The Federal Trade Commission announced Thursday (May 25) it charged the operators of a phony student loan debt relief and credit repair scheme with stealing millions of dollars from consumers by falsely promising to reduce or eliminate their student loan debt and offering them non-existent credit repair services.
In a press release, the government agency said, based on the request of FTC, the federal court has halted the operations of Strategic Student Solutions. The FTC is aiming to permanently stop the company from engaging in alleged illegal practices and is looking to get refunds for impacted consumers.
“Consumers who paid Strategic Student Solutions for help with their student loans watched their situations go from bad to worse,” said Tom Pahl, acting director of the FTC’s Bureau of Consumer Protection in the news release. “The bottom line: never pay an up-front fee to a company promising to deliver debt relief.”
According to the FTC’s complaint, Strategic Student Solutions and related companies lured student loan borrowers with promises such as “Payments as low as $0 Monthly” or “Save 60 percent or MORE on your monthly payment.” The company told the struggling borrowers that they would be placed in loan forgiveness or payment reduction programs and that monthly payments would be applied to their loans.
What really happened in many cases is the company failed to enroll them in any loan forgiveness or payment reduction plans and discovered that none of their monthly payments were applied to their student debt.
The FTC also alleges the company falsely represented that they would provide credit repair services and improve consumers’ credit scores. In exchange for the promised debt relief and credit repair services, defendants charged illegal upfront fees of up to $1200 and monthly payments typically of $49.99. The proceeds from the borrowers went to Dave Green, the owner, to pay for personal expenses such as jewelry, casino tabs, mortgage payments, luxury vehicles, clothing and construction of a pool, the FTC alleged.