Consumer News

AG Derek Schmidt and FTC announce nationwide crackdown on student loan debt relief scams

Release Date: Oct 13, 2017

TOPEKA – (October 13, 2017) – Kansas Attorney General Derek Schmidt today announced that his office, along with the Federal Trade Commission (FTC) and 10 other state attorneys general, are undertaking the first coordinated federal-state law enforcement initiative targeting deceptive student loan debt-relief scams.

“Operation Game of Loans” encompasses 36 actions by the FTC and state attorneys general against scam lenders alleged to have used deception and false promises of relief to take more than $95 million in illegal upfront fees from American consumers.

Last week, Schmidt filed a lawsuit in Shawnee County District Court against Brelvis Consulting, LLC, d/b/a The Student Loan Help Center, LLC, which is a Florida-based company offering “student debt relief services.” The case arose after the defendant failed to obey a subpoena issued by the attorney general pursuant to the Kansas Consumer Protection Act. The lawsuit asks the Court to enter an injunction prohibiting the defendant from doing business in Kansas unless and until it obeys the subpoena.

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.

Student loan debt-relief scams lure borrowers into paying hundreds or thousands of dollars in illegal upfront fees by making false promises of reduced payments or loan forgiveness. Often scammers claim to be affiliated with the government or the loan servicer when they are not.

“Kansas will continue to use our law enforcement tools to stop bad actors, recover money for consumers and deter potential lawbreakers,” Schmidt said. “We also will continue to educate student loan borrowers about these scams and how to find legitimate help with loans.”

Consumer tips for avoiding student loan debt-relief scams include:

  • Avoid companies that promise fast loan forgiveness.
  • Never pay a fee up front for help.
  • Scammers often pretend to be associated with the government or loan services and can even fake a government seal.
  • Don’t share your FSA ID with anyone.

Consumers should report student loan debt relief schemes to the attorney general’s office at www.InYourCornerKansas.org or by calling (800) 432-2310.

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