FTC’s crackdown on student loan scammers recovers over $1 million for struggling borrowers while permanently banning fraudsters who stole $24 million through fake government affiliations.
Key Takeaways
- Two major student loan debt relief scams extracted over $24 million from vulnerable borrowers through deceptive practices and false government affiliations.
- Perpetrators falsely claimed partnership with the Department of Education, created fake testimonials, and charged illegal upfront fees for services available free through the government.
- FTC enforcement has permanently banned operators from the debt relief industry and forced them to surrender over $1 million in assets to compensate victims.
- Scammers targeted financially distressed Americans with illegal telemarketing calls, including to those on the Do Not Call Registry.
Government Catches Predators Targeting Financially Vulnerable Americans
In a significant victory for struggling student loan borrowers, the Federal Trade Commission has permanently banned fraudulent operators who extracted millions from Americans already burdened with educational debt. These scammers deliberately targeted vulnerable citizens by falsely presenting themselves as affiliated with the U.S. Department of Education while charging illegal fees for services that the government provides for free. The FTC’s investigation revealed a sophisticated operation designed specifically to deceive those desperate for financial relief during challenging economic times under far-left policies that have caused record inflation.
“Consumers looking to pay off their student loan debt should not have to worry about being scammed,” said Christopher Mufarrige, FTC Bureau of Consumer Protection official.
The investigation uncovered two major fraud operations that collectively swindled over $24 million from Americans. The first scheme, run by Select Student Services and Eduardo Martinez, extracted $16.7 million through deceptive telemarketing practices and false promises of loan forgiveness. The second operation, Florida-based Start Connecting LLC and Colombia-based Start Connecting SAS (operating as USA Student Debt Relief), stole an additional $7.3 million using similar tactics. These companies deliberately targeted Americans who were already struggling financially—exactly the people who could least afford to lose money to scammers.
Sophisticated Deception Tactics Revealed
The FTC’s investigation exposed how these operations created an elaborate web of deception to appear legitimate. The scammers fabricated testimonials and reviews on social media and their websites to build false credibility. They impersonated government officials and created marketing materials that mimicked official Department of Education communications. Many victims were confused by the professional appearance of these materials, believing they were dealing with legitimate government partners rather than predatory scammers looking to exploit their financial vulnerability.
“It is illegal for debt relief companies to make false promises and use fake reviews and testimonials to promote a business,” stated Christopher Mufarrige, FTC Bureau of Consumer Protection official.
The companies intentionally broke multiple laws, including placing illegal calls to consumers on the Do Not Call Registry. They charged substantial upfront fees—a practice explicitly prohibited for debt relief services—while promising borrowers loan forgiveness programs that either didn’t exist or for which they didn’t qualify. The operators, including Douglas Goodman, Doris Gallon-Goodman, and Juan Rojas from USA Student Debt Relief, specifically preyed on borrowers who had little understanding of the legitimate programs available through the actual Department of Education’s website.
Justice Served: Permanent Industry Ban and Asset Forfeiture
The FTC’s enforcement actions resulted in court orders that permanently ban these operators from the debt relief industry. The Select Student Services case concluded with a stipulated order against Eduardo Martinez and a default judgment against other entities involved. The USA Student Debt Relief operation faced similar consequences with a proposed order approved by a 3-0 Commission vote. Both cases resulted in substantial monetary judgments—$16.8 million against Select Student Services and $7.3 million against USA Student Debt Relief—though parts were suspended due to inability to pay.
“The FTC will continue to hold fraudsters that pocket Americans’ hard-earned money accountable,” assured Christopher Mufarrige, FTC Bureau of Consumer Protection official.
The companies must surrender over $1 million in assets to compensate victims. Additionally, they are prohibited from telemarketing, making misrepresentations about products or services, using false statements to collect financial information, and impersonating government entities. While the recovered assets represent only a fraction of the total stolen from victims, the permanent industry ban ensures these particular operators can no longer prey on vulnerable Americans struggling with student loan debt. The FTC continues to emphasize that legitimate student loan assistance is available for free through StudentAid.gov.
