Companies claiming to help students, borrowers ordered to stop using government logo

The Department of Education sent cease-and-desist letters to two companies claiming to help students and student loan borrowers last week, accusing them of improperly implying an affiliation with the agency and asking them to stop.

The letters claim that both companies used the Department of Education’s logo in various places on their sites without its permission. The feds are asking the companies to stop using the logo and to include a disclaimer noting that the sites aren’t affiliated with the Department.

These letters come just months after the Department sent similar notices to two companies claiming an affiliation with the agency. Those firms and at least one of the firms the Department sent a cease-and-desist letter to last week appear to be so-called debt relief companies. Regulators and states attorneys general have accused these businesses of charging borrowers high up front fees to enroll in programs to better manage their student loan debt that borrowers can actually access for free through the Department.

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The roughly 40 million Americans with $1.3 trillion in student loan debt have created a population ripe for abuse. Consumer advocates say sloppy student loan servicing has created a vacuum of legitimate information and so borrowers who are desperate for relief are turning to scam operators instead.

The companies also use aggressive tactics to lure borrowers, including robocalls, mailings and social media postings that imply an affiliation with the government and even targeted Internet marketing that imply they’re endorsed by a borrower’s alma mater.

Federal agencies and state AGs have been cracking down on these companies over the past several months. The Consumer Financial Protection Bureau shut down one of these firms Wednesday. That was just weeks after a federal judge ruled in favor of the agency against another student debt relief company, ordering the firm to pay $8.2 million to affected victims.

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