The FTC reported today that the defendants in two student loan debt relief cases have agreed to settle claims that they charged consumers illegal upfront fees and falsely promised to help reduce or forgive student loan debt burdens.
According to the complaint against Strategic Student Solutions, the individual defendant and his companies preyed on consumers with student loan debt by falsely promising to reduce their debt or payments through enrollment in student loan forgiveness or other programs. The defendants also falsely promised to apply monthly payments to consumers’ student loans and to improve credit scores and histories in addition to making other false claims and charging unlawful advance fees.
These defendants are permanently banned from debt relief and credit repair activities. In addition, the order includes a monetary judgment of more than $17 million.
The FTC also charged Bloom Law Group, based in LA, with taking millions of dollars from consumers through unlawful student loan debt relief and mortgage assistance relief schemes.
According to the complaint, the defendants claimed to be from the Department of Education and promised to reduce borrowers’ monthly payments or forgive their loans. The FTC also alleged the defendants targeted distressed homeowners, making false promises to consumers that they would provide mortgage relief and prevent foreclosure. The judgment for these defendants exceeds $9 million.
The legal basis for these settlements is not only the FTC Act, and the Credit Repair Organizations Act, but also the Telemarketing Sales Rule. As is common in FTC actions, not only the substance of the fraudulent acts is at issue, but the means used. As a result, a fraud case often includes a charge under CAN SPAM or the TSR, allowing for additional penalties. Like catching Al Capone on tax evasion.
The settlements with Strategic Student Solutions and Bloom Law Group are part of a coordinated federal-state law enforcement initiative targeting deceptive student loan debt relief scam announced by the FTC in October 2017, called Operation Game of Loans.