On April 16, the FTC announced that it obtained a temporary restraining order against a debt relief operation over allegations that it engaged in deceptive student loan relief practices in violation of the FTC Act, the Telemarketing Sales Rule, the Impersonation Rule, and the Gramm-Leach-Bliley Act.
The complaint alleges that, since at least February 2022, the company marketed student loan debt relief services through outbound telemarketing campaigns that targeted consumers nationwide. Specifically, the FTC alleges that the operation:
- Misrepresented loan forgiveness outcomes. The company allegedly claimed it could secure student loan forgiveness for consumers, despite not obtaining such results for most.
- Falsely implied government affiliation. Telemarketers allegedly represented that they were affiliated with the U.S. Department of Education or loan servicers, despite no such relationship.
- Charged prohibited upfront fees. The complaint alleges that the company collected upfront and recurring fees for debt relief services before achieving any settlement or modification of consumer debt.
- Engaged in deceptive telemarketing practices. The company allegedly called consumers on the National Do Not Call Registry, failed to provide accurate caller identification information, and used misleading sales tactics.
- Directed consumers to stop loan payments. The company allegedly instructed consumers to stop paying their loan servicers without adequately disclosing the potential negative consequences.
- Obtained consumer financial information through misrepresentations. The FTC alleges that the company used false statements to obtain bank account and payment information from consumers.
The temporary restraining order freezes assets, appoints a temporary receiver, and is intended to stop the alleged scheme while the case proceeds.
Putting It Into Practice: The FTC continues to focus on unfair and deceptive debt relief and credit repair practices (previously discussed here). Companies offering debt relief or similar services should also monitor how regulators are applying impersonation and data access theories in enforcement actions, as these claims may expand compliance expectations beyond traditional telemarketing rules.