Game of Loans: The stark truth about student loan “debt relief” claims

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If you think the feuds among the Great Houses of Westeros get intense, consider the dinner table discussions about student loan debt. It’s not just taking a toll on the home front. Experts report that the $1.4 trillion debt burden carried by 42 million Americans is affecting workplace productivity, too. But at a time when consumers need accurate information, opportunistic outfits fly in like Daenerys Targaryen’s dragons with false promises of debt reduction or forgiveness. The FTC – along with 11 states and the District of Columbia – just announced Operation Game of Loans, a crackdown on deceptive student loan debt relief operators that allegedly took in illegal upfront fees in totals that would have astonished even the Iron Bank of Braavos.

The FTC and AGs filed a total of 36 actions against dozens of defendants charged with grabbing more than $95 million in illegal fees from consumers struggling to make their next student loan payment. Often pitched on social media, the defendants’ ads struck similar deceptive chords – “Get rid of student loan debt,” “$0 monthly payments,” and “We can . . . solve your student loan problem. 100% guaranteed!” To bolster their credibility, some ads suggested a false affiliation with the Department of Education. But the only thing “100% guaranteed” was that the defendants stung cash-strapped consumers for hefty upfront fees and then didn’t honor their promises.

As part of Game of Loans, the FTC announced court orders in two pending cases against Student Aid Center and Strategic Student Solutions. In addition, the FTC filed new actions against:

  • A1 DocPrep, Inc.  The FTC says the California-based operation, which claimed to be affiliated with the Department of Education, took millions from consumers struggling with student debt. But rather than delivering on the promised relief, they allegedly spent the cash on cars, jewelry, and nightlife.
  • American Student Loan Consolidators.  According to the complaint, the Florida company took in more than $11 million with false claims of loan forgiveness, reduced monthly payments, and lower interest rates. What’s more, the FTC says the defendants tricked consumers into believing that the illegal upfront fee of as much as $799 was going toward paying off what people owed.
  • Alliance Document Preparation.  The FTC lawsuit alleges that the Los Angeles outfit charged upfront fees totaling more than $20 million without delivering on their claims to consumers. The defendants operated under 20 corporate names like United Legal Center, Alumni Aid Assistance, Post Grad Services, and Academic Aid Center.
  • Student Debt Doctor.  The FTC alleges that the Florida company wasn’t what the doctor ordered for consumer struggling with student loan debt. Claiming that consumers could get loan forgiveness in as few as five years, the defendants used social media, email, and telemarketing in both English and Spanish to take in more than $7 million.
  • Student Debt Relief Group.  The FTC says the LA-based company used a bogus affiliation with the Department of Education to collect more than $7 million in illegal upfront fees. In addition, the complaint alleges that the defendants charged consumers as much as $1,000 to apply for free government programs. Once consumers started to complain, they allegedly changed their name, but not their business practices. The complaint also charges that they used consumers’ Social Security numbers and FSA IDs to hijack their accounts.

Why should student debt relief deception matter to your company? Chances are you have employees struggling to make their monthly payments. Money diverted to bogus debt relief operators puts their dream of financial security ever farther away. Here are steps you can take to lend a hand.

Share legitimate sources of information. Arm your staff members with accurate information from about repayment and forgiveness programs available to them at no cost. In addition, the FTC has updated advice on how to spot a student loan debt relief scam.

Enlist your HR team to assist staffers who could be targeted by student loan scammers. Whether it’s a printout of brass-tacks tips on a bulletin board or a one-minute mention at the next staff meeting, it makes good business sense to have your human resources professionals serve as a conduit for scam-fighting guidance.

Don’t assume this is a message only for recent grads. People who just tossed their mortarboards aloft are a prime target, but many mid-career employees – those who returned to school part-time and parents concerned about their kids’ student loans – are at risk, too. That’s why everyone needs to know these four fundamentals:

  1. If an ad promises fast loan forgiveness, it’s a scam. Genuine options are available through the Department of Education or the loan servicer – and they’re free.
  2. Never pay an upfront fee for debt relief services of any kind.
  3. Scammers often fake an affiliation with the Department of Education. Investigate the source of the information you receive.
  4. Don’t share your FSA ID with anyone.

The FTC also has advice for companies in the student loan debt relief business. The Telemarketing Sales Rule has specific provisions to curb deceptive and abusive practices in the debt relief services industry, including when the debt is a student loan. The Rule applies not just when companies make outbound calls to prospective customers. It also applies when consumers call companies in response to ads or other solicitations.

You’ll want to read the Rule for the specifics, but there are three important takeaways. First, it’s illegal to charge upfront fees. Until you have settled or otherwise resolve a customer’s debt, you can’t collect so much as one thin dime. Second, before people sign up, you must clearly disclose key facts about your services. Just for starters, that includes how much it will cost, how long it will take to get results, and the negative consequences that could result from using debt relief services. Third, under both the TSR and the FTC Act, it’s illegal to make false or unsubstantiated claims about student loan debt relief services. Before making any objective representations, you must have solid evidence in hand to support what you say. Read Debt Relief Services and the Telemarketing Sales Rule: A Guide for Business for more compliance advice.


Thank you for this informative piece!

cl fpr, I am a 70 year old grandma. I am also deaf. I have one of those phone that captions what people say so that I can understand what is going on . 9 calls out of 10 are call s that are involving scams. Depending on what is listed, I may or may not answer the phone. Most of the time , when I do answer it , and I tell them I am deaf, they hang up. but once in a while , after I tell them the situation and that there is a three second delay, some of these people will stay on and that is when my oneriness kicks in. Just today , I got such a call about student loans. I let her do her thing . She said, according to their records , I have outstanding student debt and that they could help me with it. I asked her what records she was referring to and she never came up with a good answer and just kept telling me that I wouldn't have to worry about my student debt. I told he that I don't worry about it , because I don't have any. I then, proceed to tell her that I am 70 years old and haven't been in school for over 50 years and whatever I owed the college that I attended was paid a long time ago ..a VERY LONG TIME AGO . She was so rude...she hung up on me. One time , recently, a man called and asked me if I had arthritis..It is none of his business, but I told him that I did. He ask me if I had any back pains. I told him no but that didn't stop him from continuing to talk about me having a back brace. He said that it would be free to me. I told him that if my doctor thinks that I need a back brace, he will write up a prescription for one and, yes, it would be "free" to me because Medicare pays 80% of my medical bills and , because my husband was a 100% service - connected disabled veteran , the VA pays the remaining 20%. I have no copays. He hung up on me too. Before my husband died , 19 years ago , a lady called about siding on our home. I told her it was brick .and that we didn't need siding . then she talked about trim. I told her that we were satisfied with what we had, but , then , she asked me if we owned our own home. I didn't take very long to answer her....I told her, "no, Superior Federal owns this house but if we pay them so much money a month , they let us live here." Then she said, "Oh, I am sorry , we can only call homeowners '....the SHE hung up. By the way, I got the house paid for last year, a whole year ahead of schedule and I AM a home owner. One other one. This is about my warranty on my car. I started to experience tinnitus and I have also been going deaf ...never could here out of my right ear and now the left one is gone. When I got the tinnitus, I decided not to drive anymore. I used to sell Tupperware (for 10 years ) and I had a van. but I decided to quit all of that . I don't like being dependent but that is the way it is . Anyway, I have had several calls saying the warranty on my car has expired I asked them where they got their information...they never come up with a good answer to that.. anyway, I tell them that I am sure the warranty has expired on my van, but that I don't even know where it is anymore and that I haven't owned a car in over 10 years. THEY ARE RUDE ALSO....THEY HANG UP ON ME ! For obvious reasons , I don't answer every call and I have to be at my desk when I do and I just don't stay glued to my desk. IF a call has a strange number or no number , I let it ring. I don't use my landline , except on a rare occasion and my family and friends know to call me on my cell phone and text me. I don't broadcast my cell phone number , but in the last two days I have been getting calls from a 800 number . Of course, I don't answer it , but then I got a text today from someone saying they tried to call me but didn't get a response and that they had a good deal for me. I sent a text back and told him I was deaf and that I didn't talk to anyone on my cell phone and that I didn't know who he or she was and asked how they got my number . I haven't heard back from them. There are so many scams out there and they are really bad online. That is why I like receiving your newsletter because I AM a70 year old lady and I don't want to be a victim like so many people are ...thank you for your diligence !

Thanks for alerting students and former students. So many of us are drowning in student loan debt and desperately seeking relief which poses vulnerability. What about Navient and NW student loan?

I have been vulnerable to 2 firms offering reduction or 0 payment on my student loans. the second caller told me that the 1st one was a scam. To prove to me that he was legitimate, he gave me all of my personal information! Being vulnerable because I am a widow with limited income and desperately needed relief of my Student Loan payments, I agreed to a contract which allowed his firm $600.00 servicing fee & reduced my loan payment to $43 per month for 3 yrs. I signed the contract (actually with both firms) electronically. I am now having to clean up this messy scam by closing & re-opening my bank account & locking my credit (through Experian who notifies the other credit bureaus). So...thanks for this article, and other students (or former students) BEWARE OF THESE SCAMS!

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