(Photo: Flickr Creative Commons / Justin Mitchell)
Jul 14, 2014
Illinois on Monday will become the first state in the nation to sue the scamming 'debt settlement' companies that prey on students buried in debt.
Illinois Attorney General Lisa Madigan filed two lawsuits Monday morning against Broadsword Student Advantage LLC, based in Texas, and First American Tax Defense LLC, based in Chicago. Madigan's office charges that these companies "engage in "deceptive marketing practices and illegally charged consumers hundreds of dollars in upfront fees to reduce or eliminate their student loan debt burden," according to a statement emailed to Common Dreams
In response to the over $1.2 trillion in U.S. student debt impacting nearly 40 million people in the U.S., the debt settlement industry has taken aim at student loans, ostensibly offering--for a price--to help people saddled in student debt reduce their monthly payments by negotiating directly with lenders.
The Illinois lawsuit charges that these companies companies often convince students to pay large upfront fees only to mislead them on what they can deliver in terms of reducing monthly payments. Furthermore the suit charges that the businesses falsely claim affiliation with federal relief programs and charge people for assistance they could have received for free from the federal government.
Allegations that these companies scam desperate borrowers extend beyond these two businesses. According to a report released last year by the National Consumer Law Center, the industry is plagued with similar abuses and deceptions, including a "shocking number of inaccuracies about consolidation, garnishment, rehabilitation, bankruptcy, and other critical topics." And according to the Times, hundreds of thousands of borrowers across the U.S. have filed complaints with the Federal Trade Commission.
"It's just, unfortunately, the latest scam on the largest group of people who are struggling with the most debt," Madigan told the New York Times.
_____________________
Join Us: News for people demanding a better world
Common Dreams is powered by optimists who believe in the power of informed and engaged citizens to ignite and enact change to make the world a better place. We're hundreds of thousands strong, but every single supporter makes the difference. Your contribution supports this bold media model—free, independent, and dedicated to reporting the facts every day. Stand with us in the fight for economic equality, social justice, human rights, and a more sustainable future. As a people-powered nonprofit news outlet, we cover the issues the corporate media never will. |
Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
Sarah Lazare
Sarah Lazare was a staff writer for Common Dreams from 2013-2016. She is currently web editor and reporter for In These Times.
Illinois on Monday will become the first state in the nation to sue the scamming 'debt settlement' companies that prey on students buried in debt.
Illinois Attorney General Lisa Madigan filed two lawsuits Monday morning against Broadsword Student Advantage LLC, based in Texas, and First American Tax Defense LLC, based in Chicago. Madigan's office charges that these companies "engage in "deceptive marketing practices and illegally charged consumers hundreds of dollars in upfront fees to reduce or eliminate their student loan debt burden," according to a statement emailed to Common Dreams
In response to the over $1.2 trillion in U.S. student debt impacting nearly 40 million people in the U.S., the debt settlement industry has taken aim at student loans, ostensibly offering--for a price--to help people saddled in student debt reduce their monthly payments by negotiating directly with lenders.
The Illinois lawsuit charges that these companies companies often convince students to pay large upfront fees only to mislead them on what they can deliver in terms of reducing monthly payments. Furthermore the suit charges that the businesses falsely claim affiliation with federal relief programs and charge people for assistance they could have received for free from the federal government.
Allegations that these companies scam desperate borrowers extend beyond these two businesses. According to a report released last year by the National Consumer Law Center, the industry is plagued with similar abuses and deceptions, including a "shocking number of inaccuracies about consolidation, garnishment, rehabilitation, bankruptcy, and other critical topics." And according to the Times, hundreds of thousands of borrowers across the U.S. have filed complaints with the Federal Trade Commission.
"It's just, unfortunately, the latest scam on the largest group of people who are struggling with the most debt," Madigan told the New York Times.
_____________________
Sarah Lazare
Sarah Lazare was a staff writer for Common Dreams from 2013-2016. She is currently web editor and reporter for In These Times.
Illinois on Monday will become the first state in the nation to sue the scamming 'debt settlement' companies that prey on students buried in debt.
Illinois Attorney General Lisa Madigan filed two lawsuits Monday morning against Broadsword Student Advantage LLC, based in Texas, and First American Tax Defense LLC, based in Chicago. Madigan's office charges that these companies "engage in "deceptive marketing practices and illegally charged consumers hundreds of dollars in upfront fees to reduce or eliminate their student loan debt burden," according to a statement emailed to Common Dreams
In response to the over $1.2 trillion in U.S. student debt impacting nearly 40 million people in the U.S., the debt settlement industry has taken aim at student loans, ostensibly offering--for a price--to help people saddled in student debt reduce their monthly payments by negotiating directly with lenders.
The Illinois lawsuit charges that these companies companies often convince students to pay large upfront fees only to mislead them on what they can deliver in terms of reducing monthly payments. Furthermore the suit charges that the businesses falsely claim affiliation with federal relief programs and charge people for assistance they could have received for free from the federal government.
Allegations that these companies scam desperate borrowers extend beyond these two businesses. According to a report released last year by the National Consumer Law Center, the industry is plagued with similar abuses and deceptions, including a "shocking number of inaccuracies about consolidation, garnishment, rehabilitation, bankruptcy, and other critical topics." And according to the Times, hundreds of thousands of borrowers across the U.S. have filed complaints with the Federal Trade Commission.
"It's just, unfortunately, the latest scam on the largest group of people who are struggling with the most debt," Madigan told the New York Times.
_____________________
We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.