Federal Communication Commission Is Cracking Down On Student Loan Scammers

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The Federal Communication Commission has told Urth Access LLC, a major provider of robocall services used to power many student loan scams, that it must stop providing robocall software to groups running scams. This action might be enough to shut down over half of the current scams targeted at student loan borrowers.

Student loan scams are nothing new but have proliferated in the wake of President Biden’s student debt relief announcement in August. With millions of borrowers eligible for relief, there are a lot of potential targets for scammers. Borrowers, especially those struggling to pay their debts, are often desperate for help, making them easy targets for scammers who promise to help get rid of loans for a fee. Scammers not only take money from vulnerable borrowers, they often discourage those same borrowers from applying for the relief they are eligible for, compounding the harm they cause.

Why Is This FCC Action Important?

Robocalls are a primary tool for scammers. Scammers can call tens or even hundreds of thousands of federal student loan borrowers for relatively low costs. Scammers know that a tiny fraction of borrowers will respond or fall for whatever they are peddling, but when dealing with millions of borrowers looking for help, getting a response from a tiny fraction of borrowers can make scammers a lot of money.

In the press release announcing the action, FCC chairwoman Jessica Rosenworcel said: “We’re slamming the door on these pernicious calls — cutting them off to protect the millions of Americans who may be targeted simply because they have school loans. This is a new and more nimble FCC tool that we are putting to quick use here and won’t hesitate to use again in order to prevent these scam calls from getting through and reaching consumers.”

It is unlikely that reducing access to robocall technology will eliminate student loan scams, but it is likely to reduce the number of them. More importantly, it is expected to reduce the reach of scams, as the people who operate them must find new ways to operate at the scale scams rely on.

Why Are Student Loan Scams On The Rise?

The Biden Administration’s decision to forgive up to $20,000 in student loans for eligible borrowers made student loan cancellation front page news around the country and prompted tens of millions of borrowers to apply for forgiveness. Scammers have tried to take advantage of the media buzz and of borrowers desperate to have their loan burdens removed or reduced.

What Else Is The Biden Administration Doing To Help Borrowers Avoid Scams?

Last month, the administration provided various pieces of advice designed to help borrowers spot scams. The resources included a fact sheet detailing its actions to crack down on scams, and an extensive list of student loan debt relief do’s and don’ts designed to help borrowers safely navigate the student debt relief process.

In addition to providing guidance to borrowers, the administration said it is working with various federal and state agencies, including the Consumer Financial Protection Bureau, the Federal Trade Commission, and State Attorneys General, to provide information on scams and coordinate responses to them. This action from the FCC seems to be part of that coordinated effort.

Multiple lawsuits have complicated the administration’s debt relief plan. Several suits have already been dismissed, including two that the Supreme Court chose not to hear appeals on. However, a district judge in Texas, and the 8th Circuit appeals court have put the plan on hold. As a result of the suits, ED has removed the debt relief application from its website while it appeals the 8th circuit decision to the Supreme Court.

The confusion and delays caused by these lawsuits may create even more time and opportunities for scammers to exploit vulnerable borrowers

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