The Federal Trade Commission recently went after StuDebt, Student Debt Relief Group, SDRG, Student Loan Relief Counselors, SLRC, and Capital Advocates Group, M&T Financial Group, American Counseling Center Corp, and Salar Tahour.
These related entities are not alone in this sweep by the FTC against student loan assistance companies. Many of these companies were operating as “doc prep” companies and believed that would shield them from regulators.
However what happened was the regular disconnect between commissioned sales people and the “safe” business structure.
I can seemingly warn debt relief companies about these mass market student loan assistance business plans but none will listen. In looking back over my 2013 article, Student Loan Assistance Rescue Scams On the Rise – Buyer Beware, it seems it is all coming true.
In the case of the groups named above, the FTC says the companies conducted aggressive outbound telemarketing and was “Preying on widespread anxiety and confusion around student debt, Defendants misrepresent the cost and features of federal student loan repayment programs in order to extract fees from the struggling consumers these programs are designed to help.” The FTC suit filed goes on to say, “Defendants then entice consumers with false promises that they qualify for federal programs that would permanently reduce their monthly loan payments to a fixed amount. To access these free government programs, Defendants tell consumers that they must pay an advance fee of up to $1,047.” In addition to these illegal advance fees, Defendants also collect and retain monthly fees that consumers believe are being applied to pay down their loans.”
You can read the entire lawsuit here.
The court documents also says.
Documents state consumers were told they did not need to read contracts from the company before signing them, the student loan assistance companies represented they were affiliated with the Department of Education, and monthly fees were used to pay for “unrelated products or services that were never discussed in the telemarketing call such as “Involuntary Unemployment Insurance,” “Auto Busing Service and Maintenance,” or “tax preparation.”
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