Earlier this month, the Federal Trade Commission, along with 11 states and the District of Columbia, announced “Operation Game of Loans,” the first coordinated federal-state law enforcement initiative targeting deceptive student loan debt relief scams.
This nationwide crackdown encompasses 36 actions by the FTC and state attorneys general actions by the FTC and state attorneys general against defendants alleged to have used deception and false promises of relief to take more than $95 million in illegal upfront fees from American consumers over a number of years.
“Operation Game of Loans” includes seven FTC actions: five new cases, one new judgment in favor of the FTC, and a preliminary injunction entered in a case filed earlier this year. The FTC alleges that the defendants in these actions charged consumers illegal upfront fees, falsely promised to help reduce or forgive student loan debt burdens, and pretended to be affiliated with the government or loan servicers, in violation of the FTC’s Telemarketing Sales Rule and the FTC Act.
Operation Game of Loans also includes law enforcement actions by Colorado, Florida, Illinois, Kansas, Maryland, North Carolina, North Dakota, Oregon, Pennsylvania, Texas, Washington and the District of Columbia.
The CFPB has now announced that it filed suit against two debt-relief companies and their owners, and a third company that processed payments for and provided other services in connection the debt-relief providers.
The complaint alleges violations under the Consumer Financial Protection Act of 2010 and the Telemarketing Sales Rule.
In short, the CFPB alleges that the companies unlawfully posed as the federal government by using marketing materials that resembled official government notices, and charged illegal upfront fees prior to providing debt-relief services and without achieving the promised results. The complaint also alleges that the defendants failed to make required disclosures.
Consult with an FTC defense lawyer for further information regarding applicable debt relief compliance obligations, or if you are the subject of a regulatory investigation or enforcement action.
Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements. You can find him on Twitter @FTCLawDefense.
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