By Jody Coultas, J.D.
The FTC and 11 states and the District of Columbia announced "Operation Game of Loans," the first coordinated federal-state law enforcement initiative targeting deceptive student loan debt relief scams that allegedly used deception and false promises of relief to take more than $95 million in illegal upfront fees from American consumers over a number of years. "Winter is coming for debt relief scams that prey on hardworking Americans struggling to pay back their student loans," said Maureen K. Ohlhausen, FTC Acting Chairman. "The FTC is proud to work with state partners to protect consumers from these scams, help them learn how to spot a scam, and let them know where to go for legitimate help."
Over 42 million Americans have student loan debt with outstanding balances of more than $1.4 trillion. Student loans are the second largest segment of U.S. debt, after mortgages. Operation Game of Loans includes 36 actions, including seven filed by the FTC, alleging that the scammers charged consumers illegal upfront fees, falsely promised to help reduce or forgive student loan debt burdens, and pretended to be affiliated with the government or loan servicers, in violation of the FTC’s Telemarketing Sales Rule and the FTC Act.
In five recently filed actions, the FTC obtained temporary restraining orders that halted the scams and froze defendants’ assets. Operation Game of Loans also includes two pending FTC actions against 11 additional student loan debt relief scammers, in which federal courts recently entered significant orders.
- The U.S. District Court for the Southern District of Florida granted summary judgment against defendant Ramiro Fernandez-Moris in a joint action filed by the FTC and the State of Florida, holding that defendants’ unlawful student loan debt relief enterprise took more than $35 million from student loan borrowers by enticing consumers to sign up for services using misleading and false claims.
- The Florida district court also entered a stipulated preliminary injunction in the FTC’s case against Strategic Student Solutions, freezing defendants’ assets, halting the organization’s student loan debt relief operation, and appointing a receiver to control the business for the remainder of the litigation in a suit alleging that the defendants took more than $11 million from consumers by falsely promising to reduce or eliminate their student loan debt and offering them non-existent credit repair services.
- The Southern District of Florida entered a TRO in October in the FTC’s case against Fort Lauderdale-based Student Debt Doctor and its owner, Gary Brent White, Jr., for falsely promising consumers loan forgiveness often in as little as five years or less, and told consumers not to communicate with their loan servicers. The defendants also fabricated income, unemployment status, and family size information on relief applications in order to qualify borrowers for eliminated or reduced monthly payments.
- The FTC charged that ASLC, d/b/a ASLC Processing, and BBND Marketing, LLC, d/b/a United Processing Center, United SL Processing, and United Student Loan Processing, and principals Daniel Upbin and Patrick O’Deady bilked student loan borrowers out of at least $11 million by falsely promising loan forgiveness, lowered monthly payments, and reduced interest rates. The Southern District of Florida entered a TRO in September.
- In an action filed in the U.S. District Court for the Central District of California, the FTC charged that Los Angeles-based A1 DocPrep took at least $6 million from consumers through unlawful student loan debt relief and mortgage assistance relief schemes, such as claiming to be from the Department of Education, and promising to reduce borrowers’ monthly payments or forgive their loans. The court entered a TRO in September.
- The Central District of California also entered a TRO against Los Angeles-based Alliance Document Preparation, d/b/a EZ Doc Preps, Grads Aid, and First Document Aid for allegedly taking more than $20 million from consumers by charging illegal upfront fees of up to $1,000. The defendants allegedly deceptively marketed their purported services primarily on social media platforms like Facebook.
- The California district court also entered a TRO and stipulated preliminary injunction against Los Angeles-based M&T Financial Group and American Counseling Center Corp., d/b/a Student Debt Relief Group, SDRG, StuDebt, Student Loan Relief Counselors, SLRC, and Capital Advocates, and principal Salar Tahour for allegedly bilking at least $7.3 million from consumers struggling to repay their student loans. The FTC alleged defendants pocketed consumers’ money and responded to mounting consumer complaints by changing their name rather than their business practices, and deceived consumers into providing them with Social Security numbers and Federal Student Aid identification information, allowing the defendants to hijack consumers’ accounts while cutting them off from their loan servicers and the Department of Education.
Operation Game of Loans also includes law enforcement actions by Colorado, Florida, Illinois, Kansas, Maryland, North Carolina, North Dakota, Oregon, Pennsylvania, Texas, Washington, and the District of Columbia.
To help consumers avoid falling victim to such fraud, the FTC has updated its consumer education related to student loan debt relief scams at ftc.gov/StudentLoans, and will be holding a Twitter chat with state attorneys general and a Facebook Live session with staff attorney experts on ways to avoid student loan debt relief scams. In addition, the U.S. Department of Education’s office of Federal Student Aid is working with the FTC to raise awareness about student loan debt relief schemes, and ensure that borrowers know to visit StudentAid.gov/repay for information about existing repayment and forgiveness programs available to them at no cost.
Companies: Strategic Student Solutions LLC; Student Aid Center, Inc.; Student Debt Doctor LLC; American Student Loan Consolidators; Alliance Document Preparation (EZ Docs Preps); M&T Financial Group (Student Debt Relief Group); A1 DocPrep Inc.
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