FTC Sues Two Companies that Ran Phony Student Loan Scams, Settles with Another
Consumer Assistance Project and Student Aid Center charged illegal upfront fees for student debt services that they failed to provide
The Federal Trade Commission (FTC) and the State of Florida are suing two companies that allegedly ran phony student debt relief scams.
The Consumer Assistance Project and Student Aid Center charged illegal upfront fees for services that they never provided. Additionally, the companies often charged monthly fees while they evaluated applications, often leaving borrowers without any viable options and failing to deliver on any advertised promises.
"The FTC is not going to stand on the sidelines when it uncovers evidence of fraudsters targeting students," said Jessica Rich, Director of the FTC's Bureau of Consumer Protection. "Consumers should be wary of any company that claims it can eliminate or greatly reduce debt, especially if they ask for money in advance."
Consumer Assistance Project
Consumer Assistance Project lured borrowers with promises of getting rid of their student loan debt, charging $250 upfront for services, on top of a monthly fee of up to $303 for as long as 36 months.
Consumer Assistance Project staffers pretended to evaluate borrowers for eligibility, and then told them they qualified for government student loan forgiveness programs that will reduce their debt by at least 50 to 70 percent. But, the FTC claims that borrowers are not likely to meet these loan forgiveness requirements.
The company also claimed they would audit borrowers' student loans for errors that would invalidate the loans or reduce the balance, and then repair their credit, but failed to deliver on both of these promises.
Positive reviews of their services on social media were, in some cases, fake posts made by the company itself.
Student Aid Center
Student Aid Center made similar promises to get students' loans completely or mostly forgiven. The company told borrowers that they were approved or pre-approved for loan forgiveness or lower monthly payments, which they could get by paying up front monthly fees of about $200 or more for five months.
The company also marketed a 100 percent money-back guarantee, but borrowers who wanted refunds often got a much lower amount or only obtained refunds after complaining to the Better Business Bureau or a state or federal agency.
In a separate case, the operators of Good EBusiness have agreed to settle an FTC complaint and are permanently banned from the debt relief business. According to the FTC, the company and its affiliates charged consumers up-front fees between $500 and $800 to renegotiate, settle or alter payment terms on student loan debt. These services, however, were never provided.
The company also marketed home loan and student loan modification services under the name AAP Firm and illegally charged advanced fees ranging from $1,000 to $5,000.
The company and its owners are banned from the debt relief business and must surrender any business assets.