Dive Brief:
- The Federal Trade Commission will send $3.3 million in payments to student loan borrowers who were duped in a debt relief scam.
- Arete Financial Group and its related businesses pretended they would mitigate borrowers’ student loan debt in exchange for upfront and monthly fees, according to the FTC, which announced the restitution last week. In reality, Arete Financial pocketed the money, the agency said.
- It also pretended to be affiliated with the U.S. Department of Education in the scheme, the FTC said. More than 37,800 borrowers will receive checks.
Dive Insight:
The FTC began targeting Arete Financial in 2019, when it first alleged the business tricked student loan borrowers out of millions of dollars.
At the time, the agency accused Arete Financial of taking out radio, television and online ads to masquerade as an Education Department affiliate and promising to reduce or eliminate students' loan debt.
Arete Financial charged students as much as $1,800 for its faux services, the FTC said.
In September 2020, the FTC announced that several of the conspirators agreed to pay at least $835,000 to settle charges against them. The settlement also bars those individuals from providing student loan debt relief services. The conspirators had a $43.3 million judgment against them in the case, though this was largely suspended because they could not pay it.
In January 2022, the remaining defendants in the case settled, paying over $743,000 and agreeing to never again offer student loan debt relief.
