FTC Quells Scheme That Defrauded Student Loan Borrowers of Millions

A scheme that bilked millions of dollars from consumers burdened by student loan debt has been stopped in its tracks, the Federal Trade Commission says.

Scammers pretended to be affiliated with the U.S. Department of Education so they could collect illegal advances and make false promises about reduced payments or even loan forgiveness.

TO A federal court temporarily halted the scheme, which violates the FTC's spoofing rule, and froze its assets.. The FTC is working to forever end the defendants' deceptive practice.

“Defendants promised consumers student debt relief and forgiveness, but gave them virtually nothing, withholding more than $10 million for themselves and leaving consumers even deeper in debt,” said Samuel Levine, Director of the Office of Consumer Protection. FTC Consumer. “The FTC will continue to take decisive action against those who take advantage of Americans with student debt.”

According to the The FTC complaintSince at least January 2023, Nevada-based Superior Servicing and its operator Dennise Merdjanian made telemarketing calls and sent personalized emails to borrowers falsely claiming that consumers enrolled in the defendants' program could get benefits such as loan consolidation. and reduced interest rates for your students. loans, reduced monthly student loan payments, or loan forgiveness.

The operators charged illegal upfront fees of up to $899 as a down payment followed by monthly payments that the defendants falsely represented were going toward consumers' student loan debt.

To convince borrowers that their claims were legitimate, the operators allegedly pretended to “work with” or be affiliated with the Department of Education or its approved loan servicers and, in some cases, even advised consumers to stop making payments to your existing loan servicers.

The operators then falsely claimed that they would assume responsibility for servicing consumers' loans, collect monthly student loan payments for up to 20 years, and said that once those monthly payments were completed, the federal student loan debt consumer students were forgiven.

Contrary to Superior Servicing's false promises, borrowers have reported never receiving loan consolidation, reduced payments or loan forgiveness, according to the complaint.

The FTC noted that, at most, the defendants completed simple debt relief applications that are available for free from the Department of Education.

The FTC accused the scheme's operators of violating the Impersonation Rule by claiming to be affiliated with the Department of Education, as well as the FTC Act's prohibition on deceptive practices, the Telemarketing Sales Rule, and the Gramm-Leach Act. Bliley.

The Commission vote authorizing staff to file the complaint was 5-0. The United States District Court for the District of Nevada issued a temporary restraining order on November 22 and a preliminary injunctive measure against the defendant company Superior Servicing on December 6.

Lead attorneys in this matter were John O'Gorman, Luis Gallegos, and Reid Tepfer of the FTC's Bureau of Consumer Protection.

NOTE: The Commission files a complaint when it has “reason to believe” that named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

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