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

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

Entrepreneur Staff

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. 

Editor's Pick

Related Topics

Business News

Taylor Swift Reportedly Pays All Restaurant-Goers' Checks to Clear Out Restaurant For Her and NFL Star Travis Kelce

The star was spotted at Arrowhead Stadium for the Kansas City Chiefs game Sunday night alongside Kelce's mother.

Starting a Business

Its First Year, This Startup Struggled to Get 75 Clients. Five Years Later, They Have 18,000. Here's How They Did It.

Financial planning startup Facet knew they were targeting a huge untapped market. But getting clients wasn't as easy as they hoped.

Leadership

How These Two Art School Buddies Brought Their Business Vision to Life

Co-founders Louie Hinnen and Paul Outlaw explain how their company The Factory NYC utilizes human creativity and digital tools to establish itself at the intersection of art and commerce.

Business Models

4 Ways to Increase Efficiency Within Your Business

If you can make these kinds of changes with confidence, you can pave the way for your company to survive the present and thrive in the future.

Money & Finance

Want to Become a Millionaire? Follow Warren Buffett's 4 Rules.

Too many entrepreneurs are counting too heavily on a company exit for their eventual 'win.' Do this instead.