The Federal Trade Commission said it has stopped "scammers" that allegedly collected millions of dollars in upfront fees as they claimed to offer services related to the "Biden Loan Forgiveness" plan that do not exist.
The FTC said Express Enrollment LLC (also doing business as SLFD Processing) and Intercontinental Solutions LLC (also doing business as Apex Doc Processing LLC) targeted borrowers seeking student debt relief. The FTC accused the two companies of taking $8.8 million for student loan debt services.
Following the FTC's complaint, a federal court in California issued a restraining order. The companies are accused of unfair or deceptive acts or practices in or affecting commerce, violating the Telemarketing Sales Rule, and violating the Gramm-Leach-Bliley Act.
The FTC alleged that the companies promised to lower or eliminate loan payments, and encouraged borrowers to stop communicating with their servicers. One borrower was allegedly told they would have $20,000 in student loans forgiven if they paid a processing fee of $375. Another borrower was allegedly told they would have $10,000 in debt forgiven if they paid six monthly $250 payments.
Borrowers on edge as federal student loan payments are set to restart
The Department of Education estimates 43 million Americans owe a collective $1.6 trillion in federal student loan debt.
The FTC said these companies began targeting students for debt relief in 2019.
In the years since, there has been a lot of uncertainty over student debt relief. In March 2020, then-President Donald Trump issued a moratorium on student loan payments due to COVID-19.
That moratorium was extended by President Joe Biden multiple times.
Facing pressure from progressives, President Biden ordered that those meeting certain income guidelines would have up to $20,000 in federal student debt forgiven. That plan, however, was denied by the U.S. Supreme Court.
Student loan repayments are scheduled to begin in October. Some student loan borrowers may see lower monthly payments due to changes in income-driven repayment plans.
“During a period of uncertainty for borrowers saddled with student loan debt, these defendants bilked consumers out of millions of dollars with junk fees and phony promises of loan forgiveness and lower monthly payments,” said Samuel Levine, director of FTC’s Bureau of Consumer Protection. “We are pleased that the court shut down this operation and froze its assets, and we will continue the agency’s ongoing efforts to pursue scammers that target the tens of millions of Americans with student loan debt.”
