The Federal Trade Commission (FTC) on Monday announced that it stopped two student loan debt relief schemes that defrauded $12 million from borrowers by using deceptive claims about repayment programs and loan forgiveness that did not exist.
The schemes were run by three companies, SL Finance, LLC and BCO Consulting Services Inc. and SLA Consulting Services Inc., according to the FTC's complaint filed in California. These two companies since at least 2019 misled borrowers into thinking they were repaying their loans, causing borrowers to pay “hundreds to thousands of dollars in illegal upfront fees” to the companies. FTC noted that many of these borrowers are low-income and “saddled with tens of thousands of dollars of student debt.”
Further, the companies tricked borrowers into believing they were enrolled in a legitimate loan repayment program and that their loans would be forgiven. However, the companies were actually pocketing students’ payments, according to FTC. Additionally, FTC noted that the two companies falsely claimed to be affiliated with the Department of Education and told borrowers that they would take over servicing for their loans.
“As Americans struggle with massive student loan debt and uncertainty around the prospect of forgiveness, scammers are looking to cash in,” said Samuel Levine, director of FTC’s Bureau of Consumer Protection, in a statement. “These lawsuits to shut down student loan debt relief schemes continue the agency’s crackdown on junk fees, unwanted calls, and financial exploitation.”
Publication Date: 5/11/2023