On January 24, the Federal Trade Commission (FTC) and the Florida Attorney General’s Office announced a settlement with student loan debt relief providers alleged to have participated in a student loan debt relief scheme, resolving allegations that the providers violated the Federal Trade Commission Act, Telemarketing and Consumer Fraud and Abuse Prevention Act, Telemarketing Sales Rule, Credit Repair Organizations Act, and the Florida Deceptive and Unfair Trade Practices Act.
According to the FTC, the debt relief providers falsely represented that they could “eliminate” consumers’ student loan debt and repair their credit, and charged borrowers illegal up-front fees. The providers also allegedly posted fake positive consumer reviews of their services online.
Pursuant to the consent order, the debt relief providers are permanently enjoined from marketing any credit repair product or service and from making misrepresentations relating to financial products and services. The order imposes a total judgment of $2.38 million against the providers. The judgment will be suspended after they pay $4,500 to the FTC, which according to the FTC represents virtually all of their assets.