FTC Exposes Student Loan Scammers: Tips to Safeguard Yourself from Deceptive Offers
The Federal Trade Commission (FTC) has recently brought to light a fraudulent scheme that targeted student loan borrowers, amassing a staggering $8.8 million through deceptive promises of debt relief.
The two companies at the center of this scam, Express Enrollment LLC and Intercontinental Solutions LLC, exploited the uncertainty surrounding student loan debts and falsely claimed to offer relief under the guise of ‘Biden Loan Forgiveness.’
Operating out of California, these entities presented themselves as affiliated with the US Department of Education, hoodwinking borrowers into believing they needed to pay processing fees to access the promised debt forgiveness.
The FTC has now filed a permanent injunction against both companies, asserting that they engaged in fraudulent activities by falsely portraying themselves as connected to the Department of Education.
Under the alleged scam, borrowers were coerced into paying processing fees or making payments in the hopes of obtaining student loan forgiveness through the supposed ‘Biden’s Loan Forgiveness’ plan.
One victim recounted that they were told they could have $20,000 of their Pell Grant forgiven in exchange for a processing fee of $375.
Another individual reported that the companies assured them of a $10,000 reduction in their loans if they agreed to a new repayment plan involving six monthly payments of $250.
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FTC Warns of Trust Concerns Amid Deceptive Student Loan Scam
“This case highlights how, in a time of uncertainty for individuals burdened by student loan debt, these defendants managed to siphon off millions of dollars through deceptive fees and false assurances of loan forgiveness and lower payment burdens,” stated Samuel Levine, Director of FTC’s Bureau of Consumer Protection.
The ramifications of such scams extend beyond the immediate monetary loss for individual borrowers.
The erosion of trust in financial assistance programs can cast a shadow over the broader market and deter both students and investors from engaging with legitimate opportunities.
Drawing a parallel to the aftermath of the 2008 housing crash, where public wariness persisted in real estate investments, students might now approach any debt relief program with skepticism, fearing the presence of malicious actors.
In light of this disconcerting revelation, the FTC urges students to exercise vigilance and conduct thorough research before engaging with any financial relief service.
The agency advises against falling for scams that promise swift loan relief or require upfront fees.
It also encourages borrowers to verify a company’s legitimacy with the Department of Education and to refrain from sharing their FSA ID, used to access federal student loan accounts.
As the investigation into this fraudulent scheme unfolds, it serves as a stark reminder for borrowers to remain cautious, informed, and proactive in safeguarding themselves against deceitful financial practices.
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Source: Investopedia
