WEST PALM BEACH, Fla. - If you or someone you know is trying to pay off student loans, here's a warning.
A federal and state crackdown has targeted companies, including two in Palm Beach County, of scamming millions of dollars from unsuspecting people.
An investigation by the Federal Trade Commission, dubbed Operation Game of Loans, involved 11 states and 36 legal actions. Dozens of companies are accused of collecting more than $95 million in student debt-relief scams.
“Winter is coming for debt relief scams that prey on hardworking Americans struggling to pay back their student loans,” said Maureen K. Ohlhausen, FTC Acting Chairman in a statement. “The FTC is proud to work with state partners to protect consumers from these scams, help them learn how to spot a scam, and let them know where to go for legitimate help.”
One of those companies is Strategic Student Solutions, which investigators say moved its base from Boca Raton to Delray Beach and Lake Worth.
The company collected more than $11 million in fees from consumers, claiming if students made three hefty payments ranging from $200 to $300, their loans could be reduced or even forgiven completely under a national loan forgiveness plan. It turned out to be bogus.
Other companies claimed that if the consumer paid a fee, they could obtain and be assisted with documents that are normally free.
"We know that there's still companies doing this, we still have companies in our area that proclaim to be offering student loan documentation preparation," said Michele Mason, senior vice president of operations for the BBB serving Southeast Florida. "You never want to pay a fee up front. You want to make sure that you provide information and see what information they can provide to you without paying a fee in advance."
The FTC has filed actions in the courts, causing temporary restraining orders on these companies to cease operating.
Other actions have involved companies in Miami and Wesley Chapel.
According to the FTC, student loan debt affects more than 42 million Americans with outstanding balances of more than $1.4 trillion. Student loans are the second largest segment of U.S. debt, after mortgages.
If you think you may have been affected by this scam, contact the FTC or BBB for more information.
You can also visit the FTC website for information about existing repayment and forgiveness programs available at no cost.