On June 28, 2024, the Federal Trade Commission (FTC) filed its first federal case under the newly implemented Impersonation Rule, effective as of April 1, 2024. The case alleged that various student loan debt relief companies and their owners operated as a common enterprise and, after falsely claiming affiliation with the Department of Education, orchestrated a fraudulent student loan debt relief scheme that cost consumers over $20.3 million.
According to the FTC’s complaint, the alleged scheme began as early as June 2021. The FTC claimed that the defendants falsely promised to assume consumers’ student loan debt and provide nonexistent loan forgiveness. The complaint further contends that by impersonating the Department of Education, the scheme’s operators illicitly obtained consumers’ bank or debit account information, resulting in the extraction of hundreds of thousands of dollars in illegal junk fees.
In addition to the Impersonation Rule, the FTC also alleges that the defendants violated the FTC Act, the Telemarketing Sales Rule, and the Gramm-Leach-Bliley Act. The FTC seeks a preliminary and permanent injunction, and monetary relief to consumers. On June 24, 2024, the U.S. District Court for the Central District of California issued a temporary restraining order against the defendants freezing their assets and prohibiting them from engaging in the conduct alleged during the pendency of the action.