Blog Enforcement Watch November 15, 2021

FTC Reaches $500,000 Settlement with Payment Processor for Its Role in Alleged Student Loan Debt Relief Scheme

On November 8, 2021 the Federal Trade Commission (FTC) announced that it entered into a stipulated order with a payment processor, resolving allegations that the payment processor violated Section 5 of the Federal Trade Commission Act (FTC Act) and the Telemarketing Sales Rule (TSR) ​​​by facilitating payments related to an unlawful student loan debt relief scheme.

In a complaint simultaneously filed in the United States District Court of the District of Columbia, the FTC alleged that the payment processor withdrew at least $31 million from consumers’ bank accounts on behalf a fraudulent student loan debt relief company.  As previously reported by Enforcement Watch, in July 2019 the FTC obtained a judgment against the debt relief company for its allegedly false claims that it would service and pay down consumers’ student loans, while instead diverting loan payments directly to the debt relief company.  ​In the current action, the FTC alleges the payment processor facilitated withdraws on behalf of debt relief company with knowledge, or while consciously avoiding knowledge, of the debt relief company’s unlawful conduct.

Under the stipulated order, the payment processor is enjoined from providing payment processing services for any debt relief company.  The order also contains a $27.5 million judgment that will remain suspended as long as the payment processor pays $500,000.

The post FTC Reaches $500,000 Settlement with Payment Processor for Its Role in Alleged Student Loan Debt Relief Scheme appeared first on Consumer Finance Enforcement Watch.