The FTC and DOJ announced it would be sending $9 million in refunds to 22,000 student-loan borrowers.
It's a result of a company that was convicted of illegally charging borrowers for debt relief services.
Impacted borrowers will be getting payments via check or PayPal in the coming weeks.
The scams keep coming for student-loan borrowers — and federal watchdogs are cracking down.
On Tuesday, the Federal Trade Commission and Department of Justice announced they will be sending over $9 million in refunds to student-loan borrowers who gave money to Ameritech Financial, which the agencies called a "student loan debt relief scheme" that the DOJ brought charges against in 2018.
Specifically, the FTC first filed a complaint in 2018 accusing Brandon Frere, who ran the company, of pretending to be affiliated with the Education Department and charging borrowers up to $800 in "illegal up-front fees" for debt relief services. The company also told borrowers that their $49-99 monthly membership fees would go toward their student-loan balances, but that was not the case. The FTC in 2020 banned the company from providing debt relief services, and the same year, a federal judge sentenced Frere to 42 months in prison.
As a result of the legal proceedings, 22,562 borrowers who paid for Ameritech's services will receive refund checks in the mail, and those who do not have an address on file will receive a payment via PayPal. Those who have questions about the refunds can contact Rust Consulting, which contracts with the FTC to facilitate payments, at 1-833-579-3126.
The FTC wrote in its initial complaint that the company sent mailers to consumers expressing an urgency to sign up for debt relief services, and later pressured borrowers to "quickly click through the document and electronically sign multiple pages. In some instances, Defendants represent that consumers do not need to read the agreement carefully because the information contained in the contract was already discussed in the call. At the end of the calls, Defendants transfer consumers to the Verification Department where employees quickly read lengthy disclosures to consumers."
Scams have been increasingly scrutinized with the changing student-loan landscape. After President Joe Biden announced his broad debt relief plan nearly a year ago, the Education Department warned borrowers to be wary of any efforts that would require them to pay for debt relief services, given that any help with repayment is also free from the government. Most recently, the FTC announced on Monday that a federal court halted operations of two companies that misled borrowers into paying for debt relief services, scamming them out of $8.8 million.
And in June, an additional 37,000 borrowers began receiving $3.3 million in refunds following accusations of misleading debt relief behavior by separate companies.
Read the original article on Business Insider