SAN DIEGO (CN) — A student financial aid advisory services company must try again to defend itself against claims it duped 76,000 college students into paying at least $4.7 million to receive financial aid, a federal judge ruled.
On Feb. 24, U.S. District Court Judge Gonzalo Curiel granted the Consumer Financial Protection Bureau's motion to strike affirmative defenses and allowed defendant Armond Aria - owner and CEO of Global Financial Support Inc. - leave to file an amended answer.
The bureau sued Aria and his company in 2015, claiming Aria runs a scheme that preys on high school and college students and their families looking to get financial aid information to help finance their college educations, according to Curiel's summary.
Aria has been running the program since at least January 2011, when students were promised to be matched with targeted financial-aid opportunities. Aria found the names of students by purchasing lists of student information from online vendors, according to the order.
The bureau claims Aria's student aid advisory program violates the Consumer Financial Protection Act. In addition to owning Global Financial, Aria is president of College Financial Advisory and CEO of Student Financial Resource Center.
The bureau claims Aria's companies have sent millions of letters to students and their families bearing watermarks and seals used by government agencies that include a filing deadline and filing status along with a nine-digit student profile number.
The letter instructs students and their families to fill out a "student aid profile form" and submit it along with a "refundable processing fee," which has varied from $59 to $78. Students were told the fee helps "apply for the maximum merit and need-based financial aid programs," according to Curiel's summary.
According to the order, the form looks similar to the Free Application for Federal Student Aid, commonly known as the FAFSA, which students do not pay to fill out.
Students who do not qualify for or receive financial aid funding were promised a refund of the entire processing fee within 10 business days, the letters said.
There is no real deadline represented by the letters, however, and the letters hint that consumers will lose out on student aid opportunities if they do not pay a fee to Aria's company, the bureau claims.
Two websites and a toll-free phone number are also used in the scheme, which promise individualized content but in reality only provided instructions for downloading and filling out the student aid profile form, the bureau claims.
Aria filed a first amended answer Dec. 7, 2015, along with 22 affirmative defenses, eight of which the bureau moved to strike.
Three of Aria's defenses involve the plaintiff's deception claims but are actually defenses to an unfairness claim, the bureau asserts, while the other defenses do not meet the fair-notice standard.
Aria argued the bureau's complaint is not clear on whether it involves violations based on unfairness, deception or abuse against consumers.
Curiel struck the defenses, finding a deception claim does not require showing a substantial injury to consumers as Aria had claimed.
The court found Aria's affirmative defense reserving the right to assert additional defenses later down the road does not give the bureau fair notice. Aria can only assert additional defenses by amending his case, Curiel ruled.
Aria has until March 18 to amend his answer.
The bureau said it does not comment on pending litigation.
Aria is represented by Mark Bagula and Rada Feldman of Olins Riviere Coates and Bagula in San Diego, who did not return an emailed request for comment.
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