Pictured above is the CFPB office. The CFPB is making a serious effort to crack down on student debt relief scams.
Academic Debt Alliance LLC, a company that charges borrowers to prepare loan-reduction applications that can be filed for free online, continues to operate throughout the United States despite being banned in the state of Georgia last year.
After actions were taken by Georgia’s attorney general in 2016, Academic Debt Alliance was found to be fraudulent, the company was fined, ordered to give customer refunds, and banned from operation in Georgia.
However, the fraudulent company still operates throughout the U.S. from a call center in Florida’s Palm Beaches, according to AJC, an online news outlet.
Despite the negative press, Richard Eyring III and Blaine Burdette, business partners at Academic Debt Alliance, said their company separates itself from other industry competitors because they are truly trying to help borrowers.
“There’s a black cloud over this industry, but we’re a shining light,” Burdette said. “We feel like what we do is worthwhile because a lot of the people who get to us are on their last breath.”
Optimism aside, the partners say they are meeting a court-ordered deadline each month to issue refunds to scammed customers. Eyring, Burdette, and Melissa Burns, a third owner, are required to pay monthly installments through October to return a total of $27,000 to Georgia customers.
In addition to the monthly installments, Academic Debt Alliance must proclaim the following statement in bold font on each of their website pages: “These services are not available to Georgia residents.”
All too often, student loan debt relief companies will charge borrowers to help them sign up for government programs that can be accessed for free. Even worse, some fraudulent companies will get permission from borrowers to access their loan accounts, then change passwords so payments lapse, which then leads to seized tax refunds, garnished wages, and ruined credit.
One example of such a company committing highway robbery occurred with Deanne Theodore, a 50-year old National Louis University alumnus according to AJC. Theodore had roughly $100,000 in education loans from her MBA degree when she was informed about First American Tax Defense LLC.
A First American representative told Theodore the company could cut her monthly payments in half. First American charged her $1,000 before Theodore realized she could have done everything herself for free by applying for U.S. Education Department loan programs.
Theodore received a refund after she filed a complaint with Illinois Attorney General Lisa Madigan, who went on to obtain a 2015 court settlement that banned First American from Illinois. This is just one example of many as federal agencies are taking note of these schemes more frequently.
Over the last few years, the Consumer Financial Protection Bureau (CFPB) has made a concentrated effort to shut down student loan debt relief companies that have scammed borrowers out of millions through a variety of unethical practices. The job is getting harder.
Today, there are more than 44 million student borrowers accounting for over $1.4 trillion in student debt. With such a large chunk of desperate borrowers, it is easy for scam artists to slip through the cracks.
A few of these phony companies have been covered on by The Student Loan Report. In one instance, reality TV star Blac Chyna encouraged her social media followers to call a number to get their student loans forgiven; the number was revealed to be a part of a debt relief scam.
Another case found that a company named EDU Loan Servicing was encouraging borrowers to call their number for help. That supposed intent to aid borrowers turned out to be a malicious method of scraping personal information from unlucky borrowers.
On yet another occasion, Strategic Student Solutions, another company offering phony services, was shut down by the Federal Trade Commission after it allegedly stole $30 million from unsuspecting student loan borrowers.
Image Copyright © Ted Eytan