At least $95 million was deceptively obtained from American consumers by scam-artist student loan debt relief groups over the past couple years, according to crackdown results revealed by the Federal Trade Commission.

Student loans
Zephyr Picture, Getty Images
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In the first-ever coordinated federal-state initiative targeting deceptive practices aimed toward those struggling to repay college loans, 36 actions — including several lawsuits — were taken by the FTC and state attorneys general against groups such as Student Aid Center, Student Debt Relief Group and A1 DocPrep, Inc.

The FTC alleges that the defendants charged consumers illegal upfront fees, made false promises to help reduce or eliminate debt burdens and pretended to be affiliated with the government or legitimate loan servicers.

"We see, sometimes, misrepresentations about where someone's payment is going to go — is it going to pay off their loans or is it a fee going to the company?" Michelle Grajales, a staff attorney for the FTC, told New Jersey 101.5.

In at least one action, it was alleged an unscrupulous company duped consumers into providing them with theie Social Security and Federal Student Aid information, allowing them to hijack consumers' accounts.

Student loan debt relief scams
Federal Trade Commission
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"Consumers should treat their FSA ID almost like they would their Social Security Number or bank account number," Grajales said, noting telemarketing rules also prohibit entities from collecting payment for debt relief services until those are services are actually provided.

New Jersey was not listed among the 11 states listed as part of the crackdown, but Grajales said that should not be viewed as a sign that New Jersey's officials "don't care" about the issue.

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Contact reporter Dino Flammia at dino.flammia@townsquaremedia.com.

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