The Federal Trade Commission has stopped a scam that allegedly deceived student loan borrowers out of millions of dollars by pretending to work with the U.S. Department of Education.
The scheme, run by Nevada-based Superior Servicing, targeted consumers with false promises of loan consolidation, reduced payments, and debt forgiveness, the FTC said.
They collected illegal upfront fees of up to $899 and monthly payments, claiming these payments would go toward student loans. However, borrowers received little or no real help and were left deeper in debt.
The operators allegedly impersonated the Department of Education, advising borrowers to stop paying their actual loan servicers. They falsely claimed to take over loan servicing and promised loan forgiveness after years of payments, which never happened.
The FTC has frozen the defendants’ assets and is seeking to permanently stop their deceptive practices. The agency charged the defendants with violating rules against impersonation, deceptive practices, and illegal advance fees.