There's some bad news and some good news for debt-saddled graduates who paid a company called the Student Aid Center to help reduce their student loan debt. The bad news first: The Federal Trade Commission (FTC) says the business was a scam.
The good news: The FTC and Florida Attorney General Pam Bondi are suing the Doral-based company for illegal business practices in hopes of recouping consumers' money. That isn't likely, however, given that Student Aid Center and its owners, Damien Alvarez and Ramiro Fernandez-Moris, filed for bankruptcy in February, saying the company had liabilities between $1 million and $10 million.
The company, which claimed to help graduates dig themselves out of debt, is now drowning in a veritable ocean of legal woes. In addition to the complaint by the FTC and the State of Florida, both Minnesota and the District of Columbia have filed lawsuits accusing Student Aid Center of deceptive practices. (The Minnesota lawsuit says Alvarez's Instagram account, which has since been deleted, frequently referenced Jordan Belfort, the money-grubbing stockbroker depicted in the Leonardo DiCaprio film The Wolf of Wall Street.)
The new complaint brought by the FTC and the State of Florida says Student Aid Center "preyed on consumers' anxiety about student loan debt" by falsely promising to reduce or even eliminate its customers' student loan debt.
The company hit up its customers for upfront fees in five monthly installments of $199 or more, according to the complaint, which points out that graduates can apply for government loan forgiveness programs free of charge. Frequently, Student Aid Center directed its customers to stop paying their lenders and instead pay the company directly, the lawsuit alleges.
The owners were apparently savvy at advertising through social media, radio spots, Google ads hawking "Obama Loan Forgiveness," and even in one case, an aerial banner flying over South Beach.
But although the company lured in customers by promising a 100 percent money-back guarantee, Student Aid Center later deflected those who demanded refunds by either not returning the money or returning an amount much less than what had been paid, according to the FTC.
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Consumers in Florida and Pennsylvania have also sued the company, complaining they received unsolicited phone calls and text messages from Student Aid Center. (A man in this comment thread claims that when he complained to Alvarez, the owner texted him to "fuck off.")
Student Aid Center hasn't yet filed a response to the allegations in federal court. Alvarez did not respond to a phone message and email left by New Times, and an attorney who represented the company in prior legal battles could not immediately be reached for comment Tuesday. (Update, June 2: The lawyer who had been representing the Student Aid Center says he has not represented the company since it filed for bankruptcy and hasn't been contacted by the owners in reference to the new litigation.)
Bondi's office says those worried about the scam can file a complaint by calling 1-866-9-NO-SCAM. Links to other resources for help can be found here.