• by Ray Schultz , Columnist, October 13, 2017

As the late comic Charles Ludlam used to say, “The utter horror, the utter shame.”

Email was used in several loan relief scams that ripped off more than $95 million from beleaguered debtors, according to the Federal Trade Commission.

The FTC today announced 36 federal and state actions against bad actors as part of the “Operation Game of Loans.” For this sweep, the FTC worked in partnership with 11 state attorneys general; as FTC Acting Chairman Maureen K. Ohlhausen states, "winter is coming for these malefactors. 

According to the FTC, the scammers offered to arrange debt relief on student loans and mortgages. But they rarely delivered.

The student loan fees were “usually between $900 and $1,500 upfront, quite a chunk of change for most people,” says Michelle Grajales, a staff attorney for the FTC who worked in one of the cases. 

Grajales adds that the “$4,500 for mortgages was even worse.”

The scams were largely conducted by telephone. But email was used on the front end in at least one case — by the defendants Student Debt Doctor LLC and Gary Brent White Jr.

According to the FTC complaint, these parties promised to enroll consumers in student-loan repayment programs to reduce or eliminate their balances. However, they did not provide these services in most cases. 

The complaint notes that the defendants “have made these claims in online advertising, emails and on telemarketing calls. “

Email was also used as part of the ongoing correspondence with consumers,” Grajales says. And it was utilized to solicit online signatures that would finalize the deals.

Consumers were sometimes told to not bother reading the contracts.  And, “in many instances, Defendants have instructed consumers not to contact, work with, make payments to, or respond to contacts from their loan servicers,” says the complaint against Student Debt Doctor LLC and Gary Brent White Jr.

That was bad enough. But Grajales notes that “other harms occurred other than the fees that people paid.” For example, student debtors stopped paying their loans, on instruction from the defendant firms 

“The interest accrues,” Grajales says.

In mortgage cases, “some people did lose their homes,” she adds.

The FTC notes that “student loan debt affects more than 42 million Americans, and with outstanding balances of more than $1.4 trillion, student loans are the second-largest segment of U.S. debt, after mortgages.

How did the alleged perps find prospects?

“Anecdotally, many use lead generators,” Grajales says.

That’s the worst thing of all. Need it be said? Email vendors and lead firms should not work with outfits like this—nor should ESPs or credit processors. Legality aside, it’s a question of basic ethics.