Scammers be scamming! The Federal Trade Commission (FTC) announced this week that they would send out thousands of checks totaling more than $822,000 to student loan borrowers who lost money in a debt-relief scam. According to NBC Chicago, over 14,500 consumers who paid money to a company called ‘Student Advocates’ will receive a check.
The FTC brought a complaint against the company in September 2019, alleging that the company charged illegal upfront fees and lied to borrowers. Student Advocates told their victims that their money would go toward their loans and were also steered into high-interest loans and falsely promised lower payments. In some cases, victims were offered debt elimination. In a statement on Thursday, the FTC said, “None of the money collected by the defendants was paid toward consumers’ student loans.”
There are more than 44 million student loan borrowers in the United States, with the country’s outstanding loan balance totaling more than $1.7 trillion. On average many borrowers owe $100,000 or more in student loans debt, which is an opportunity for to capitalize, consumer advocates say. Reports state scammers increasingly promise borrowers student debt forgiveness and lower payments. The scammers often request upfront fees for up to thousands of dollars for this “service,” which is illegal, consumer advocates explain.
Higher education expert Mark Kantrowitz says, “The Credit Repair Organizations Act of 1996 bans charging upfront fees for credit repair, such as student loan forgiveness, student loan consolidation, and switching repayment plans.” For those struggling with payments, there are options to help borrowers.
Reports also state people may be able to switch to an income-driven repayment plan. There are also economic hardship and unemployment deferments available. There are more options through the Education Department’s StudentAid.gov.
The FTC says victims of the scam should cash their checks within 90 days of receipt. However, NBC Chicago doesn’t state when the checks will be mailed out. For more information, contact JND Legal Administration by calling 877-540-0989.