Debt is on the rise; from tax debt, mortgage debt, and credit card debt to the ever climbing price of education and student loan debt. It seems that more people than ever are in desperate need of help when it comes to managing their debt and credit. Unfortunately, this rise in debt has created an opportunity for phony “debt reduction” businesses to make a quick buck and they are taking full advantage.
Earlier this week the Federal Trade Commission (FTC) and the Florida Attorney General’s Office filed suit against two Florida businesses peddling in phony debt reduction scams: Consumer Assistance Project & Student Aid Center. “For companies that peddle phony student loan debt relief, we have a message for you: Winter is coming.” was the opening line in the FTC’s recent post announcing its participation in the lawsuits (Game of Loans) and, as anyone who has seen Game of Thrones will tell you, that’s no small threat.
According to the lawsuit filed against Consumer Assistance Project, the company allegedly lured customers in with promises of debt reductions starting at 50-70% or more, all thanks to government student loan forgiveness programs. Sounds pretty great, right? What consumers weren’t told was that it is actually free to apply to these programs and that most people are not eligible. Instead, the company charged individuals (who were clearly already struggling with their level of debt) as much as $300 a month in addition to upfront fees “to evaluate consumers for eligibility”. Among other things, the complaint charges violations of the FTC Act, the Florida Unfair and Deceptive Trade Practices Act, the Telemarketing Sale Rule, and the Credit Repair Organizations Act (CROA).
The suit filed against Student Aid Center– which utilized URLs such as studentaidcenter.org and studentloanforgivness.org as well as radio and text marketing, telemarketing and even an aerial promotion to draw customers to their business—challenges the defendants’ claims that consumers were “approved” or “pre-approved” for loan forgiveness or reduced monthly payments. The icing on top of the cake? The company promised consumers a 100% money-back guarantee, which, according to the complaint, they did not deliver. Additionally, the suit alleges that when some consumer asked for their money back they were instead confronted with threats of sending their accounts to collections.
What do these suits mean for those who suffer from debt?
Everyone knows someone—or is someone—suffering from debt and struggling to find help relieving that debt. There are a lot of valid, legal and helpful debt relief options out there but it is important that you find those organizations and not scams that will only end with you further in debt.
How can you tell if a debt relief organization is credible?
The FTC has resources (including a comic) to help you identify the signs of debt relief scams as well as a list of companies and individuals that courts have banned from selling debt relief services.
We suggest avoiding companies that use vague terms such as “debt experts” and to seek out non-profits and federally accredited debt relief organizations such, as our firm, to ensure your rights are not violated on the road to debt relief.
If you’re suffering from debt in the Baton Rouge or Metairie area, our Louisiana attorneys offer free consultations so that you can learn more about your debt relief options and legal rights as a debtor. Contact our offices today to find out more about your legal options for debt relief in Louisiana.