On May 15, 2017, the FTC filed a Complaint in Federal Court against Strategic Student Solutions and a number of related companies that claim to provide debt relief services. According to the Complaint, rather than providing the advertised services, the defendants pocketed thousands of dollars in fees from consumers without providing any debt relief services. In essence, despite promising to reduce or eliminate student debt, the defendants simply took consumers’ money without providing any debt reduction service, leaving consumers in a worse financial situation. The Federal Court for the Southern District of Florida recently granted the FTC’s request for a preliminary injunction preventing the defendants from engaging in these business practices.

According to the Complaint, the defendants targeted consumers struggling with student loan debt and charged consumers up to $1200 in initial fees and an additional $49.99 per month with the promise that defendants would enroll the consumer in a loan forgiveness or payment reduction program. The defendants also allegedly promised that they would apply any fees paid to them to the consumers’ debt in the loan forgiveness program and that if consumers simply made monthly payments to defendants for three years the loan would be forgiven. According to the FTC, none of this was true—other than the fees paid by consumers to defendants. In fact, rather than forgiveness or reduction, many consumers allegedly had their debt increase while using defendants’ “services.” And when a consumer attempted to cancel their participation in the defendants’ program, the defendants allegedly lied to consumers by stating if they cancel, they will not be able to enroll in a different loan forgiveness program.

After making these false promises, according to the Complaint, the defendants had consumers sign contracts with disclaimers contradicting the sales pitch. For example, the contracts stated “I understand that the fees paid to Strategic Student Solutions is [sic] for Document preparation and consultation services only and will not be applied to my student loan balance.” However, as detailed previously on this blog, the FTC does not give much weight to disclaimers buried in a contract, especially where it is directly contrary to explicit advertising claims.

The FTC alleges that defendants’ scheme violated the FTC Act, the Telemarketing Sales Rule, and the Credit Repair Organizations Act and is seeking restitution for the money taken from consumers and a permanent injunction ceasing defendants’ scheme.