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FTC Goes After Student Loan Debt Relief Scam That Alleged to Take Over Servicing

The Federal Trade Commission is continuing its assault on student loan debt relief scams, obtaining a temporary restraining order against an operation that is alleged to have pocketed $43 million in revenue from individuals, largely via illegal upfront fees.

A copy of the complaint, filed against a number of defendants, including American Financial Support Services Inc., Arete Financial Group, Arete Financial Group LLC, CBC Conglomerate LLC, Diamond Choice Inc., J&L Enterprise LLC, La Casa Bonita Investments Inc., and US Financial Freedom Center, Inc., along with a number of d/b/a’s, can be accessed by clicking here.

The defendants are accused of charging as much as $1,800 in upfront fees to individuals seeking relief from their student loan debt burdens. Rather than enter the individuals into loan forgiveness or repayment plans, the defendants simply contacted the loan servicers and placed the individuals into forbearance programs, usually without the individuals’ knowledge.

“Arete Financial Group charged illegal upfront fees and made false promises to consumers struggling with student loan debt,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, in a statement. “To avoid scams like these, consumers should never pay an advance fee to a company promising to deliver debt relief.”

The defendants also told individuals that they would take over servicing their loans and that the individuals should stop sending payment the previous servicer and start sending payments to them. But the defendants did not service any of the loans and pocketed the payments.

The defendant were also accused of playing up alleged relationships with the Department of Education and the federal government to win the trust of customers.

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