Washington State Attorney General Bob Ferguson on Thursday announced a lawsuit against a Florida-based company and its owners, accusing them of charging students illegal fees for debt relief services, including help consolidating federal student loans.
Student Aid Center Inc. and owners Ramiro Fernandez-Moris and Damien Alvarez are accused of deceptively marketing their services, charging more than the legal maximum $25 in initial fees for debt adjustment and taking illegal advance fees.
From 2013 to 2015, the company advertised debt relief services for student loans, including claims it could offer an "Obama Student Loan Forgiveness Program," and suggesting the company was associated with the federal government. At least 800 consumers in Washington paid Student Aid Center a total of approximately $500,000 in fees for its purported services.
According to Ferguson’s lawsuit, although Student Aid Center claimed it was part of the student loan forgiveness or loan consolidation process, all it really did was enroll consumers into repayment plans offered at no cost by the U.S. Department of Education. The lawsuit alleges violations of Washington’s Consumer Protection Act, Debt Adjustors Act and Credit Services Organizations Act.
The defendants' websites, including studentloanforgiveness.org, included more false claims and their telemarketers deceived people with promises of a 100% money-back guarantee, the complaint alleges. In reality, however, consumers who sought refunds often received a much lower amount or obtained refunds only after complaining to the Better Business Bureau or a state or federal agency. Some people complained that, instead of issuing refunds after they canceled their enrollment, the defendants threatened to send their accounts to collection.
Ferguson wants the court to find Student Aid Center’s contracts invalid, order the defendants to provide refunds and force the defendants to end their deceptive advertising and illegal fees.
Ferguson has successfully sued or obtained consumer refunds from seven student debt adjustment firms in the past year, resulting in $306,896 returned to students and $180,000 for costs, fees, monitoring and future Consumer Protection Act enforcement. Ferguson said that in 2015 students in Washington graduated with an average of nearly $25,000 in debt.
The Attorney General’s Office investigated the case along with the offices of the attorneys general of Florida, Kentucky and the District of Columbia, as well as the Federal Trade Commission.