The Federal Trade Commission on Monday announced it had sued and obtained a temporary restraining order against a number of corporate and individual defendants accused of pretending to be affiliated with the Department of Education so that they could market student loan forgiveness programs that made false promises and collected millions in illegal upfront fees.
A copy of the complaint, filed against Intercontinental Solutions, Express Enrollment, Marco Manzi, Ivan Esquivel, and Robert Kissinger can be accessed by clicking here. A copy of the temporary restraining order can be accessed by clicking here.
The defendants collected nearly $9 million in upfront fees from individuals looking for relief from their student loan payments. The individuals were promised that their student loan payments would be lowered or completely eliminated, but first had to pay a fee for services that were available through the Department of Education. One borrower who had a $400 monthly student loan payment, for example, was told his new monthly payment would be $145.83 for six months, following by monthly payments of $0 for the remainder of the 240-month term.
Individuals were told to stop communicating with the servicers of their student loans and provided their bank account, credit card, or debit card information to process the upfront fees. The defendants were accused of continuing their alleged scam even after settling claims with the Attorney General of Minnesota that they misrepresented their services, collected unlawful advance fees, and failed to secure the appropriate licenses.
The complaint accuses the defendants of violating the Telemarketing Sales Rule, the Gramm-Leach-Bliley Act, and the Federal Trade Commission Act.
“During a period of uncertainty for borrowers saddled with student loan debt, these defendants bilked consumers out of millions of dollars with junk fees and phony promises of loan forgiveness and lower monthly payments,” said Samuel Levine, Director of FTC’s Bureau of Consumer Protection, in a statement. “We are pleased that the court shut down this operation and froze its assets, and we will continue the agency’s ongoing efforts to pursue scammers that target the tens of millions of Americans with student loan debt.”