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October 15, 2015

Financial Aid Resource Company Required to Stop Iowa Marketing, Make Refunds to Iowans, and Pay $25,000

(DES MOINES, Iowa) A San Diego company that sends Iowa students official-looking mailings and charges for services that they can largely receive for free will cease marketing to Iowa residents, pay refunds to Iowans who request them, and pay the state $25,000, through an agreement with Attorney General Tom Miller.

The agreement, called an Assurance of Voluntary Compliance, with Global Financial Support Inc., doing business as Student Financial Resource Center (SFRC), and its owner, Armond Aria, follows an Iowa school teacher’s complaint that an SFRC solicitation mailing “fooled” her into thinking that it was an official communication about student aid for college-bound students.

The SFRC solicitation letter, sent to Iowa high school students and their parents last spring, directed them to submit an official-looking form by a June “filing deadline” in order to apply for financial aid.

Although easily mistaken for a government document related to FAFSA – the Free Application for Federal Student Aid developed by the office of Federal Student Aid of the U.S. Department of Education – the letter is actually a sales solicitation. The mailing offers a mostly generic packet of information about publicly available grants and scholarships for a purchase price of $65.

“Parents and students planning for college have to be wary of solicitations like these that appear to be official contacts, but are really just efforts to get you to pay for information you can largely get yourself through school counselors or online searches,” Miller said. “Households with less experience in applying for college are especially susceptible to being misled.”

Miller noted several features of the solicitation likely to mislead consumers about the nature and purpose of the letter, as well as its source:

  • The letter’s overall layout and format, with an official seal and prominent references to a “filing deadline” and “filing status,” is more like an official communication than a solicitation.
  • The letter prominently features a nine-digit “student profile number,” enough like a Social Security number to prompt SFRC to disclose “not a SSN” in a tiny print footnote.
  • The letter informs students that “it is time to apply” for financial aid, and directs them to “submit the enclosed…‘profile form,’” rather than simply describing the benefits of purchasing the company’s services.
  • The letter refers to a required $65 payment as a “processing fee,” when it is really the sales price of the informational packet sold by SFRC.
  • The “profile” that the student was to submit with the $65 payment required the “preparer’s signature” on a “certification,” elements of a FAFSA submission that are unnecessary and misleading in a sales context.
  • Important disclaimers and disclosures – like “not affiliated with any educational institutions or government agencies” – appear only in small print in footnotes.

According to Miller, a student who sent in the “profile” and paid the $65 received a minimally customized packet of information that only loosely reflected a particular student’s background and interests.

For example, one student wanting to be an accountant received financial aid information relating to the hospitality industry, psychology, counseling, and aircraft maintenance, and a would-be nurse received information highlighting aid opportunities relating to the rubber industry and the Department of Agriculture.

“Part of SFRC’s modus operandi was to threaten disgruntled consumers and other critics who spoke up with a defamation suit, apparently to bully them into silence,” Miller said. “That’s especially troubling, because our close review of the company’s practices indicate that those critics basically had it right.”

As part of the agreement, the company denies wrongdoing or liability. The company's payment will go to a state fund for future enforcement efforts under Iowa's Consumer Fraud Act.

Miller urges any Iowans who have made a payment to SFRC and who want a refund to contact the Consumer Protection Division:

Miller noted that earlier this year his office reached a settlement with College Admissions Assistance, a Texas-based company that used a comparable solicitation letter that made the company seem like an official part of the application process, rather than a private marketer of information and services.

Families of students wishing to explore post-high-school educational options and available financing should first check out the resources available from counselors and other personnel at the student’s own school. In addition, colleges and universities of interest are usually eager to work with prospective students regarding the admissions process and financing.

Be wary of official-looking letters from unfamiliar sources. Many marketing schemes adopt formatting or wording that implies a governmental or other authoritative source. Check it out to be sure.


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