March 14 (UPI) — The Federal Trade Commission said it would send $4.1 million in refunds to people scammed out of money through fake loan forgiveness programs.
The FTC said Wednesday it would be sending out 27,584 checks to victims who lost money in the scam.
The move is a follow-up to the FTC filing a complaint in 2019 against operators of Mission Hills Federal and the Federal Direct Group alleging that it was hoodwinking students into paying them thousands of dollars in fees while falsely claiming it was lowering their monthly student loan payments.
Authorities said few, if any, of those payments went to pay for student loans, and were often kept by the scammers.
“Defendants have lured consumers with telephone calls and emails promising to reduce consumer’ monthly student loan payments or loan balances by consolidating their loans or enrolling them in income-based payment plans,” the FTC said in its 2019 complaints.
The FTC said the companies never followed through on those promises.
The Biden administration has been cracking down on bad actors in the student loan industry.
Last year, the Education Department withheld $7.2 million in payments to the Missouri Higher Education Loan Authority for failing students on a timely basis, causing some to default on loans.
