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For people dealing with student loan debt – your employees, a family member, or maybe you – the CARES Act gives emergency grants to qualifying borrowers. But like other financial assistance programs, consumers need to know key details up front. As part of its ongoing effort to monitor the marketplace for questionable claims arising from the COVID pandemic, FTC staff just sent a warning letter to New York-based Frank Financial Aid, raising concerns about representations regarding CARES Act grants, as well as a cash advance product the company is advertising.

What has FTC staff concerned? Some potentially misleading claims on Frank’s website. One fundamental fact to keep in mind is that for assistance through the Department of Education’s Higher Education Emergency Relief Fund created by the CARES Act, the Department has made it clear that each school has its own unique application process and “decides the criteria for qualified students to receive a grant, the grant amount, and how and when the grant will be disbursed (paid out) to students” – which raises the issue of what Frank has claimed.

  • Frank has said consumers may “apply in 2 minutes for your student emergency grant” through the company’s site and that “Frank emails you everything you need to send to your school.” But according to the FTC, the letters Frank creates aren’t tailored to the application process and documentation requirements of each school.
  • Frank has said that to be eligible for emergency relief, students and/or their parents must have experienced one or more of four identified criteria since March 1, 2020 (for example, a firing or furlough). But again, each school determines its own grant eligibility criteria.
  • In addition, Frank has said that consumers who get a cash advance through the company (which is separate from any CARES Act relief) can “[p]ay it back when your financial aid comes in.” However, in the fine print is the statement that consumers are required to pay back Frank’s cash advance “61 days after the date of disbursement.” Furthermore, despite claims on its website that consumers can get cash advances of up to $5,000 on their student loans with “No interest, no fees – ever,” the company actually charges a fee of $19.90 per month.

The warning letter advises Frank to take a look at its advertising and marketing – including websites, social media, email, telemarketing, and texts – to ensure the company is complying with the FTC Act’s prohibition on unfair or deceptive acts or practices. The letter also suggests a careful look at disclosures required by the Truth in Lending Act. FTC staff has directed the company to get back to us promptly with the specific actions it has taken to address these concerns.

The message for other marketers is that the pandemic in no way changes established consumer protection principles. That’s why FTC staff is keeping a careful watch on companies’ claims.

Looking for information about dealing with student debt during the pandemic? The Department of Education has information for borrowers. Also, check out FTC consumer resources for addressing the financial impact of the coronavirus.


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