Get All Access for $5/mo

FTC Cracks Down on Student Loan Schemes That Scammed Borrowers Out of $12 Million The two companies claimed to be affiliated with the Department of Education.

By Madeline Garfinkle Edited by Jessica Thomas

Opinions expressed by Entrepreneur contributors are their own.

Bloomberg | Getty Images
Federal Trade Commission (FTC) headquarters in Washington, DC.

The Federal Trade Commission has accused two California-based companies of scamming student loan borrowers out of approximately $12 million, according to a complaint calling to "put an end" to the scheme.

The two companies, SL Finance LLC and BCO Consulting Services Inc. and SLA Consulting Services Inc., allegedly found individuals looking to pay down their student loans — many of whom were low-income borrowers — and tricked them into paying thousands in illegal upfront fees.

The victims were led to believe that they were in a legitimate repayment program and were told that their loans would be partially or entirely forgiven, according to the complaint. In actuality, the companies were "pocketing" the payments. The deceptive practice is thought to have occurred since "at least 2019."

Related: A Retired Teacher and Her Daughter Were Scammed Out of $200,000 Over Email: 'I'm 69 Years Old and Now I'm Broke and Homeless'

Additionally, the FTC says that the companies falsely claimed to be affiliated with the Department of Education.

"As Americans struggle with massive student loan debt and uncertainty around the prospect of forgiveness, scammers are looking to cash in," Samuel Levine, director of FTC's Bureau of Consumer Protection, said in a statement.

After the FTC filed the complaint, a federal court temporarily ceased operations of both companies and froze their assets. In addition to a call to end the scheme, the FTC seeks to secure compensation for the victims.

Related: I'm a Business News Editor, and Even I Fell Victim to an Online Scam That Cost Me $300

Madeline Garfinkle

News Writer

Madeline Garfinkle is a News Writer at Entrepreneur.com. She is a graduate from Syracuse University, and received an MFA from Columbia University. 

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Side Hustle

'Hustling Every Day': These Friends Started a Side Hustle With $2,500 Each — It 'Snowballed' to Over $500,000 and Became a Multimillion-Dollar Brand

Paris Emily Nicholson and Saskia Teje Jenkins had a 2020 brainstorm session that led to a lucrative business.

Business News

'I'm Not Trying to Land on Mars': Mark Cuban Takes Dig at Elon Musk to Explain Why His Online Pharmacy Isn't Trying to Make More Money

Mark Cuban Cost Plus Drug Co. is an online pharmacy co-founded by Cuban and radiologist Alex Oshmyansky.

Business News

'It's Not About You': How to Fire Someone Effectively, According to Kevin O'Leary

O'Leary says that if you can't fire someone, you aren't the right leader for the organization.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Marketing

Your Most Powerful Marketing Weapon Is Hiding in the Finance Department — Here's Why

Transform your marketing leadership by turning finance from a barrier into a strategic ally. Learn how aligning with your finance team can drive unprecedented growth and innovation.

Business News

Meta Makes $1 Million Dollar Donation to Donald Trump's Inaugural Fund

Meta CEO Mark Zuckerberg also reportedly gave Trump a pair of Ray-Ban Meta smart glasses.