FTC Distributes $1.7 Million to Affected Consumers in Alleged Student Loan Debt Relief Scam

On February 10, 2021, the Federal Trade Commission (FTC) announced that it will begin distributing over $1.7 million to consumers that it claims lost money as a result of an alleged student loan debt relief scheme.  The payments are part of a 2018 settlement with a student debt relief group, previously covered ​by Enforcement Watch, that resolved alleged violations of the Federal Trade Commission Act, (FTC Act), 15 U.S.C. § 45(a), the Telemarketing and Consumer Fraud and Abuse Act (Telemarketing Act), 15 U.S.C. §§ 6101-6108, and the FTC’s Telemarketing Sales Rules, 16 C.F.R. § 310.

In its complaint, the FTC alleged that the group defrauded consumers into believing that they were affiliated with the U.S. Department of Education to elicit payment of illegal fees.  The FTC further alleged that the group falsely claimed that these fees would be credited towards consumers’ student loans.  Instead, the group allegedly pocketed the fees.

As part of the settlement, the group was ordered to pay almost $11.7 million—most of which was suspended due to inability to pay.  The settlement also requires defendants to permanently cease from engaging in any type of debt relief activities.