Recently, the U.S. District Court for the Central District of California granted the FTC’s motion resulting in a permanent injunction against defendants involved in an allegedly fraudulent student loan debt relief operation. The operation marketed student loan debt relief services to consumers throughout the U.S. The court found that the defendants misrepresented their affiliation with the U.S. Department of Education and promised loan forgiveness to consumers — but failed to deliver on these promises. The defendants were ordered to turn over all assets and were permanently banned from the debt relief industry. The court ordered a monetary judgment of nearly $16.8 million.
As previously covered by InfoBytes, the FTC was granted a temporary restraining order as part of an enforcement action against the operation, alleging the company violated the Impersonation Rule, the FTC Act, the Telemarketing Sales Rule, and the GLBA.
The defendants told consumers the student loan relief company would secure forgiveness of their student loan debt, could lower their monthly payment amounts, could service their federal student loans, and “worked with” or were affiliated with the government, including specifically the Department of Education. The court found the defendants’ promises were untrue.
The court’s final order prohibited the defendants from, among other things: (i) advertising, marketing, promoting, offering for sale, or selling any debt relief product or service — or assisting others to do so; (ii) participating in telemarketing activity; (iii) suggesting that the defendants are affiliated with, endorsed, sponsored, or approved by, or otherwise connected to any other government entity or non-profit program; (iv) attempting to obtain information regarding consumer credit or debit card numbers, bank account numbers and routing numbers, and consumer credit reports through deceptive practices.
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