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Promises, Promises: Scammers Target Student Loans, Unclaimed Property And Government Grants

Illinois Attorney General Lisa Madigan
Wikipedia | government photo

Keep your guard up, gentle consumers. There are anglers among us.

Here are four recent alerts worth noting:

1. Illinois Attorney General Sues Student Loan Debt Relief Companies

Illinois Attorney General Lisa Madigan has sued debt relief companies that she says exploit people struggling to repay student loans. Some of the marketing strategies are reminiscent of the way scammers duped vulnerable homeowners facing foreclosure during the mortgage crisis.

On Monday, Madigan filed suit against First American Tax Defense LLC, based in Chicago, and Broadsword Student Advantage LLC, based in Frisco, Texas. She alleges that the companies, which are unlicensed, engaged in deceptive marketing practices and illegally charged consumers hundreds of dollars in upfront fees to reduce or eliminate their student loan debt. In some cases, people were persuaded to pay as much as $1,200 upfront for government services that are actually free of charge. Others paid for bogus services, including enrollment in a fake “Obama forgiveness program.”

The news release from Madigan’s office says the lawsuits are the first in the U.S. aimed at halting these new scams. She accused the companies of trying to circumvent an Illinois law that bans companies from charging upfront fees for debt settlement services. The suit alleges that the companies falsely claim expertise and affiliation with the U.S. Department of Education, promising to cut student loan payments in half or to eliminate them entirely.

2.You Can Claim Lost Riches For Free, Says Missouri Treasurer

Missouri State Treasurer Clint Zweifel says the state’s residents should be wary of "dubious" third-party websites that charge a fee to help them collect their unclaimed property -- a process his office offers at no cost.

In a news release, Zweifel said he has heard from Missourians who’ve paid fees to such websites though they could have searched ShowMeMoney.com and filed their claims for free. He warns that these third parties might also misuse a consumer’s personal information. This past year, Missouri returned $40 million worth of unclaimed property.

Consumers can email questions about these websites to ucp@treasurer.mo.gov. To check other states for unclaimed property, go to the website of the National Association of Unclaimed Property Administrators, which links to official sites in other states.

3. FTC Wants To Hack Rachel

The Federal Trade Commission is holding a contest at DEF CON 22 – a convention for hackers – to inspire a tech solution to fight illegal robocalls.

Because the scammers hide behind technology -- including the use of fake caller IDs -- the FTC is asking hackers to develop what they are calling “robust, cutting-edge robocall honeypots” to catch them. Information security specialists have developed online honeypots, but there's been limited cross-pollination between that expertise and efforts to fight telephone spam, says the FTC. DEF CON 22 is being held in Las Vegas next month.

The FTC has tried the contest tactic before. In October 2012, the agency issued a public challenge, offering $50,000 to the innovator who could design the best solution to thwart illegal robocalls.

The FTC  is apparently as frustrated as we are with the barrage of recorded messages from Rachel of Cardholder or Cardmember or Cardwhatever Services -- and her ilk – who pester us about credit card interest rates, or sell us costly alarm systems, etc., etc. The agency receives more than 150,000 complaints about robocalls every month.

4. St. Louis BBB Warns Of Free Government Money Scheme

A St. Louis woman lost $9,000 in a scheme that promised free grant money from the U.S. government, according to the Better Business Bureau.

The scam started with a phone call offering a $7,000 education grant from a man claiming to be with the Federal Reserve Bank of New York. It ended with the woman sending nearly $9,000 in upfront fees to thieves in New York, California and India, according to the St. Louis BBB, which investigated the case.

The woman told the BBB she was directed to use MoneyGram, Western Union and Green Dot MoneyPak cards to transfer the fees and that all of her advance fees would be repaid when she got the grant. She borrowed the money from relatives, friends, her bank and two payday loan companies.

According to BBB president Michelle Corey, government grant scams have been around for years, but have become more pervasive in the St. Louis area.

The Federal Reserve Bank of New York first issued a warning on the grant scams in January 2012.

Consumers who have a question about such grant offers, can email the BBB at www.bbb.org or call 314-645-3300.

Our earlier coverage:

FTC Is Still On The Trail Of Rachel And The Robocallers; Hang Up And File A Complaint

Mary Delach Leonard is a veteran journalist who joined the St. Louis Beacon staff in April 2008 after a 17-year career at the St. Louis Post-Dispatch, where she was a reporter and an editor in the features section. Her work has been cited for awards by the Missouri Associated Press Managing Editors, the Missouri Press Association and the Illinois Press Association. In 2010, the Bar Association of Metropolitan St. Louis honored her with a Spirit of Justice Award in recognition of her work on the housing crisis. Leonard began her newspaper career at the Belleville News-Democrat after earning a degree in mass communications from Southern Illinois University-Edwardsville, where she now serves as an adjunct faculty member. She is partial to pomeranians and Cardinals.

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