Consumer Finance Insights
June 18, 2018

FTC Settles Claims Against Student Loan Debt Relief Company for Over $2.3 Million

On June 11, the Federal Trade Commission (FTC) announced that it had settled claims against an individual and his loan debt relief companies in connection with its coordinated federal-state enforcement initiative to target deceptive student loan debt relief scams, called “Operation Game of Loans.”  Enforcement Watch covered a similar enforcement action earlier this month.

The FTC alleged that the companies violated the FTC Act, Telemarketing Act, and Telemarketing Sales Rule by allegedly participating in a debt relief operation that preyed on consumers with student loan debt by claiming to be associated with the Department of Education and offering “government” loan forgiveness programs.  The companies also allegedly charged advance fees and monthly fees for their services, even before consumers were enrolled in any debt relief program.

Defendants are required, by a stipulated order filed in the U.S. District Court for the Central District of California, to cease debt relief activities and to cease making misrepresentations or unsubstantiated claims related to financial or other products or services.  The settlement also includes a monetary judgment of over $11 million.  After the defendants turn over all of their assets, estimated to be more than $2.3 million, the remainder of the judgment will be suspended due to defendants’ inability to pay.

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