On May 17, 2021, the Federal Trade Commission (FTC) announced a settlement with several student loan debt relief companies and their respective owners. The settlement stems from a complaint filed in 2019, in which the FTC alleged the companies charged illegal upfront fees and led consumers to believe the fees were going towards consumers’ student loans in violation of Sections 13(b) and 19 of the Federal Trade Commission Act (FTC Act), 15 U.S.C. §§ 53(b) and 57b, the Telemarketing and Consumer Fraud and Abuse Act (Telemarketing Act), 15 U.S.C. §§ 6101-6108, and the Truth in Lending Act (TILA), 15 U.S.C. § 1601- 1666j. The FTC further alleged that the companies falsely promised that their services would eliminate or permanently lower consumers’ loan balances or payments.
Pursuant to the terms of the settlement, the companies and their owners will no longer be able to provide debt relief services and are prohibited from violating the Telemarketing Sales Rule (TSR). The stipulated orders also impose a monetary judgment against certain defendants totaling more than $24.5 million, the majority of which has been suspended due to their inability to pay, and require defendants to pay $11,500 in consumer redress. Additionally, the orders prohibit the defendants from collecting any additional payments from consumers who purchased their debt relief services.
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