The Federal Trade Commission yesterday charged two different companies with engaging in scams related to offering student loan debt relief services, and also charged a finance company for its role in offering credit to help individuals pay the illegal up-front fees.
In one of the two actions, the FTC charged Manhattan Beach Ventures, which was operating as Student Loan Debt Relief Department, and Equitable Acceptance Corp. MBV charged individuals looking to lower their student loan debt burdens an up-front fee of $1,400, which was financed through a high-interest loan from EAC. MBV has agreed to pay $156,000 out of a $4.2 million judgment and has agreed to no longer sell any debt relief products or services.
In the second action, the FTC charged Student Advocates Team and EAC for engaging in the same scam, charging individuals a $1,400 up-front fee to sign up for debt relief services.
EAC has agreed to pay a $1 million fine out of a $28 million judgment and relinquished the right to collect on any outstanding loans.
Litigation against Student Advocates Team is ongoing, according to the FTC.
“Working with our law enforcement partners across the country, we have brought dozens of cases against debt relief scams like these,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, in a statement. “The difference here is that a state-licensed finance company was knowingly participating in the scheme by financing the thousands of dollars in illegal fees that these scammers tricked consumers into paying. This is yet another example of how we are holding accountable companies that facilitate fraud by others.”
