Over 27,000 student-loan borrowers are getting $4.1 million in payments in the mail after debt relief companies 'lured'
Source: Business Insider
Mar 14, 2024, 10:37 AM EDT
Thousands of student-loan borrowers are getting checks in the mail after paying companies accused of scamming them for debt relief services.
The Federal Trade Commission on Wednesday announced it would be sending over $4.1 million in refunds to 27,584 borrowers who gave money to South Dakota corporations Mission Hills Federal and Federal Direct Group. According to the press release, the FTC said the companies "lured consumers with fake loan forgiveness claims and pocketed their money."
Specifically, in a complaint filed in 2019, the FTC accused the companies of promising to reduce borrowers' monthly payments, instructing the borrowers to stop paying their federal servicer and make their payments to the companies instead. However, the FTC said that borrowers rarely saw lower monthly payments, even as the companies were charging "hundreds to thousands of dollars per consumer in illegal advance fees."
"Moreover, because Defendants have failed to apply most or any of consumers' payments to their student loans, many consumers have accrued additional capitalized interest on the balance of their loans," the complaint said. "As a result, many consumers have owed more on the balances of their student loans after signing up with Defendants." The US District Court for the Central District of California ruled in favor of the FTC in 2020, prohibiting the companies from telemarketing and providing borrowers debt relief services.
Read more: https://www.businessinsider.com/student-loan-forgiveness-borrowers-getting-payments-in-mail-scams-ftc-2024-3
Full headline: Over 27,000 student-loan borrowers are getting $4.1 million in payments in the mail after debt relief companies 'lured' them into 'fake loan forgiveness claims,' a federal consumer agency says
Link to FTC PRESS RELEASE - FTC Sends More Than $4.1 Million in Refunds to People Who Lost Money to Student Loan Debt Relief Scheme
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