The commission successfully halted a group of scammers who exploited students seeking debt relief, falsely claiming affiliation with the U.S. Department of Education and using deceptive loan forgiveness promises.
08/23/2023 2:00 P.M.
1.5 minute read
In a significant victory against fraudulent practices, the Federal Trade Commission has taken down a scheme preying on vulnerable students seeking relief from their debt burdens, according to a recent press release.
The scammers, operating through California-based companies Express Enrollment LLC and Intercontinental Solutions LLC, collected approximately $8.8 million in illegal upfront fees from unsuspecting students under the pretense of providing student loan debt relief services that were nonexistent.
The FTC’s complaint (PDF) reveals a pattern of deceit, where the defendants falsely assured students that their loan payments would be lowered or eliminated entirely. They posed as representatives of the U.S. Department of Education, convincing students to cease communication with their legitimate loan servicers. As part of their scheme, the scammers misled consumers into believing that they needed to pay for services that were readily available for free through official channels.
One example involved luring students into paying a processing fee of $375 by promising forgiveness of up to $20,000 due to Pell Grant eligibility. Another instance showcased a fabricated “student loan forgiveness program” that supposedly reduced a student’s loan balance by $10,000 while initiating a new repayment plan.
To carry out their scam, the defendants obtained sensitive financial information from victims, including bank account, debit card and credit card details. Through these illicit means, they collected unlawful advance fees, often through remotely created checks, in violation of the Telemarketing Sales Rule.
The FTC’s response to their operation resulted in the temporary suspension of the defendants’ activities and the freezing of their assets by a federal court with a unanimous 3-0 vote. As the case progresses, the U.S. District Court for the Central District of California will ultimately determine the outcome of this battle against student loan debt relief scams.
The FTC has resources on how to avoid student loan debt relief scams at ftc.gov/StudentLoans.
Read the FTC’s press release here.
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