Home Philatelic investment FTC sends checks to defrauded student borrowers in scams

FTC sends checks to defrauded student borrowers in scams


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The Federal Trade Commission announced this week that it will send thousands of checks totaling more than $822,000 to student borrowers who lost money in a debt relief scam.

More than 14,500 consumers who donated money to a company that operated as Student Advocates will receive a check, which they must cash within 90 days of receiving it, according to the FTC.

The FTC filed suit against Student Advocates in September 2019, alleging the company charged illegal upfront fees and lied to borrowers, claiming their money would go to their loans. Clients were also steered towards high interest loans and falsely promised lower payments and, in some cases, debt elimination.

“None of the funds collected by the defendants was disbursed for consumer student loans,” the FTC said. said in a statement Thursday.

Student Advocates officials did not respond to a CNBC request for comment via LinkedIn.

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Red flags: upfront costs, promises of “immediate” results

There are more than 44 million student borrowers in the United States, and the country’s total outstanding loan balance is over $1.7 trillion. The average student loan balance is about $30,000, up from $10,000 in the early 1990s, with many borrowers owing $100,000 or more. Reimbursement issues are common.

For fraudsters, it’s a scam opportunity, say consumer advocates.

Scam artists are increasingly promising borrowers forgiveness of student debt and lower payments. They often charge up-front fees of up to thousands of dollars for this “service,” which consumer advocates say is illegal.

“The Credit Repair Organizations Act 1996 prohibits charging up-front fees for credit repair, such as student loan cancellation, student loan consolidation and change of repayment plan,” said the education expert Mark Kantrowitz.

Never respond to requests to share your federal student ID except from your department or the government, Kantrowitz said.

Also be wary of any promise of “immediate” cancellation of your student debt, he added.

“As we all know, loan forgiveness is not such a quick process,” Kantrowitz said, citing one of the most popular — and real — programs. “Civil Service Loan Cancellation Takes 10 Years.”

Find Legit Resources for Help with Student Loans

These scammers will often offer services you could do yourself, online, in less than half an hour, advocates say.

For example, if you’re having trouble meeting your student loan payments, you may be able to switch to an income-based repayment plan with your service agent.

Under the program, your monthly bills will be capped at a portion of your income. There is also economic difficulties and unemployment deferments available. You can apply for these forms of relief free of charge from the Education Department StudentAid.gov.

And remember that through at least the end of August, most federal student loan borrowers are off the hook with their payments, thanks to the pandemic-era policy that’s been in effect since March 2022.

Consumers who receive a check from the FTC and have questions about their refund should call the refund administrator, JND Legal Administration, at 877-540-0989, the commission said.