On December 19, the Federal Trade Commission (FTC) filed a motion to compel discovery responses and for the production of documents in a case the FTC filed against a student loan debt relief company and its owner in the U.S. District Court for the Southern District of Florida.
The FTC claims that the student loan debt relief company promised consumers it would reduce or eliminate student loan debt in exchange for a monthly fee (around $50) and an initial fee (as high as $1,200), which would be applied towards their loans. The company also promised that it would provide credit repair services and improve credit scores. But the FTC alleges that the company failed to enroll consumers in any debt forgiveness or payment reduction programs, did not reduce or eliminate payments, did not apply any fees charged to repay debts, and did not provide credit repair services.
The FTC alleges that these practices violated Sections 5(b) and 13(b) of the Federal Trade Commission Act, 15 U.S.C. § 53(b), the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. §§ 6101-08, the Telemarketing Sales Rules, 16 C.F.R. Part 310, and the Credit Repair Organizations Act, 15 U.S.C. §§ 1679-1679j.
The FTC served the company and its owners with requests for production and interrogatories, which it alleges have not been answered. The FTC further alleges that it does not know whether the company had even preserved documents or data relevant to the lawsuit. The owner of the company, whose counsel withdrew this past October, has not responded to a court order requiring him to provide information so he could be served electronically.
Goodwin will continue to track this action as it develops.