to help students fill out the federally required FAFSA forms to apply for college financial aid for a fee.
Although students can fill their FAFSAs out on a government-run website for free, SFAS charges $79.99 for online filing and $99.99 to file by telephone.
The company also offers "Gold" and "Combo" packages that run between $67 and $85 to fill out the FAFSA annually - and students are charged these fees annually whether they use SFAS' service or not, the bureau says.
Students can't opt out of the charges, which the company calls "worry-free annual billing" in the middle of its 6,500-word terms-of-use webpage. The payments are automatically deducted from the students' credit, debit or checking accounts each year for four years without the students' affirmative consent, the bureau says in the complaint.
To date, SFAS has processed about 206,000 charges from students who did not use the service, the bureau says.
The bureau seeks refunds for the affected students, an end to SFAS' billing practices, disgorgement and civil penalties.
Attorneys Anthony Alexis and David Rubenstein represent the bureau in the action.
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