Recent Debt Relief Scams Have Students and Families on the Lookout
Posted By Eliana Osborn on August 3, 2015 at 5:14 pm
If student debt alone wasn’t enough to think about, there’s another worry for those looking to refinance or figure out payment plans. The Consumer Financial Protection Bureau is warning lenders of multiple debt relief scams that have been uncovered in recent years. The CFPB even recently asked major search engines like Yahoo! and Google to help fight the proliferation of these scams, which target vulnerable (and often young) loan holders.
In an unusual step, the Bureau has collected and published nearly 8,000 complaint stories filed through their website. Their findings? Many debt relief services are charging high fees to get consumers to sign up, rather than just pointing them towards free services provided by the Department of Education or private companies.
The CFPB reached out to Internet search companies for help, as their algorithms and cookies are one way deceptive organizations find potential clients. If a person searches terms related to debt relief or student loans, organizations can target them with ads. The Consumer Financial Protection Bureau is requesting assistance from search engines in shutting down this growing segment of business.
For students who hold federal student loans, participating in rate renegotiation is a free process that does not require lenders to sign up with an outside company. Possible renegotiation solutions include lowering payments to 10% of a lender’s income, deferring payments, and other means of avoiding default.
Companies who target student borrowers in crisis are even using Facebook to bombard users with advertisements for their services. Search engine providers say they already have systems in place for finding fraudulent ads, and that users can report such pop-ups if they appear.
Worrying about paying off student loans can be stressful and confusing, so it’s no wonder that students are turning to Internet to get help. However, consumers need to be smart about where they go for information – and who they trust with their financial details. Something to keep in mind? Advertisements that promise dramatic results are generally false. Student loan payments can be minimized or spread out over a longer term, but they are virtually impossible to erase.
The CFPB also offers an advisory on its website, which explains red flags of a student loan debt relief rip-off, and what students can do if they’re the victim of debt relief scam. That advisory can be found here.