Operators of Student Loan Debt Relief Scam Claimed Affiliation with Department of Education
The defendants bilked at least $7.3 million from unsuspecting consumers who were struggling to repay their student loans
The operators of a Los Angeles-based student loan debt relief scam have agreed to settle Federal Trade Commission (FTC) charges that they falsely claimed to be affiliated with the United States Department of Education, charged consumers illegal upfront fees, and collected monthly fees they falsely claimed would be credited toward consumers' student loans.
Operation Game of Loans
The settlement with Student Debt Relief Group is part of a coordinated federal-state law enforcement initiative targeting deceptive student loan debt relief scams called Operation Game of Loans.
Took Millions of Dollars from struggling consumers
According to the FTC's complaint, individual defendant Salar Tahour and his companies—Los Angeles-based M&T Financial Group and American Counseling Center Corp., doing business as Student Debt Relief Group, SDRG, Student Loan Relief Counselors, SLRC, StuDebt, and Capital Advocates Group—bilked at least $7.3 million from unsuspecting consumers struggling to repay their student loans.
The FTC says that the defendants tricked consumers into believing that they were affiliated with the Department of Education, deceived consumers into paying up to $1,000 in illegal upfront fees to enter them into free government programs, and charged consumers monthly fees they claimed would be credited toward their student loans.
In reality, the defendants pocketed consumers' money and responded to consumer complaints by changing the name of their companies rather than their business practices.
Hijacked Consumers' student loan accounts
To prevent consumers from discovering the scam, the FTC says that the defendants cut consumers off from their loan servicers and the Department of Education by instructing them to stop all communication with those entities.
The defendants often obtained consumers' Social Security numbers and FSA IDs and hijacked their online student loan accounts. The defendants also routinely placed illegal calls to consumers on the National Do Not Call Registry.
Banned from Debt Relief Activities
Under the proposed settlement order with the FTC, the defendants are permanently banned from engaging in any type of debt relief activities and from making misrepresentations or unsubstantiated claims related to financial or any other products or services. They also are prohibited from engaging in illegal telemarketing practices.
The order includes a monetary judgment of $11,694,347.49, which is the estimated amount of money swindled from consumers by the defendants.
Once the defendants turn over nearly all of their available assets to go towards consumer redress, totaling more than $2.3 million, the remainder of the judgment would be suspended due to their inability to pay. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.