[author: Samantha Becci]
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 that companies charged illegal upfront fees and led consumers to believe the fees went to consumer student loans in violation of Section 13 (b) and 19 of the Federal Law on Commerce. Commission Act (FTC Act), 15 USC §§ 53 (b) and 57b, the Telemarketing and Consumer Fraud and Abuse Act (Telemarketing Act), 15 USC §§ 6101-6108, and the Truth in Lending Act (TILA), 15 USC § 1601-1666j. The FTC further alleged that the companies falsely promised that their services would permanently eliminate or reduce balances or loan payments to consumers.
Under the terms of the settlement, companies and their owners will no longer be able to provide debt relief services and are prohibited from violating the Telemarketing Selling (TSR) rule. The stipulated orders also impose a pecuniary judgment against certain defendants totaling more than $ 24.5 million, the majority of which was stayed due to their inability to pay, and require the defendants to pay $ 11,500 in consumer redress. In addition, the orders prohibit defendants from collecting additional payments from consumers who have purchased their debt relief services.