WASHINGTON, D.C. — A company promising fast relief from student loan debt has been permanently banned from the debt relief industry after the Federal Trade Commission uncovered a scheme that apparently scammed consumers out of tens of million, the agency said.
The FTC announced a settlement with Panda Benefit Services(also known as Prosperity Benefit Services) and its affiliated operators. The company was accused of charging illegal upfront fees while falsely claiming ties to the U.S. Department of Education. Instead of helping borrowers manage or forgive their student loans, the company is accused of pocketing the money, leaving many people deeper in debt.
While the FTC has not publicly disclosed the total number of student loan borrowers affected by the Panda Benefit Services scheme, it’s likely that thousands of borrowers were impacted.
According to the FTC, the defendants lured borrowers with promises of immediate loan forgiveness or enrollment in government programs, for a fee. But federal law prohibits charging fees before providing debt relief services.
“This wasn’t relief — it was a rip-off,” the FTC said in a statement. “These companies preyed on people trying to do the right thing and pay off their loans.”
As part of the FTC’s settlement with Panda Benefit Services and its affiliate companies, the companies are banned from offering any debt relief services and must comply with strict prohibitions against misrepresenting affiliations or charging advance fees, the FTC said.
They were also required to surrender all available assets. The funds were used by the FTC to provide refunds or compensation to affected borrowers.
While the exact amount each person may receive hasn’t been disclosed, this action ensures that at least some of the money scammed from consumers will be returned to those who were misled and financially harmed.
The commission is sharing tips to prevent others from falling victim:
- Never pay upfront for student loan help — it’s illegal
- Don’t share your FSA ID or personal financial information with anyone who contacts you unsolicited
- Verify claims before signing anything
If you suspect a scam, report it, and notify your state attorney general.