The FTC recently charged the operators of two student loan debt relief schemes, and a financing company that supported their ventures, with violations of several consumer protection statutes, including the FTCA, provisions of the Telemarketing Sales Rule, and TILA, among others.
According to the complaints, the two debt relief companies engaged in similar schemes, targeting consumers looking for assistance with lowering and eliminating student loan debt reductions. Both operators allegedly targeted consumers with deceptive marketing tactics leading consumers to believe they might be entitled to federally-supported student loan debt relief programs. Once contact with consumers was made by the operators, they allegedly induced consumers to agree to an up-front fee of $1400 with assurances those funds would be used toward reduction of their debt. In fact, this was a fee for debt relief services that consumers were steered into repaying with a high-interest loan from the third party financing company, which allegedly had knowledge of the deceptive practice. The suits also allege both defendants and the financing company failed to make required consumer disclosures.
One operator was sued jointly by the FTC and the Minnesota Attorney General — along with the third-party financing company as a co-defendant — for state and federal consumer protection law violations. That operator agreed to a ban from the debt relief business. The other operator has been sued by the FTC only, and has not settled the litigation. The third party financing company that supported both ventures agreed to pay $1 million in equitable monetary relief.