On December 9, 2024, the Federal Trade Commission (FTC) announced it received a temporary restraining order against a student loan servicer over allegations the servicer and its operator misled consumers into thinking they were receiving student debt relief and forgiveness.
According to the FTC’s complaint, the Nevada-based servicer and its operator made telemarking calls and sent personal mailers to borrowers that claimed enrolling in their program could result in loan consolidation, reduced interest rates, reduced monthly payments, or loan forgiveness in exchange for an advance fee of up to $899 and monthly payments. The FTC alleged the servicer falsely claimed the advance fee and monthly payments were going towards the borrowers’ loans. The FTC also alleged violations of the Impersonation Rule based on claims that the operators pretend to “work with” or claimed to be affiliated with the Department of Education or its approved loan servicers and stated the borrowers’ loans would be serviced by them for 20 years before being forgiven. The complaint further alleges that borrowers did not receive loan consolidation, lowered payments, or loan forgiveness and, at most, the operators filled out a free Department of Education debt relief application form on behalf of the borrowers.
The temporary restraining order, issued on November 22, 2024, prevented the loan servicer from misrepresenting that borrowers who purchased its Debt Relief Service will have their payments reduced, their loans forgiven, payments applied to their consumers’ loans, that its operators are affiliated with the Department of Education, that the servicer will assume responsibility for servicing consumers’ loans, and charging or receiving money for any Debt Relief Service before that service is performed. Additionally, the temporary restraining order halted the servicers operations and froze its assets.
On December 6, 2024, the court issued a preliminary injunction, with an asset freeze, that will stay in effect while the matter is litigated.
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