HARRISBURG — Attorney General Josh Shapiro, working with the Federal Trade Commission and 11 other Attorneys General, today announced a coordinated federal-state initiative targeting student loan debt relief scams. The nationwide crackdown encompasses 36 actions by the FTC and state Attorneys General against scammers who used false promises of debt relief to take more than $95 million in illegal upfront fees from American consumers.
Pennsylvanians collectively owed $61.8 billion in private and federal student loans as of December 2016. The average student loan debt for Pennsylvania college graduates in 2016 was $35,759 – the second highest of any state. Student loan debt affects more than 44 million Americans and, with balances of more than $1.4 trillion, student loans are the second largest segment of U.S. debt, after mortgages.
“Pennsylvania is ground zero when it comes to student loan debt, and we have a responsibility to protect our students and families from false or deceptive practices,” Attorney General Josh Shapiro said. “Consumers should remember: Only scammers promise fast loan forgiveness. Consumers should never pay upfront fees for help. If you think you’re being scammed, I want to hear from you. We’re here to help protect you from scam artists preying on your hopes and dreams to obtain higher education.”
Student borrowers who believe they’ve been scammed by a company promising debt relief from student loans should call the Bureau of Consumer Protection at 1-800-441-2555 or send an email to email@example.com.
Earlier this month, the Office of Attorney General’s Bureau of Consumer Protection sued Student Loan Relief, LLC, a Texas company which engaged in unfair and deceptive acts targeting Pennsylvania consumers with student loan debt. Student Loan Relief was charged with violating Pennsylvania’s Unfair Trade Practices and Consumer Protection Law.
Student Loan Relief targeted 66 Pennsylvania consumers by falsely promising they would reduce their student loan payments or eliminate some of their debt through enrollment in student loan forgiveness programs or income-driven repayment plans.
As a result of Student Loan Relief’s deceptive conduct, these consumers now owe more on their student loans, have higher monthly student loan payments and have suffered lost opportunities for loan forgiveness. Many of these harmed consumers are public servants who retained these services in order to obtain loan forgiveness under U.S. Department of Education programs.
To date, BCP investigators have developed restitution claims totaling $60,482 for affected Pennsylvania student borrowers, and it is anticipated total restitution claims will be higher.
“Whether it’s standing up for 66 borrowers who were scammed, or filing a lawsuit last week on behalf of tens of thousands of Pennsylvanians and millions of Americans against the largest federal student loan provider in the country, my office will fight every day to protect students and families from predatory loan practices that leave them saddled with debt,” Attorney General Shapiro said.
The FTC’s federal-state initiative includes seven FTC actions. The agency alleges the defendants in these cases 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.
“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.”
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