FTC sending checks to people defrauded by student loan forgiveness scams

More than $4.1 million in refunds are being sent to people who lost money to student loan forgiveness scammers.

The Federal Trade Commission on Wednesday announced the refunds for victims who were lured by fake loan forgiveness claims. The alleged scheme used many names, including Mission Hills Federal, Federal Direct Group, National Secure Processing, and The Student Loan Group, the FTC said.

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A complaint was filed by the FTC against the operators of Mission Hills Federal and Federal Direct Group in 2019, alleging that "since 2014, they tricked students into paying hundreds to thousands of dollars in illegal upfront fees and pretended to lower consumers’ monthly student loan payments." 

"The operators also tricked consumers into sending their monthly student loan payments directly to the defendants by falsely claiming to take over the servicing of the consumers’ loans," the agency said.

But in reality, few payments were actually applied to the borrower’s student loans – and in many cases – none at all. Instead, the scammers pocketed the money. 

"As a result of the lawsuit, the defendants paid money to provide refunds and are banned from telemarketing and debt relief services," the agency said.

FILE - A student studies in the Perry-Castaneda Library at the University of Texas at Austin on Feb. 22, 2024, in Austin, Texas. (Photo by Brandon Bell/Getty Images)

FILE - A student studies in the Perry-Castaneda Library at the University of Texas at Austin on Feb. 22, 2024, in Austin, Texas. (Photo by Brandon Bell/Getty Images)

The FTC said 27,584 consumers would receive refunds in the form of a check. The agency noted that recipients should cash their checks within 90 days of receiving them.

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Consumers with questions about their payment should contact the refund administrator, JND Legal Administration, at 1-844-566-0108, or visit the FTC website to view frequently asked questions about the refund process, the agency said. 

The FTC noted how the commission never requires people to pay money or provide account information to get a refund.

This story was reported from Cincinnati.

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