AG Lisa Madigan Files Lawsuit Against Student Loan Debt Relief Scam As Part Of Nationwide Crackdown

Attorney General Lisa Madigan announced Friday a lawsuit against the operators of an alleged student loan debt relief scam that took advantage of student loan borrowers.

Madigan filed suit against two suburban Wood Dale, Illinois companies, one operating as Federal Student Loan Relief or Federal Tax Relief, and the other as Teldebt, as well as the owners of each entity, a release from the Attorney General’s office read. The companies charged as much as $700 to provide document preparation services that are already available to borrowers for free.

The lawsuit is part of a nationwide crackdown announced Friday in partnership with the Federal Trade Commission (FTC) and attorneys general from across the country. The crackdown, Operation Game of Loans, is on companies that take advantage of people trying to pay back their student loans.

Operation Game of Loans is “the first state-federal law enforcement initiative targeting student loan debt relief scams that falsely promise to help reduce or forgive student loan debt burdens and pretend to be affiliated with the government or consumers’ loan servicers,” the release read.

Of course, you could pay someone to help you fill out paperwork, to try to resolve your student loan debt.

“But the real issue is, why on earth would you when you can do it by yourself and for free?” Madigan said.

Madigan said the two Wood Dale companies charged as much as $700 to do paperwork already available on line. And she said the upfront fees are illegal here.

“During the mortgage crisis, when we saw these scams start to be played against these people who couldn’t pay their mortgages, we saw people losing tens of thousands of dollars to these types of scams.

“And so I went to the legislature and we had them outlaw these upfront fees.”

Madigan said complaints about companies taking advantage of student loan borrowers have grown over the past few years.

The nationwise announcement includes more than 36 actions by the FTC and the attorneys general.

The lawsuit filed by Madigan is the ninth lawsuit she has filed against student loan debt relief scammers. Madigan’s office is currently investigating over 50 other student loan debt relief scam operations.