Alice Morgan, Photo Illustration for Investopedia by Getty Images
TAKEAWAYS KEY
- Federal Trade Commission (FTC) helped stop a scheme to reduce student loans by a Nevada company, Superior Servicing.
- After a lawsuit filed by the FTC in 2023, a federal court placed Superior Servicing on restraining orders and frozen its assets.
- The company allegedly falsely stated that they are affiliated with the U.S. Department of Education. They also claimed to be able to offer loan consolidation, reduced rates of interest, reduced monthly payment, or forgiveness of loans.
- FTC: Operators received up to 899 dollars as an initial payment from borrowers in addition to the monthly payments.
Federal Trade Commission has helped to put an end to a scam that generated $10 million in student loans debt. The scheme allegedly charged illegal fees up front and claimed that they were affiliated with U.S. Department of Education.
Since at least January 2023, Superior Servicing violated the FTC's Impersonation Rule by making false claims through telemarketing calls and personalized mailers to borrowers, the agency said.
The Nevada-based firm was placed under a temporary injunction and its assets were frozen after an FTC complaint filed 2023.
What were the scams perpetrated on student loan borrowers?
Superior Servicing allegedly falsely claimed that its customers would receive benefits, including loan consolidation, lower interest rates, smaller monthly payments or forgiveness of loans.
FTC: Operators of Superior Servicing collected as much as $899 in initial payments, plus monthly payments, which borrowers falsely believed went toward their overall student loan debt.
According to the allegations, this company falsely stated that it was affiliated or worked with the Department of Education. In some instances, they told borrowers that they could stop paying their current loan servicers.
“The defendants promised consumers student debt relief and forgiveness but gave them virtually nothing, keeping over $10 million for themselves and leaving consumers deeper in debt,” Samuel Levine Director of FTC Bureau of Consumer Protection.
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