The Federal Trade Commission (“FTC”) recently entered into proposed stipulations with a group of student loan debt relief providers to resolve allegations that the group conducted deceptive marketing and sales practices in collecting over $8 million in “junk fees” for nonexistent debt relief services.
Last August, the FTC filed a complaint against Express Enrollment LLC (d/b/a SLFD Processing), Intercontinental Solutions LLC (d/b/a Apex Doc Processing LLC), and their operators Marco Manzi, Ivan Esquivel, and Robert Kissinger alleging violations of the unfair or deceptive acts or practices (“UDAP”) prohibitions of Section 5(a) of the FTC Act , the FTC’s Telemarketing Sales Rule (“TSR”), and Section 521 of the Gramm Leach Bliley Act, which prohibits obtaining a person’s financial information by making false statements, in connection with their deceptive marketing and sale of student loan debt relief services. According to the FTC’s complaint, the defendants used misrepresentations to obtain consumers’ bank account, debit card, or credit card information, and typically collect hundreds of dollars in unlawful advance fees—sometimes through remotely created checks in violation of the TSR. Stating that the FTC was likely to prevail on its claims, the federal court issued a temporary injunction to stop the defendants’ deceptive practices, making the following findings of fact:
“There is good cause to believe that in numerous instances, in connection with marketing, telemarketing, and sale of student loan debt relief services, Defendants have:
1. Falsely represented that consumers who purchase Defendants’ debt relief services will be enrolled in a repayment plan that will reduce their monthly payments to a lower, specific amount or have their loan balances forgiven in whole or in part;
2. Falsely represented that most or all of consumers’ monthly payments to Defendants will be applied toward consumers’ student loans;
3. Falsely represented that Defendants are affiliated with the Department of Education or part of a federal government program;
4. Falsely represented that Defendants will assume responsibility for the servicing and repayment of consumers’ student loans;
5. Taken advance fees for their debt relief services; and
6. Created or caused to be created remotely created payment orders as payment for their debt relief services.”
The proposed stipulated orders, which are subject to approval by the U.S. District Court for the Central District of California, will ban Express Enrollment LLC and Intercontinental Solutions LLC, Kissinger, and Esquivel from the debt relief industry and prohibit them from making any misrepresentations about financial products or services and from using false statements to collect consumers’ financial information. The monetary judgment of $7.4 million will be mostly suspended due to an inability to pay. Litigation continues against the remaining defendant, operator Marco Manzi.
This case is another example of the Biden Administration’s continued attacks on “junk fees.” As we previously blogged, the FTC sought comments until February 7, 2024 on its proposed “Rule on Unfair or Deceptive Fees” targeting “junk fees.”
On February 28, 2024, from 1:30 p.m. to 2:30 p.m. ET, Ballard Spahr will hold a webinar, “The Federal Trade Commission: Looking Back at 2023 and Looking Ahead to 2024 and Beyond.” Malini Mithal, Associate Director of the Federal Trade Commission’s Division of Financial Practices, will join us to review highlights of FTC regulatory and enforcement activity in 2023 directed at protecting consumers and small businesses and to discuss what to expect from the FTC in 2024 and beyond. For more information and to register, click here.
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