Last week, the Federal Trade Commission (FTC) obtained temporary restraining orders against two student debt relief companies in the U.S. District Court for the Central District of California. The FTC thereby temporarily immobilized the two alleged student loan debt relief schemes that took $12 million from students by making deceptive claims about repayment programs and loan forgiveness that didn't exist. The FTC stated that the defendants violated the FTC Act, the Telemarketing Sales Rule, and the Gramm-Leach-Bliley Act by using deceptive tactics to obtain consumers' financial information. The court temporarily halted the two schemes and froze the assets of SL Finance LLC and its owners and BCO Consulting and SLA Consulting and their owners after the FTC filed complaints seeking to end the deceptive practices.

The temporary restraining orders are part of the legal action taken by the FTC against these two debt relief companies that according to the FTC scammed people who were struggling to pay off their student loans. BCO Consulting Services, SLA Consulting Services, and SL Finance were accused of impersonating the Department of Education and offering fake COVID-19 relief programs to allegedly steal over $12 million from borrowers. These companies were accused of taking advantage of the federal student loan pause, which allowed borrowers to temporarily stop making payments, to get people to sign up for phony repayment plans. According to the FTC, they charged illegal upfront fees and promised to take over servicing loans but did not follow through. It is alleged that when borrowers asked for refunds, they were ignored or threatened with loan default.

Additionally, among the other allegations regarding the restraining order were that the companies falsely claimed to be affiliated with the Department of Education and misrepresented that illegal payments would count towards students' loans. One of the companies and its owners also allegedly violated the COVID-19 Consumer Protection Act by claiming their program was part of the CARES Act or a similar COVID-19 relief program. The defendants also falsely claimed that they would take over servicing students' loans, but they were actually pocketing students' payments according to the FTC.