Attorney General sues
nine student loan debt
relief companies
BY RYAN KELLEY
Several student loan debt relief
companies have used deceptive
tactics to entice consumers and
charge illegal upfront fees and
interest rates according to a lawsuit
filed by New York Attorney General
Barbara Underwood in September.
The lawsuit alleges that thousands of
New Yorkers and students nationwide were
victimized by nine companies that typically
charged $1,000 for services that are available
for free through the federal government or the
student loan servicer. The companies also
allegedly charged consumers a 20.99 percent
interest rate, well above the New York cap of 16
percent.
The companies named in the suit include
Debt Resolve, Inc.; Hutton Ventures, LLC;
Progress Advocates, LLC; Progress Advocates
Group, LLC; Student Advocates, LLC; Student
Advocates Group, LLC; Student Advocates Team,
LLC; Student Loan Care, LLC; and Student Loan
Support LLC.
“These companies sought to line their own
pockets by taking advantage of students who
were simply trying to pay for their education,”
Underwood said. “My office will continue to
do everything in our power to protect students
– and all New Yorkers – from predatory
scammers.”
Also named in the suit were Bruce Bellmare
and Stanley E. Freimuth, the current and
former CEOs of Debt Resolve, Inc., which is the
majority owner of two other companies in the
suit. The financing company called out in the
suit is Equitable Acceptance Corporation.
The student loan debt relief defendants
contacted the victims in a number of
ways, according to the lawsuit, such
as deceptive personalized direct
mail that appears to come from the
federal government. They also
created Facebook ads that claim
to have breaking news that certain Department
of Education (DOE) programs were recently
approved by the government.
The defendants then relied on “student
loan advisers” to sell debt relief agreements to
consumers, though they were just telemarketers
with no specialized experience, according to
the suit. Some consumers even stopped paying
back their student loans because they were led
to believe that their payments to the defendants
were paying their loans, and these consumers
ultimately owe more on their student loans
because of missed payments.
The lawsuit seeks injunctive relief, a
declaration that the defendants’ contracts
with the borrowers are null and void,
restitution, damages, disgorgement,
penalties and costs.
The New York Legal Assistance Group (NYLAG)
and Quinn Emanuel Urquhart & Sullivan LLC also
recently filed a class action against Equitable
Acceptance Corporation and several other
companies that allegedly sold debt relief to tens
of thousands of borrowers.
“The victims of Equitable Acceptance
Corporation and its business partners are
among the millions of vulnerable student loan
borrowers already struggling to make ends
meet,” said Danielle Tarantolo, Co-Director of
NYLAG’s Special Litigation Unit. “We commend
the New York Attorney General for seeking to
stop these companies’ fraud and return their illgotten
gains to borrowers.”
New Yorkers have a total estimated student
loan debt of $86.54 billion, according to a 2017
Consumer Financial Protection Bureau report,
and the U.S. Department of Education estimates
that 92 percent of all outstanding student loans
are federal.
Student loan borrowers who believe they have
been defrauded are urged to file a complaint with
the Attorney General online, or call (800) 771-
7755 to have a complaint form sent via mail.
Attorney General Barbara Underwood
QNS.COM
10 FALL 2018