WASHINGTON, D.C. (WWLP)– The Federal Trade Commission (FTC) has filed a complaint in a California Federal Court to halt student loan debt relief schemes that it says stole nearly $12-million.
The FTC says in court filings that 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 people attempting to pay down their student loans, many of whom are low-income borrowers with tens of thousands of dollars of student debt, into paying hundreds to thousands of dollars in illegal upfront fees.
According to the complaints, the defendants used deceptive claims about repayment programs and loan forgiveness that did not exist, 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.
The FTC says 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.
“As Americans struggle with massive student loan debt and uncertainty around the prospect of forgiveness, scammers are looking to cash in,” said Samuel Levine, Director of FTC’s Bureau of Consumer Protection. “These lawsuits to shut down student loan debt relief schemes continue the agency’s crackdown on junk fees, unwanted calls, and financial exploitation.”
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.
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 FTC is reminding consumers that you do not have to pay for help in managing student loans. Loan providers must help for free. If you have federal student loans use the Federal Student Aid website. For private loans, contact the loan servicer directly.
If you see a similar scheme or have been a victim of one, contact the FTC to report fraud.