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The Federal Trade Commission is settling charges against a group of debt relief companies based in California after alleging that they made false promises to lower or eliminate student loans in exchange for an up-front fee that was illegal.
The FTC is prepared to settle with three different companies owned by Adam Owens, it announced Monday. The companies are named Navloan, Student Loan Assistance Center and SLAC, which also goes by the name Aspyre. They will be permanently banned from the debt relief business under an agreement.
Parties in the case have agreed to a final order submitted to U.S. District Court for the Central District of California. But a judge has suspended action for 60 days because of the COVID-19 outbreak.
If the court enters the settlement, it will bar defendants from offering debt relief services. But it will allow them to assist existing customers who are completing forms and submitting documents to the Department of Education -- if those customers choose to continue working with the companies. In addition, the settlement calls for defendants to turn over about $470,000 in assets. Remnants of a $23.9 million judgment would be suspended because the defendants are unable to pay more.
The FTC alleged that defendants charged an up-front fee of $699 and a monthly fee of $39 while promising to decrease or eliminate student loans. But loan forgiveness isn’t guaranteed to anyone, and customers’ payments could vary year to year.
Additionally, the FTC alleged defendants offered $20 gift cards or checks in exchange for positive reviews on the Better Business Bureau’s website without disclosure, and that they either incorrectly advised consumers how to state their family size in Department of Education application documents or that in some cases they falsified consumers’ family size without those consumers’ knowledge.
“These companies promised people that they could get their student loans forgiven, which was more than they could deliver,” Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said in a statement.
