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 Madigan filed the suits earlier today against First
American Tax Defense LLC, based in Chicago, and Broadsword Student
Advantage LLC, based in Frisco, Texas, alleging the unlicensed
companies engaged in deceptive marketing practices and illegally
charged consumers hundreds of dollars in upfront fees to reduce or
eliminate their student loan debt burden. In reality, Madigan
alleges, the companies sought to scam vulnerable people into paying
as much as $1,200 upfront for bogus services, including assistance
enrolling in a fake “Obama forgiveness program,” or for government
services that are already free of charge.
“These companies illegally charge fees for services that student
loan borrowers can obtain themselves through government programs at
no cost,” Madigan said. “My office will be aggressive in cracking
down on scam operations that prey on student loan borrowers for
profit.”
Student loan debt levels have grown to historic proportions, now
affecting nearly 40 million Americans who have $1.2 trillion in
outstanding debt. Madigan’s lawsuits targeting these scam operations
allege that First American and Broadsword Student Advantage are
doing an end-run around an Illinois law that she wrote to ban
companies from charging people upfront fees for so-called debt
settlement services.
Madigan’s lawsuits allege First American and Broadsword Student
Advantage have advertised heavily on the radio in Chicago and
downstate, offering consumers a myriad of options to ease their debt
burden based on the companies’ alleged expertise and false
affiliation with the U.S. Department of Education to consolidate or
forgive their loans. The companies are alleged to offer to cut
student loan payments in half or eliminate them entirely, and
specifically offer public service employees a loan debt forgiveness
program for which the companies could not qualify them. The lawsuit
against First American specifically advertises an “Obama forgiveness
program” that is not an actual government program.
The lawsuits allege the companies are in violation of the Illinois
Consumer Fraud and Deceptive Business Practices Act, the Credit
Services Organizations Act, and the Debt Settlement Consumer
Protection Act. In 2010, Madigan crafted and helped pass the Debt
Settlement Consumer Protection Act to ban companies from charging
upfront fees to consumers for help with debt relief. Today’s
lawsuits allege the companies are not complying with the
requirements of the Debt Settlement Consumer Protection Act and in
addition are not providing any meaningful assistance to reduce
consumers’ student loan debt.
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 In announcing the lawsuits, Madigan urged current and former
students never to pay upfront for help with student loan debt
relief. For information on legitimate sources of free
assistance, consumers can contact the Consumer Financial
Protection Bureau or the National Consumer Law Center. For
problems with your student loan servicer or a debt collector,
consumers can also contact the U.S. Department of Education’s
Student Loan Ombudsman at 1-877-557-2575 or
www.ombudsman.ed.gov
the Consumer Financial Protection Bureau or Attorney General
Madigan’s Consumer Fraud Hotline at 1-800-386-5438.
“We applaud the Attorney General for cracking down on scammers
targeting student loan borrowers,” said Dev Gowda of Illinois
Public Interest Research Group. “Consumers experiencing problems
with their student loans such as fraudulent activity should
bring their complaints to the Attorney General’s office, and
also to the Consumer Financial Protection Bureau, which our
report, ‘Private Loans, Public Complaints’ has found to get real
results for students.”
Assistant Attorneys General Joseph Pham and Rebecca Pruitt are
handling the cases for Madigan’s Consumer Fraud Bureau.
[Text received; THE OFFICE OF
ILLINOIS ATTORNEY GENERAL LISA MADIGAN]
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