The Federal Trade Commission (FTC) has stopped two student loan debt relief schemes that allegedly bilked students out of approximately $12 million by using deceptive claims about repayment programs and loan forgiveness that did not exist. The agency also claims that the companies falsely claimed to be or be affiliated with the Department of Education and told students that the illegal payments the companies collected would count towards their loans.
According to the FTC, since at least 2019, SL Finance LLC and its owners Michael Castillo and Christian Castillo, and BCO Consulting Services Inc. and SLA Consulting Services Inc. and their owners Gianni Olilang, Brandon Clores, Kishan Bhakta, and Allan Radam have lured consumers looking to pay down their student loans, many of whom are low-income borrowers saddled with tens of thousands of dollars of student debt, into paying hundreds to thousands of dollars in illegal upfront fees. The FTC alleges that the defendants tricked consumers into believing they were enrolled in a legitimate loan repayment program, that their loans would be forgiven in whole or in part, and that most or all of consumers’ payments to the companies would be applied to their loan balances. However, in reality, the defendants were pocketing students’ payments.
The agency also charges that the defendants falsely claimed to be or be affiliated with the Department of Education, and that they would take over servicing for students’ loans. Both complaints note that the misrepresentations by defendants about their purported debt relief services violated Section 5 of the FTC Act and the Telemarketing Sales Rule (TSR). Both complaints also note that the companies have violated the TSR by collecting advance fees for debt relief services and violated the Gramm-Leach-Bliley Act by using deceptive tactics to obtain consumers’ financial information. Lastly, SL Finance LLC and its owners violated the TSR by calling consumers who had signed up for the Do Not Call Registry and by failing to pay required Do Not Call Registry fees.
The FTC notes that one of the companies and its owners also violated the COVID-19 Consumer Protection Act by misrepresenting that their program was part of the CARES Act or a similar COVID-19 relief program.
“These lawsuits to shut down student loan debt relief schemes continue the agency’s crackdown on junk fees, unwanted calls, and financial exploitation,” said Samuel Levine, Director of FTC’s Bureau of Consumer Protection. “As Americans struggle with massive student loan debt and uncertainty around the prospect of forgiveness, scammers are looking to cash in.”
After the FTC filed complaints seeking to end the deceptive practices, a federal court temporarily halted the two schemes and froze the assets of SL Finance LLC and its owners and BCO Consulting and SLA Consulting and their owners. The Commission votes authorizing the staff to file the complaints were 3-0. The U.S. District Court for the Central District of California entered temporary restraining orders in the two cases on May 2, 2023, and May 3, 2023.
The FTC warns consumers to be wary of companies that promise quick relief from student loan debt, especially those that require upfront payments. The agency advises students to verify the legitimacy of the company offering the service, ask for references and contact information, and to be wary of any company that requires them to provide their Federal Student Aid (FSA) ID, which the Department of Education only uses to manage student aid information.
The FTC also advises borrowers who need help with their student loans to contact their loan servicer directly or visit the Department of Education’s Federal Student Aid website. The site provides information on various repayment plans, loan forgiveness, and other debt relief options.
