WASHINGTON—The Federal Trade Commission said it has stopped a pair of student loan debt relief schemes it said “bilked” students out of approximately $12 million by using deceptive claims about repayment programs and loan forgiveness that did not exist.
The agency alsosaid the companies falsely claimed to be or be affiliated with the Department of Education and told students that the illegal payments the companies collected would count towards their loans.
The FTC stated that one of the companies and its owners also violated the COVID-19 Consumer Protection Act by misrepresenting that their program was part of the CARES Act or a similar COVID-19 relief program.
According to the FTC’s complaints,since at least 2019, SL Finance LLC and its owners Michael Castillo and Christian Castillo, and BCO Consulting Services Inc. and SLA Consulting Services Inc. and their owners Gianni Olilang, Brandon Clores, Kishan Bhakta, and Allan Radamhave “lured” consumers looking to pay down their student loans, many of whom are low-income borrowers saddled with tens of thousands of dollars of student debt, into paying hundreds to thousands of dollars in illegal upfront fees.
Consumers ‘Tricked’
According to the complaints, the defendants “tricked” consumers into believing they were enrolled in a legitimate loan repayment program, that their loans would be forgiven in whole or in part, and that most or all of consumers’ payments to the companies would be applied to their loan balances. In reality, the defendants were pocketing students’ payments, according to the FTC’s complaint.
The agency also charged that the defendants falsely claimed to be or be affiliated with the Department of Education, and that they would take over servicing for students’ loans. Both complaints note that the misrepresentations by defendants about their purported debt relief services violated Section 5 of the FTC Act and the Telemarketing Sales Rule (TSR).
Additional Violations
Both complaints further note the companies have violated the TSR by collecting advance fees for debt relief services and violated the Gramm-Leach-Bliley Act by using deceptive tactics to obtain consumers’ financial information.
Lastly, SL Finance LLC and its owners violated the TSR by calling consumers who had signed up for the Do Not Call Registry and by failing to pay required Do Not Call Registry fees.
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