On December 7, 2018, the Federal Trade Commission (FTC) announced settlements with the operators of two Florida-based student loan debt relief companies and their principals in connection with its coordinated federal-state enforcement initiative to target deceptive student loan debt relief scams, called “Operation Game of Loans.”
In September and October 2017, the FTC filed actions against the defendants (here and here) alleging deceptive acts and practices in violation of Section 5(a) of Federal Trade Commission Act (FTC Act), 15 U.S.C. § 45(a), and advanced fees and material misrepresentations under the Telemarketing and Consumer Fraud and Abuse Prevention Act (Telemarketing Act), 15 U.S.C. §§ 6101-6108 and the Telemarketing Sales Rule, 16 C.F.R. §§ 310.4(a)(5)(i) and 16 C.F.R. § 310.3(a)(2)(x). Specifically, the FTC alleged that the company and its principals ran debt relief operations that preyed on consumers with student loan debt by, among other things, claiming to be associated with the Department of Education and offering loan forgiveness programs. The companies also made a number of other misrepresentations relating to their ability to reduce consumers’ monthly payments and charged illegal advance fees for their debt relief services.
Defendants are required, by stipulated orders filed in the U.S. District Court for the Southern District of Florida (here and here), to cease debt relief activities and/or telemarketing activities, and to cease making misrepresentations or unsubstantiated claims related to financial or other products or services, in addition to submitting to compliance reporting and monitoring. The settlements, together, also impose equitable monetary judgment of over $36.6 million and requires defendants to liquidate certain of their accounts. The judgments were partially suspended due to the defendants’ inability to pay, but require a total combined payment of $3.5 million.