FTC and State AGs Sue Two Student Loan Debt Relief Providers

FTC  •  State AGs

FTCOn May 25, the Federal Trade Commission (FTC) and the State of Florida announced that they had filed complaints in the United States District Court for the Southern District of Florida seeking permanent injunctive relief against two debt relief providers.  The complaints (available here and here) allege that the companies violated the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b), the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. §§ 6101-6108, Section 410(b) of the Credit Repair Organizations Act, 15 U.S.C. § 1679h(b), and the Florida Deceptive and Unfair Trade Practices Act, ch. 501, pt. 2, by engaging in deceptive student loan debt relief operations.  Specifically, the complaints allege that the providers promised to reduce consumers’ debts by a stated amount, even though the consumers did not qualify for government loan forgiveness.  The providers also allegedly represented to consumers that they could repair their credit.  In return, the providers charged up front fees of up to $250, and monthly fees of up to $303.  The District of Columbia and Washington Attorneys General announced (here and here) similar lawsuits against one of the student debt relief providers in the wake of the FTC action.

The complaints seek permanent injunctions against further violations and disgorgement.  The FTC simultaneously announced that it had reached a settlement with another student loan debt relief provider, resolving similar allegations.  The provider agreed to cease operations and surrender all remaining business assets to the FTC.

 

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