Student Loan Scam Ends in $27M FTC Settlement
The Federal Trade Commission reached two separate settlements totaling near $27 million with a law firm and a student debt relief company who were accused of participating in a student loan scam.
According to the student loan scam settlement, both the law firm and the student debt relief company promised to eliminate or reduce student loan debt which allegedly misled consumers to the tune of millions of dollars.
Strategic Student Solutions and Bloom Law Group PC will have to pay millions of dollars as a result of this student loan scam settlement.
Each of the defendants are also banned from offering credit repair services or debt relief services or making any misleading statements about financial services offered by any of the firms.
Telemarketing services were blocked for Bloom Law Group, who consumers alleged was pretending to be calling from the Department of Education. The FTC initially filed a student loan scam lawsuit against Strategic Student Solutions and the owner of the law firm in 2017.
Consumers were told that they would achieve low monthly payments and would be able to repair their credit scores associated with participating in the loan program.
Consumers, however, were never enrolled in payment reduction programs or student loan forgiveness and none of the monthly payments they made were even applied to their student loan debt, according to research released by the FTC.
Upfront fees as high as $1,200 and monthly payments of $50 were charged, according to the FTC. The owner and president of the debt relief company and all of his associated organizations will have to pay $17.7 million as part of the settlement.
The monthly payments of approximately $50 were used by the company’s president to pay for casino tabs, luxury cars, mortgage payments, jewelry and a pool.
All assets will be forfeited by that president and his companies to pay off the $17 million judgement.
The law firm connected with the student loan scam case allegedly violated the Telemarketing and Consumer Fraud and Abuse Prevention Act and will pay $9.1 million to resolve the claims.
Consumers who have received phone calls or other communications from debt collectors who are not following state or federal laws may choose to take legal action.
While debt collectors are able to follow a strict set of guidelines to recover debts, they cannot violate laws or the rights of individual consumers.
Callers from Bloom Law pretended to be reaching out from the Department of Education in offering to help consumers reduce their monthly student loan payments.
The Student Loan Scam Lawsuit is Case No. 9:17-CV-80619-WPD, in the U.S. District Court for the Southern District of Florida.
If you believe that you have grounds to pursue a legal claim based on violations of consumer laws, consult with the experienced attorneys at McDonald Worley today.
Disclaimer: McDonald Worley is not representing the plaintiff in this lawsuit.