After cracking down on a student loan scam, federal watchdogs are sending nearly $9 million in of refunds to around 22,500 borrowers who were cheated out of their money.
The refunds will reimburse those who lost money to Ameritech Financial, a student loan debt relief scheme operated by Brandon Frere, who was convicted of criminal charges and sentenced to prison in 2020. Frere and his companies misled borrowers and charged additional, illicit fees by pretending to be affiliated with the US Department of Education.
Eligible people will receive their checks in the mail, which have to be cashed within 90 days. For those without an address on file, the refund will be processed via PayPal.
Earlier in June, the FTC sent refunds in excess of $3.3 million to more than 37,800 consumers who were duped by Arete Financial Group, a similar operation. Arete tricked people with student loan debt into making illegal upfront payments via ads and telemarketing calls by pretending to be affiliated with the US education department.
More payments to defrauded borrowers may be in line, as more scams keep happening. Just two days ago, on Aug. 21, the FTC found two California-based companies—Express Enrollment LLC and Intercontinental Solutions LLC—guilty of targeting students and collecting approximately $8.8 million in illegal advance fees in exchange for student loan debt relief services that did not exist.
A brief timeline of Brandon Frere’s student loan repayment fraud
February 2018: The FTC files a complaint against Frere and his firms for targeting debtors with personalized emails, charging them up to $800 in illegal fees, purportedly to enroll consumers in a federal loan assistance program. They also charged a $100-$1,300 advance fee for enrollment in a “financial education” program and an additional monthly $49-$99 membership fee for the life of the loan—typically 10-25 years—which people believed was going towards loan repayment.
December 2018: The Department of Justice (DoJ) brings criminal charges against Frere and his companies.
December 2019: Frere pleads guilty to two counts of wire and mail fraud, and agrees to forfeit funds.
July 2020: A US district court judge sentences Frere to 42 months in prison and orders him to forfeit assets worth over $8.9 million.
November 2020: The FTC bans Frere and his companies from providing debt relief services.
August 2023: The FTC and DoJ start sending refunds to those affected by Frere’s scam. The refunds come out of the the available funds from the FTC and DOJ settlements.
One more thing: Scams before and after Biden’s loan forgiveness program
After US president Joe Biden announced his massive student loan relief scheme last year, the scamsters came out to play—or rather, prey. They took advantage of the confusion and misinformation around the scheme even as federal agencies sounded alarm bells.
After the program was struck down by the US Supreme Court on June 30, and before payment schedules resume in October, officials have been warning borrowers to watch out for paid debt relief assistance from those pretending to be associated with the government.
On Aug. 16, Idaho’s attorney general shared three common scams in a press release: claiming to arrange smaller monthly payments; offering to negotiate loan forgiveness on behalf of borrowers; and posing as a loan servicer collecting on passed due amounts. Less than a week later, the FTC issued its own warning against such swindling.
Quotable: A giveaway sign of a student loan relief scam
“The first thing to know is this: you don’t have to pay for help managing your student loans. If someone tries to charge you up front, before they’ve done anything, that’s your first clue that this is a scam. And nobody but a scammer will ever offer you quick loan forgiveness.”
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