Operation Game of Loans launched to snare student loan help scammers: Internet Scambusters #798
Crooked firms have taken an estimated $95 million from Americans seeking student loan help with their debts.
But now, state governments and the Federal Trade Commission have banded together to clamp down on the villains and educate students on where to get free help.
We'll give you the details in this week's issue, along with news about an extension of a program aimed at handing back wired money to scam victims.
And now for the main feature...
States and FTC Unite to Fight Fake Student Loan Help
Student loan help has become tied up in so many painful debt relief scams that a special task force has been set up to tackle the problem.
According to the latest figures, an estimated 44 million Americans have outstanding student loans worth about $1.4 trillion. That number is second only to the nation's mortgage debt.
Around 11% of those borrowers are more than 90 days delinquent on payment, which works out at something like almost 5 million students seriously in debt.
Every one of them is a target for scammers offering student loan help by supposedly rescheduling the loans or simply wiping them out -- in return for a hefty fee of up to $1,000.
In some cases, these fake agencies even charge their victims monthly fees to supposedly progress their applications, promising the sums will be credited once the loan relief comes through.
Eleven American states plus Washington DC and the U.S. Federal Trade Commission have launched a campaign called "Operation Game of Loans" (playing off the name of the popular TV series "Game of Thrones").
Experts say scammers may have taken as much as $95 million in upfront fees from their victims -- without giving most of them an ounce of help.
In some cases, the scammers did try to help -- illegally -- by fabricating information in relief applications, misstating family size, claiming their clients were unemployed or suffering some other financial woe.
It may be spring but Maureen K. Ohlhausen, Acting FTC Chairman, warns the scammers: "Winter is coming for debt relief scams that prey on hardworking Americans struggling to pay back their student loans.
"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."
The scams typically use an impressive-sounding name playing on words like "student" and "aid" and begin with attractive email or social media ads promising either loan reductions or total loan forgiveness.
Sometimes, the scammers also target their victims via telesales, even using illegal robocalls and claiming government debt relief programs are due to end soon, pressuring their victims to act fast.
There's no mention of a fee, and the ads often use logos of well-known news media, implying endorsement. In reality, if these media, like CNN, have featured these firms at all, it's likely been to report them as scammers!
Under Operation Game of Loans, the FTC has already filed several cases against multiple firms including one that falsely claimed to be affiliated with the U.S. Department of Education.
They found scam firms that frequently changed their names to avoid detection and many instances where crooks also collected victims' Social Security numbers and other confidential information that could be used for identity theft.
Free Help Is Available
"Consumers should remember that only scammers promise fast loan forgiveness, and that scammers often pretend to be affiliated with the government," the campaign organizers said.
"And consumers should never pay an upfront fee for help and should not share their FSA ID -- a username and password used to log in to U.S. Department of Education websites -- with anyone."
Instead, students struggling with loan debt can apply for loan deferments, forbearance, repayment and forgiveness or discharge programs directly through the Department of Education or their loan servicer -- for free.
They don't involve any third-party company or agency. And there's no payment of application fees.
Federal student loan holders can visit StudentAid.gov/repay to learn more about their options. If you have a private student loan, the FTC says you should contact the loan servicer directly.
"There's nothing a student loan debt relief company can do for you that you can't do yourself for free," says the Federal Student Aid Office of the Department of Education.
The Department of Education, at no cost to you, can help you lower or cap your monthly federal student loan payment, consolidate your federal loans, determine if you are eligible for loan forgiveness or other programs, and get your loans out of default.
So now you know. If you're looking for student loan help, it won't cost you a cent. Anyone who says different is a scammer!
Alert of the Week
Are you the victim of a scam that involved wiring money via Western Union?
We reported a couple of months ago that Western Union had agreed to reimburse people who were scammed between January 2004 and January 2017.
The program was due to expire in February, but the deadline has now been extended to May 31.
To learn more or file a claim, visit FTC's Western Union Refunds page.
Time to close today, but we'll be back next week with another issue. See you then!