Consumer Finance Insights
November 14, 2019

FTC Files Suit and Obtains Temporary Restraining Order Against Alleged Student Loan Debt Relief Scam

On November 12, 2019, the Federal Trade Commission (FTC) announced that on it had filed a lawsuit against a collection of interrelated companies and individual defendants for allegedly misrepresenting themselves as affiliated with the Department of Education in order to convince consumers to sign up for student loan debt relief. The FTC further announced that it had secured a temporary restraining order against the defendants. According to the complaint, the defendants operated a debt relief scheme whereby consumers pay a large upfront fee and subsequent monthly fees with the promise that the defendants would reduce or eliminate their student loan payments through federally sponsored forgiveness, consolidation, or repayment programs. Instead, according to the FTC, the defendants contacted lenders to put the consumers’ student loans in temporary forbearance or deferment without their consent. The FTC claims that this alleged conduct violates the Telemarketing Sales Rule (TSR), 16 C.F.R. Part 310, and the FTC Act, 15 U.S.C. § 45(a), by making false or misleading promises to reduce consumers’ student loan debt and by charging upfront fees for debt relief services.