The Federal Trade Commission announced their recent success in enforcement against bogus student loan programs and identity fraud. Along with cooperation with authorities and law enforcement in the District of Columbia and eleven states, the FTC initiative “Operation Game of Loans” uncovered scams warranting 36 official actions and totaling over $95 million in victim losses.
The investigation involved many layers of government and law enforcement across the country. The U.S. Postal Inspection Service and the U.S. Department of Education worked alongside many state attorneys general and local authorities. In the announcement, the FTC was “proud to work with state partners to protect consumers from these scams.” Alongside enforcement, federal authorities are working on education programs to promote loan fraud awareness and help people after they discover a scam.
The American student loan market is worth over $1.4 trillion in outstanding debts. Alternative lenders and online services have pushed the market for student loans to web-based services like never before. Scam artists will create fake student loan operations to connect with honest borrowers seeking a good deal on their debt. Loan forgiveness, deceptive company names, easy payment plans, and many other false advertising claims are all tools to attract new victims of fraud.
One recent case in Florida saw a scammer take in over $25 million through a variety of companies doing fake loan repayment plans. Dave Green ran the operation using an assortment of names and storefronts including Strategic Credit Solutions, Strategic Doc Prep Solutions, Student Relief Center, and Strategic Debt Solutions. Most of the marketing activities for these firms traced back to a call center located in Jamaica.
The headquarters in Boca Raton only had ten employees managing over 20,000 borrowers and their monthly payments. A typical scam would include hundreds of dollars in upfront fees and a monthly payment of $49.99 on their outstanding loan balance. No actual loan payments are ever made in the borrower’s name, and the scammer pockets the cash as profit from fraud.
The lighter moments in the otherwise-serious FTC announcement were some unusual pop culture references to HBO’s popular Game of Thrones franchise. When the FTC’s Acting Chairwoman Maureen Ohlhausen made the announcement, she declared “winter is coming for debt relief scams that prey on hardworking Americans struggling to pay back their student loans.” The FTC initiative “Operation Game of Loans” was no doubt a source of many jokes and allusions for the investigators and legal professionals involved.
On a more serious note, it’s important to protect yourself from student loan scams and other debt frauds in general. The FTC published some tips to help Americans avoid these awful student loan scams. Some of the advice includes never paying upfront fees, avoid “too good to be true” offers, and always safeguarding your FSA ID.
If you experience a scam yourself or you know someone who does, the FTC Complaint Assistant is a useful tool for you to report the company and alert the authorities about bad experiences with any loan companies.
Author: Andrew Rombach
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