On May 17, 2021, the Federal Trade Commission (FTC) ad a regulation with several student debt relief companies and their respective owners. The settlement stems from a complaint filed in 2019, in which the FTC alleged that businesses were charging illegal upfront fees and tricked consumers into believing the fees were for consumer student loans in violation of Sections 13 (b) and 19 of the Federal Trade Commission Act (FTC Act). , 15 USC Â§Â§ 53 (b) and 57b, the Telemarketing and Consumer Fraud and Abuse Act (Telemarketing Act), 15 USC Â§Â§ 6101-6108, and the Truth in Lending Act (TILA), 15 USC Â§ 1601-1666j. The FTC further alleged that the companies falsely promised that their services would permanently eliminate or reduce consumer loan balances or payments.
Under the terms of the settlement, businesses 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 has been suspended 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.