The Consumer Financial Protection Bureau has delivered a strong message to Internet scammers: Don’t mess with student loan debtors.
Those borrowers are a tempting target, given that there are about 40 million of them who collectively owe more than $1.2 trillion. That total includes more than 8 million who are in default on federal or private student loans.
Just the potential for problems recently caught the eye of the federal consumer watchdog organization.
In a June 22 letter to Google and other major Internet search engines, the consumer bureau expressed concern that “unscrupulous companies may be using aggressive advertising” through sophisticated Web search tools to lure borrowers seeking repayment help.
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Search engines generally have policies to protect consumers against misrepresentations in advertisements. But the bureau asked Google and the other companies to work with federal and state regulators to ensure search products are not being used by debt relief businesses to gouge or defraud borrowers by “implying an affiliation” with the U.S. Department of Education.
“By more closely monitoring advertising on key search terms and helping to drive traffic toward unbiased sources of information, your users will gain greater value from your search products and scammers will be less likely to flourish,” the consumer watchdog said in its letter.
According to an analysis of Google trend data, the consumer regulator said, struggling borrowers are searching online for help using keywords such as “student loan default,” “student loan forgiveness” and “Obama student loan relief.”
To regulators, this resembles the mortgage foreclosure crisis during the recession. That’s when some borrowers were given conflicting information about their repayment options “and found scammers who made false promises on loan modification in exchange for steep upfront fees,” the consumer bureau said.
But the search engine companies joined with federal regulators in 2011 to stop scammers from targeting troubled homeowners.
The consumer protection bureau said there has been an increase in recent years in the number of companies and Internet services requiring large upfront fees to help distressed borrowers enroll in a student loan repayment plan.
Keep in mind, however, that the Department of Education provides numerous options to make repayment of college debts more affordable and manageable — and they’re free. Some of the most popular programs include provisions that let borrowers set their monthly payment based on their income.
Even before the consumer protection bureau issued this latest warning, federal and state regulators had been cracking down on student loan fraud artists. Most recently, state regulators in Illinois sued Broadsword Student Advantage, the operator of GetForgiven.org, to block the firm from preying on student loan debtholders.
You can steer clear of student loan debt scams by watching for these warning signs: pressure to pay high up-front fees, promises of immediate loan foregiveness or debt cancellation, and requests for your federal student aid number.
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