Companies preyed on student loan borrowers and made $8.8 million in scam, feds say
Two California-based companies preyed on student loan borrowers by saying they would lower or erase their payments — but those were empty promises, the Federal Trade Commission announced on Aug. 21.
Instead, borrowers lost money as Express Enrollment LLC, which does business as SLFD Processing, and Intercontinental Solutions LLC, which does business as Apex Doc Processing LLC, scammed them out of $8.8 million since late 2019, according to the FTC.
The companies — which pretended to be associated with the U.S. Department of Education — promised borrowers loan forgiveness if they paid a fee for relief services or made loan payments directly to them, a complaint filed in federal court for the Central District of California says.
Their purported, nonexistent relief services are actually offered for free by the Education Department, according to the FTC.
In some cases, the companies used promises of “Biden Loan Forgiveness” and told borrowers their loan balances could be lowered by $10,000 or $20,000 if they paid them, the complaint says. It’s unclear how many borrowers were affected.
Now the FTC said it has stopped the companies from scamming borrowers after filing its complaint — with the U.S. District Court for the Central District of California temporarily freezing their assets and stopping their operations.
The court did so by entering a temporary restraining order on Aug. 16.
McClatchy News left messages with both companies seeking comment on Aug. 22 and didn’t receive immediate responses.
“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,” Samuel Levine, the director of FTC’s Bureau of Consumer Protection, said in a statement.
The case comes as more than 45 million student loan borrowers owe about $1.75 trillion in loans, according to the FTC.
More on the scam
As part of the companies’ sweeping scam, they caused several borrowers to stop communicating with their federal loan servicers, told them to ignore their servicers’ notices and directed them to stop paying the servicers, according to the FTC and the agency’s complaint.
One borrower was told government agencies are inundated with requests for student loan forgiveness — so SLFD Processing “was ‘taking on some of these cases’ for the government,’” the complaint says.
When it came to convincing borrowers to pay fees, another was told that “because I received a Pell Grant, my student loans would be forgiven up to $20,000, if I paid a processing fee of $375,” the complaint says.
In another example, a different borrower was told that “under ‘the student loan forgiveness program’: (1) my student loan balance would be reduced by $10,000 and (2) I would begin a new loan repayment plan starting with six monthly payments of $250,” according to the complaint.
Through their falsehoods, the companies gained borrower’s sensitive financial information — including bank account, debit card or credit card information — and collected hundreds of dollars in illegal fees, the FTC said. This violated the Telemarketing Sales Rule, according to the agency.
“This place is a scam!! Do not give them info,” one Google user wrote in a Google review for SLFD Processing in July.
With its complaint, the FTC is seeking monetary and other relief for borrowers, including refunds.
The agency offers information on how to avoid student loan scams here.
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