FTC Bans Student Loan Debt Relief Operators For Alleged Deceptive Practices

On September 11, the Federal Trade Commission announced final orders permanently banning two individual defendants from the debt relief industry and imposing asset surrender provisions to resolve allegations of a fraudulent student loan forgiveness scheme. The FTC alleged violations of the Federal Trade Commission Act, the Telemarketing Sales Rule, the Gramm-Leach-Bliley Act, and the FTC's new Impersonation Rule.

The Commission alleged that the defendants, operating through multiple companies, targeted borrowers following the end of the federal student loan payment pause, misrepresented affiliations with the Department of Education, and collected hundreds of dollars in illegal upfront fees while providing little or no relief. The agency also claimed the conduct amounted to unfair or deceptive acts or practices, reinforcing its core UDAP authority under the FTC Act.