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Case 4:18-cv-00806 Document 1 Filed 02/07/18 Page 1 of 17 

DAVID C. SHONKA 

Acting General Counsel 

SARAH SCHROEDER, Cal. Bar No. 221528 

ROBERTA TONELLI, Cal. Bar No. 278738 

EVAN ROSE, Cal. Bar No. 253478 

BORIS YANKILOVICH, Cal. Bar No. 257887 

Federal Trade Commission 

901 Market Street, Suite 570 

San Francisco, CA 94103 

sschroeder@ftc.gov, rtonelli@ftc.gov, erose@ftc.gov, 

byankilovich@ftc.gov 

Tel: (415) 848-5100; Fax: (415) 848-5184 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

OAKLAND DIVISION 

FEDERAL TRADE COMMISSION,

 Plaintiff, 

vs. 

AMERICAN FINANCIAL BENEFITS 

CENTER, a corporation, also d/b/a AFB and AF 

STUDENT SERVICES; 

AMERITECH FINANCIAL, a corporation; 

FINANCIAL EDUCATION BENEFITS CENTER, 

a corporation; and 

BRANDON DEMOND FRERE, individually and as 

an officer of AMERICAN FINANCIAL BENEFITS 

CENTER, AMERITECH FINANCIAL, and 

FINANCIAL EDUCATION BENEFITS CENTER,

 Defendants. 

Case No. ____________ 4:18-cv-0806 

COMPLAINT FOR PERMANENT 

INJUNCTION AND OTHER 

EQUITABLE RELIEF 

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Case 4:18-cv-00806 Document 1 Filed 02/07/18 Page 2 of 17 

Plaintiff, the Federal Trade Commission (“FTC”), for its Complaint alleges: 

1. The FTC brings this action under Section 13(b) of the Federal Trade Commission 

Act (“FTC Act”), 15 U.S.C. § 53(b), and the Telemarketing and Consumer Fraud and Abuse 

Prevention Act (“Telemarketing Act”), 15 U.S.C. §§ 6101-6108, to obtain preliminary and 

permanent injunctive relief, rescission or reformation of contracts, restitution, the refund of 

monies paid, disgorgement of ill-gotten monies, and other equitable relief for Defendants’ acts or 

practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the FTC’s 

Telemarketing Sales Rule (“TSR”), in connection with their deceptive marketing and sale of 

student loan debt relief services. 

JURISDICTION AND VENUE 

2. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a), 

and 1345, and 15 U.S.C. §§ 45(a), 53(b), 6102(c), and 6105(b). 

3. Venue is proper in this district under 28 U.S.C. § 1391(b)(1), (b)(2), (c)(1), (c)(2), 

and (d), and 15 U.S.C. § 53(b). 

PLAINTIFF 

4. The FTC is an independent agency of the United States Government created by 

statute. 15 U.S.C. §§ 41-58. The FTC enforces Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), 

which prohibits unfair or deceptive acts or practices in or affecting commerce. The FTC also 

enforces the Telemarketing Act, 15 U.S.C. §§ 6101-6108. Pursuant to the Telemarketing Act, 

the FTC promulgated and enforces the TSR, 16 C.F.R. Part 310, which prohibits deceptive and 

abusive telemarketing acts or practices in or affecting commerce. 

5. The FTC is authorized to initiate federal district court proceedings, by its own 

attorneys, to enjoin violations of the FTC Act and the TSR, and to secure such equitable relief as 

may be appropriate in each case, including rescission or reformation of contracts, restitution, the 

refund of monies paid, and the disgorgement of ill-gotten monies. 15 U.S.C. §§ 53(b), 

56(a)(2)(A), and 6102(c). 

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Case 4:18-cv-00806 Document 1 Filed 02/07/18 Page 3 of 17 

DEFENDANTS 

6. Defendant American Financial Benefits Center (“AFBC”), also doing business as 

AFB and AF Student Services, is a California corporation. AFBC has held itself out as doing 

business at 311 Professional Center Drive, Suite 200, Rohnert Park, CA 94928 and 1900 Powell 

Street, Suite 600, Emeryville, CA 94608. AFBC was incorporated in California in February 

2011. AFBC transacts or has transacted business in this district and throughout the United 

States. At all times material to this Complaint, acting alone or in concert with others, or as part 

of the common enterprise described in Paragraph 10, AFBC has advertised, marketed, 

distributed, or sold student loan debt relief services to consumers throughout the United States. 

7. Defendant AmeriTech Financial (“AmeriTech”) is a California corporation. 

AmeriTech has held itself out as doing business at 1101 Investment Boulevard, Suite 290, El 

Dorado Hills, CA 95762 and 5789 State Farm Drive, Suite 265, Rohnert Park, CA 94928. 

AmeriTech was incorporated in California in October 2015. AmeriTech transacts or has 

transacted business in this district and throughout the United States. At all times material to this 

Complaint, acting alone or in concert with others, or as part of the common enterprise described 

in Paragraph 10, AmeriTech has advertised, marketed, distributed, or sold student loan debt 

relief services to consumers throughout the United States. 

8. Defendant Financial Education Benefits Center (“FEBC”) is a California 

corporation that has stated in public documents that 2010 Crow Canyon Place, Suite 100, San 

Ramon, CA 94583 is its principal executive office. FEBC was incorporated in California in 

October 2015. FEBC transacts or has transacted business in this district and throughout the 

United States. At all times material to this Complaint, acting alone or in concert with others, or 

as part of the common enterprise described in Paragraph 10, FEBC has advertised, marketed, 

distributed, or sold student loan debt relief services to consumers throughout the United States. 

9. Defendant Brandon Demond Frere (“Frere”) founded AFBC, AmeriTech, and 

FEBC and is majority owner of the companies. He currently serves as CEO of the Corporate 

Defendants. Frere resides in this district and, in connection with the matters alleged herein, 

transacts or has transacted business in this district and throughout the United States. 

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Case 4:18-cv-00806 Document 1 Filed 02/07/18 Page 4 of 17 

COMMON ENTERPRISE 

10. Defendants AFBC, AmeriTech, and FEBC (collectively, “Corporate Defendants”) 

have operated as a common enterprise while engaging in the deceptive acts and practices and 

other violations of law alleged below. Corporate Defendants have conducted the business 

practices described below through an interrelated network of companies that have common 

ownership, officers, managers, and employees. AmeriTech’s November 2015 application to the 

Better Business Bureau described AFBC as the “parent” and AmeriTech as the “child.” AFBC 

and AmeriTech commingle their funds. For example, AFBC and AmeriTech bank records show 

consistent, substantial payments between these accounts. AmeriTech and FEBC sell their 

services together and provide service contracts simultaneously to consumers. Because these 

Corporate Defendants have operated as a common enterprise, each of them is jointly and 

severally liable for the acts and practices alleged below. Defendant Frere has formulated, 

directed, controlled, had the authority to control, or participated in the acts and practices of the 

Corporate Defendants that constitute the common enterprise. 

COMMERCE 

11. At all times material to this Complaint, Defendants have maintained a substantial 

course of trade in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act, 

15 U.S.C. § 44. 

DEFENDANTS’ DECEPTIVE BUSINESS PRACTICES 

12. Since 2014 and continuing thereafter, Defendants have operated a debt relief 

enterprise that has tricked consumers out of millions of dollars. Defendants distribute mailers to 

consumers claiming that consumers are eligible for federal programs that would permanently 

reduce their monthly loan payments to a fixed amount or result in total loan forgiveness. 

Defendants collect an advance fee of between $600-800, purportedly to enroll consumers in 

federal loan assistance programs. In numerous instances, the consumer was not enrolled in the 

promised federal loan program. In some instances, not only has the consumer’s loan balance not 

diminished, but it has also accrued interest. 

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Case 4:18-cv-00806 Document 1 Filed 02/07/18 Page 5 of 17 

13. In addition to the advance fees, Defendants also collect and retain monthly fees 

that consumers believe are being applied to pay down their loans, but are actually going towards 

a membership to a “financial education” program that includes access to various resources 

unrelated to their student loans. Defendants have collected over $28 million from consumers. 

Background on Student Loan Forgiveness and Repayment Programs 

14. Student loan debt is the second largest class of consumer debt; more than 42 

million Americans collectively owe nearly $1.34 trillion. The student loan market shows 

elevated levels of distress relative to other types of consumer debt. 

15. To address this mounting level of distressed debt, the Department of Education 

(“ED”) and state government agencies administer a limited number of student loan forgiveness 

and discharge programs. Most consumers, however, are not eligible for these programs because 

of strict eligibility requirements. For example, one program requires the consumer to 

demonstrate a total and permanent disability; another applies only to consumers whose school 

closed while the consumer was still enrolled. A third program, the Borrower Defense to 

Repayment (“BDR”), may provide a loan discharge if the school, through an act or omission, 

violated state law directly related to the borrower’s federal student loan or to the educational 

services for which the loan was provided. 

16. Other forgiveness programs require working in certain professions for a period of 

years. Teacher Loan Forgiveness applies to teachers who have worked full-time for five years in 

a low-income elementary or secondary school or educational service agency. Public Service 

Loan Forgiveness (“PSLF”) applies to employees of governmental units or non-profit 

organizations who make timely monthly payments for a period of ten years while employed in 

the public sector. 

17. The federal government also offers loan forgiveness through income-driven 

repayment (“IDR”) programs that enable borrowers to reduce their monthly payments and have 

portions of their loans forgiven. As of September 2017, no loans had been forgiven under any of 

the IDR programs. IDR programs allow eligible borrowers to limit their monthly payments 

based on a percentage of their discretionary monthly income. To remain in an IDR program, 

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Case 4:18-cv-00806 Document 1 Filed 02/07/18 Page 6 of 17 

borrowers must recertify their income and family size annually. Obtaining forgiveness through 

IDR programs requires a minimum of 20 or 25 years of qualifying payments. 

18. Because a borrower’s income is likely to fluctuate over the life of the loan, 

monthly payments under the IDR programs can vary considerably from year to year. If a 

borrower’s income were to increase over the repayment period, for example, the monthly 

payment amount could correspondingly increase to the point where those payments would pay 

off the loan before any amount could be forgiven at the end of the repayment term. 

19. Consumers can apply for BDR, PSLF, IDR, and other loan repayment and 

forgiveness or discharge programs through ED or their student loan servicers at no cost; these 

programs do not require the assistance of a third-party company or payment of application fees. 

20. ED will grant forbearance while processing applications for an alternative 

repayment plan, and in some cases of hardship. During forbearance, unpaid interest adds to the 

principal balance. 

21. ED also allows consumers with multiple federal loans to consolidate them into 

one “Direct Consolidation Loan” with a fixed interest rate and single monthly payment. ED does 

not charge for consolidation and offers a dedicated helpline and webpage to assist borrowers 

with the process. 

Defendants’ Deceptive Marketing of Student Loan Debt Relief Services 

22. Since at least 2014 and continuing thereafter, Defendants have disseminated, or 

have caused to be disseminated, personalized mailers to consumers throughout the United States, 

including but not necessarily limited to the attached Exhibits A-E. These mailers have contained 

the following statements: 

a. Exhibit A-1. (dated “reply by 12/31/14”) 

STUDENT LOAN PAYMENT REDUCTION – PRE-QUALIFICATION 

NOTICE 

. . . . 

You have been Pre - Qualified to reduce your student loan payments through 

the Student Loan Document Preparation and Processing Services Program. 

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Case 4:18-cv-00806 Document 1 Filed 02/07/18 Page 7 of 17 

. . . . 

Your student loan has been identified as eligible for the Student Loan Reform 

Act which can save you thousands on your current student loans. You are 

now eligible to reduce your estimated monthly payments of $1,110 down to as 

low as $68 . . . . 

b. Exhibit B-1. (dated “Deadline: March 28, 2014”) 

Due to the current status of your student loans, your pre-qualification may 

allow you to reduce your current monthly payments of approximately $480 

down to as low as $60, and may also qualify for complete 100% total loan 

forgiveness and other available programs. 

. . . . 

PRE-QUALIFIED* FIXED PAYMENTS & TERMS 

[tables containing, among other things, “*Estimated Monthly Payment” terms] 

c. Exhibit C. (undated) 

Student Loan Payment Reduction & Forgiveness 

. . . . 

We are pleased to inform you that you may now participate in the Student 

Loan Document Preparation and Processing Services Program. This 

program can immediately assist you in potentially saving thousands on 

your student loans. 

d. Exhibit D-1. (dated “2017”) 

With the implementation of the Health Care and Education Affordability 

Reconciliation Act of 2010 the U.S. Department of Education has adjusted 

their re-payment policies. 

You may now be eligible for: 

. . . . 

OFFER TYPE Loan Forgiveness 

LOAN TYPE Federal Student Loan 

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Case 4:18-cv-00806 Document 1 Filed 02/07/18 Page 8 of 17 

REFERENCE # [personalized number] 

OFFER STATUS Eligible 

. . . . 

• Total Loan Forgiveness Programs 

e. Exhibit E-2. (undated) 

With the implementation of the Health Care and Education Affordability 

Reconciliation Act of 2010, the U.S. Department of Education has adjusted 

their [sic] re-payment policies. You may now be eligible for: 

9 $0/ month Monthly Student Loan Payment 

9 No Minimum Income Requirement or Credit Check 

9 Loan Forgiveness Programs 

9 No Impact on your Credit Rating or Score 

9 No Program Payment for up to 90 days 

23. Defendants’ mailers do not advertise or describe a monthly membership to any 

service. Exhibits A-E. 

24. Defendants’ mailers create a sense of urgency by indicating that the offers are 

available for a limited time only or by stating, “[F]ailure to respond to this letter may void 

company offer for services.” Exhibit D-1; see also Exhibits B-C. 

25. In numerous instances, Defendants did not include the names American Financial 

Benefits Center, AmeriTech Financial, or Financial Education Benefits Center on mailers they 

sent consumers. 

26. The mailers list a toll-free phone number where consumers can reach Defendants. 

When consumers call Defendants, they are connected to one of Defendants’ sales agents. The 

recorded message that consumers hear while waiting for a sales agent has stated: “You have 

reached the program enrollment department,” and “[T]o speak with an account specialist 

regarding an important notice you’ve received, please stay on the line.” 

27. Defendants tell consumers that their new monthly payment amount will be their 

payment amount for the next ten or 20 years, and that thereafter, the consumers’ remaining loan 

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Case 4:18-cv-00806 Document 1 Filed 02/07/18 Page 9 of 17 

balances will be forgiven. Defendants also tell consumers that they will save a specific amount 

of money, usually in the thousands of dollars, by enrolling in the program Defendants describe. 

28. Defendants make false or unsubstantiated representations to consumers about 

their eligibility for IDR programs based on inaccurate family size and income information. For 

example, Defendants inform consumers that they are allowed to inflate their family size on the 

IDR application. In a recorded call, one of Defendants’ sales representatives, when describing 

how to count family size, told a consumer: 

Now, support includes any kind of money – gifts, loans, housing, food, clothing, 

car, medical or dental, payment of college costs. Do you help anybody – if you 

have somebody on your cell phone plan; if you have somebody on your gym 

membership, they’re considered part of your family. And we just had Christmas. 

You know, if you bought presents, clothes, watch, earrings, toilet paper, they’re a 

part of your family. 

29. “Family size” for the IDR programs “means the number that is determined by 

counting the borrower, the borrower’s spouse, and the borrower’s children, including unborn 

children who will be born during the year the borrower certifies family size, if the children 

receive more than half their support from the borrower. A borrower’s family size includes other 

individuals if, at the time the borrower certifies family size, the other individuals - (i) Live with 

the borrower; and (ii) Receive more than half their support from the borrower and will continue 

to receive this support from the borrower for the year the borrower certifies family size.” 34 

C.F.R. § 682.215(a)(3). 

30. The family size listed on an IDR program application affects eligibility for these 

programs and the monthly amount a consumer will have to pay. Because of Defendants’ 

misrepresentations about family-size requirements, consumers may be improperly enrolled in 

federal student loan programs for which they do not qualify. 

31. Defendants’ representations that they are able to procure a permanent reduction in 

consumers’ monthly payments are also false or unsubstantiated because none of ED’s IDR 

programs guarantees consumers a fixed, reduced monthly payment for more than one year. 

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Case 4:18-cv-00806 Document 1 Filed 02/07/18 Page 10 of 17 

Under ED’s IDR programs, monthly payments fluctuate based on consumers’ income in a given 

year, which consumers must recertify annually, and the amount forgiven depends on what 

remains unpaid at the end of the repayment period. In many cases, consumers’ income will rise 

over the years-long repayment period, and as consumers’ income rises, so will their monthly 

payment in a given year. As a result, the amount that would be forgiven at the end of the 

repayment term typically would be less than Defendants have promised. 

32. After Defendants have convinced consumers to enroll in a federal program and 

turn over their payment information, Defendants email consumers a link to a lengthy contract 

that consumers are required to sign electronically. As consumers remain on the phone, 

Defendants pressure them to quickly click through the document and electronically sign multiple 

pages. In some instances, Defendants represent that consumers do not need to read the 

agreement carefully because the information contained in the contract was already discussed in 

the call. At the end of the calls, Defendants transfer consumers to the Verification Department 

where employees quickly read lengthy disclosures to consumers. 

33. Defendants charge consumers an advance fee for “document preparation” ranging 

from $600 to $800, which Defendants generally collect over one to six installments, before 

attempting to enroll consumers in any federal program. 

Defendants’ Deceptive Marketing of “Financial Education” Memberships 

34. In addition to charging an advance fee, since 2014 and continuing thereafter, 

Defendants have also charged consumers a monthly fee for the life of their loan, typically 10-25 

years. The monthly fee ranges between $49 and $99. Defendants represent in communications 

with consumers that the monthly fee will be used to pay down consumers’ loans. For example, 

Defendants told one consumer, “Your quote based on your current situation is $255 for 1 month 

then it would drop down to $235 for an additional 6 months then it will be $99 for the remainder 

of your loan term, if your situation stays the same, which would be 25 years.” Exhibit F. 

35. In fact, Defendants apply the monthly fees they receive from consumers towards 

memberships to their “financial education” program. The membership fees, which agents rarely 

discuss during the sales call, are used to pay for access to various resources unrelated to 

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Case 4:18-cv-00806 Document 1 Filed 02/07/18 Page 11 of 17 

consumers’ student loans, such as “Key Ring & Luggage Protection,” “Everyday Grocery 

Savings,” “Auto Buying Service and Maintenance Discounts,” “Financial Calculators,” “medical 

and wellness discounts,” and “Access to Dozens of Informational & Useful Web links.” See, 

e.g., Exhibit G (contract excerpts). The explanation of what members receive often is buried in 

the middle of the numerous documents that Defendants provide to consumers. Exhibit H-17. 

Many consumers believe that their monthly payments to Defendants are going toward paying 

their student loan balance, not a membership program unrelated to their student loan. In addition 

to the monthly membership fee, Defendants charged consumers an enrollment fee to their 

“financial education” program ranging from $100 to $1,300. 

36. Defendants’ collection notices further reinforce their representation that 

consumers’ monthly payments are going towards their student loans. If a consumer misses a 

monthly payment for Defendants’ “financial education” program, Defendants send them a notice 

stating,“RE: Student Loan Payment . . . ***YOUR FILE IS CURRENTLY ON HOLD*** 

. . . *** Don’t risk falling behind on your payments”, or similar language. Exhibit I. 

37. Defendants often refuse to provide refunds to consumers. In some instances, 

Defendants have provided only partial refunds that are substantially less than what consumers 

paid to Defendants. 

Role of Individual Defendant Brandon Frere 

38. At all times material to this Complaint, acting alone or in concert with others, 

Brandon Frere has formulated, directed, controlled, had the authority to control, or participated 

in the acts and practices of the Corporate Defendants, including the acts and practices set forth in 

this Complaint. 

39. Frere is majority owner of AFBC. He incorporated AFBC in 2011 and has served 

as the company’s CEO, Secretary, CFO, and sole Director since that time. Frere has signed 

contracts with consumers on behalf of AFBC as a “Managing Director” of the company. As an 

owner and officer of AFBC, Frere has the authority to control the acts of the company. 

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Case 4:18-cv-00806 Document 1 Filed 02/07/18 Page 12 of 17 

40. Frere is majority owner of AmeriTech. He incorporated AmeriTech in 

2015 and has served as the company’s CEO, Secretary, CFO, and sole Director since that time. 

As an owner and officer of AmeriTech, Frere has the authority to control the acts of the 

company. 

41. Frere is majority owner of FEBC. He incorporated FEBC in 2015 and 

has served as the company’s CEO, Secretary, CFO, and sole Director since that time. As an 

owner and officer of FEBC, Frere has the authority to control the acts of the company. 

42. At all times material to this Complaint, Frere has been a signatory on AFBC’s and 

AmeriTech’s depository bank accounts. 

43. In late 2015, Frere submitted an application to the Better Business Bureau serving 

Northeast California (“BBB”) seeking accreditation for AmeriTech. In June 2016, the BBB sent 

Frere a letter describing consumer complaints about AmeriTech. Specifically, the BBB told 

Frere that consumers “have alleged that they are being scammed by AmeriTech” and “allege 

they were [led] to believe the payments being made to your company were going towards their 

student loan debt, only to find out later that this was not the case.” The BBB continued to 

express concerns about AmeriTech’s business practices until June 2017, when AmeriTech 

informed the BBB that it was closing its office in the Sacramento area. 

44. As the owner, high-ranking corporate officer, and active participant in the daily 

activities of the Corporate Defendants, Frere knew the Corporate Defendants’ representations to 

consumers were false or unsubstantiated, was recklessly indifferent to the truth or falsity of such 

representations, or was aware of a high probability that the representations were fraudulent and 

intentionally avoided the truth. 

THE FTC ACT 

45. Section 5(a) of the FTC Act, 15 U.S.C. §45(a), prohibits “unfair or deceptive acts 

or practices in or affecting commerce.” 

46. Misrepresentations or deceptive omissions of material fact constitute deceptive 

acts or practices prohibited by Section 5(a) of the FTC Act. 

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Case 4:18-cv-00806 Document 1 Filed 02/07/18 Page 13 of 17 

VIOLATIONS OF THE FTC ACT 

Count I 

Deceptive Student Loan Debt Relief Representations 

47. In numerous instances, in connection with the advertising, marketing, promotion, 

offering for sale, or sale of student loan debt relief services, Defendants have represented, 

directly or indirectly, expressly or by implication, that: 

a. Consumers’ monthly payments to Defendants would be applied toward 

consumers’ student loans; and 

b. Consumers were qualified for, or were approved to receive, loan 

forgiveness or other programs that would permanently lower or eliminate 

their loan payments or balances. 

48. In truth and in fact, in numerous instances in which Defendants made the 

representations set forth in Paragraph 47 of this Complaint, such representations were false or 

not substantiated at the time Defendants made them. 

49. Therefore, Defendants’ representations as set forth in Paragraph 47 of this 

Complaint are false or misleading and constitute deceptive acts or practices in violation of 

Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). 

THE TELEMARKETING SALES RULE 

50. Congress directed the FTC to prescribe rules prohibiting abusive and deceptive 

telemarketing acts or practices pursuant to the Telemarketing Act, 15 U.S.C. §§ 6101-6108. The 

FTC adopted the original TSR in 1995, extensively amended it in 2003, and amended certain 

provisions thereafter. 16 C.F.R. Part 310. 

51. Defendants are “seller[s]” or “telemarketer[s]” engaged in “telemarketing” as 

defined by the TSR, 16 C.F.R. §§ 310.2(dd), (ff), (gg). A “seller” means any person who, in 

connection with a telemarketing transaction, provides, offers to provide, or arranges for others to 

provide goods or services to a customer in exchange for consideration. 16 C.F.R. § 310.2(dd). 

A “telemarketer” means any person who, in connection with telemarketing, initiates or receives 

telephone calls to or from a customer or donor. 16 C.F.R. § 310.2(ff). “Telemarketing” means a 

plan, program, or campaign which is conducted to induce the purchase of goods or services or a 

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Case 4:18-cv-00806 Document 1 Filed 02/07/18 Page 14 of 17 

charitable contribution, by use of one or more telephones and which involves more than one 

interstate telephone call. 16 C.F.R. § 310.2(gg). 

52. Defendants are sellers or telemarketers of “debt relief services” as defined by the 

TSR, 16 C.F.R. § 310.2(o). Under the TSR, a “debt relief service” means any program or service 

represented, directly or by implication, to renegotiate, settle, or in any way alter the terms of 

payment or other terms of the debt between a person and one or more unsecured creditors, 

including but not limited to a reduction in the balance, interest rate, or fees owed by a person to 

an unsecured creditor or debt collector. 16 C.F.R. § 310.2(o). 

53. The TSR prohibits sellers and telemarketers from requesting or receiving payment 

of any fees or consideration for any debt relief service until and unless: 

a. The seller or telemarketer has renegotiated, settled, reduced, or otherwise 

altered the terms of at least one debt pursuant to a settlement agreement, 

debt management plan, or other such valid contractual agreement executed 

by the customer; 

b. The customer has made at least one payment pursuant to that settlement 

agreement, debt management plan, or other valid contractual agreement 

between the customer and the creditor; and 

c. To the extent that debts enrolled in a service are renegotiated, settled, 

reduced, or otherwise altered individually, the fee or consideration either: 

i. Bears the same proportional relationship to the total fee for 

renegotiating, settling, reducing, or altering the terms of the entire 

debt balance as the individual debt amount bears to the entire debt 

amount. The individual debt amount and the entire debt amount 

are those owed at the time the debt was enrolled in the service; or 

ii. Is a percentage of the amount saved as a result of the renegotiation, 

settlement, reduction, or alteration. The percentage charged cannot 

change from one individual debt to another. The amount saved is 

the difference between the amount owed at the time the debt was 

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Case 4:18-cv-00806 Document 1 Filed 02/07/18 Page 15 of 17 

enrolled in the service and the amount actually paid to satisfy the 

debt. 16 C.F.R. § 310.4(a)(5)(i). 

54. The TSR prohibits sellers and telemarketers from misrepresenting directly or by 

implication, any material aspect of any debt relief service, including, but not limited to, the 

amount of money or the percentage of the debt amount that a customer may save by using the 

service. 16 C.F.R. § 310.3(a)(2)(x). 

55. Pursuant to Section 3(c) of the Telemarketing Act, 15 U.S.C. § 6102(c), and 

Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), a violation of the TSR constitutes an 

unfair or deceptive act or practice in or affecting commerce, in violation of Section 5(a) of the 

FTC Act, 15 U.S.C. § 45(a). 

VIOLATIONS OF THE TELEMARKETING SALES RULE 

Count II 

Advance Fee for Debt Relief Services 

56. In numerous instances, in connection with the telemarketing of student loan debt 

relief services, Defendants have requested or received payment of a fee or consideration for debt 

relief services before: 

a. Defendants had renegotiated, settled, reduced, or otherwise altered the 

terms of at least one debt pursuant to a settlement agreement, debt 

management plan, or other such valid contractual agreement executed by 

the customer; and 

b. The customer had made at least one payment pursuant to that settlement 

agreement, debt management plan, or other valid contractual agreement 

between the customer and the creditor. 

57. Defendants’ acts or practices, as described in Paragraph 56 of this Complaint, are 

abusive telemarketing acts or practices that violate Section 310.4(a)(5)(i) of the TSR, 16 C.F.R. 

§310.4(a)(5)(i). 

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Count III 

Material Debt Relief Misrepresentations 

58. In numerous instances, in connection with the telemarketing of student loan debt 

relief services, Defendants have misrepresented, directly or indirectly, expressly or by 

implication, material aspects of their debt relief services, including that: 

a. Consumers’ monthly payments to Defendants would be applied toward 

consumers’ student loans; and 

b. Consumers were qualified for, or are approved to receive, loan forgiveness 

or other programs that will permanently lower or eliminate their loan 

payments or balances. 

59. Defendants’ acts and practices, as described in Paragraph 58 of this Complaint, 

are deceptive telemarketing acts or practices that violate Section 310.3(a)(2)(x) of the TSR, 16 

C.F.R. § 310.3(a)(2)(x). 

CONSUMER INJURY 

60. Consumers have suffered and will continue to suffer substantial injury as a result 

of Defendants’ violations of the FTC Act and the TSR. In addition, Defendants have been 

unjustly enriched as a result of their unlawful acts or practices. Absent injunctive relief by this 

Court, Defendants are likely to continue to injure consumers, reap unjust enrichment, and harm 

the public interest. 

THIS COURT’S POWER TO GRANT RELIEF 

61. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to grant 

injunctive and such other relief as the Court may deem appropriate to halt and redress violations 

of any provision of law enforced by the FTC. The Court, in the exercise of its equitable 

jurisdiction, may award ancillary relief, including rescission or reformation of contracts, 

restitution, the refund of monies paid, and the disgorgement of ill-gotten monies, to prevent and 

remedy any violation of any provision of law enforced by the FTC. 

62. Section 6(b) of the Telemarketing Act, 15 U.S.C. § 6105(b), authorizes this Court 

to grant such relief as the Court finds necessary to redress injury to consumers resulting from 

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1 Defendants' violations of the TSR, including the rescission or reformation of contracts, and the 

2 refund of money. 

3 PRAYER FOR RELIEF 

4 Wherefore, Plaintiff FTC, pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), 

and the Court's own equitable powers, requests that the Court: 

6 A. Award Plaintiff such preliminary injunctive and ancillary relief as may be 

7 necessary to avert the likelihood of consumer injury during the pendency of this action and to 

8 preserve the possibility of effective final relief, including but not limited to, a preliminary 

9 injunction, appointment of a receiver, and an asset preservation order; 

11 TSR; 

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B. 

C. 

Enter a permanent injunction to prevent future violations of the FTC Act and the 

Award such relief as the Court finds necessary to redress injury to consumers 

13 resulting from Defendants' violations of the FTC Act and the TSR, including but not limited to, 

14 rescission or reformation of contracts, restitution, the refund of monies paid, and the 

disgorgement of ill-gotten monies; and 

16 D. Award Plaintiff the costs ofbringing this action, as well as such other and 

1 7 additional relief as the Court may determine to be just and proper. 

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Dated: February 7, 2018 Respectfully submitted, 

DAVID C. SHONK.A 

Acting General Counsel 

Sarah Schroeder 

Roberta Tonelli 

Evan Rose 

Boris Y ank:ilovich 

Attorneys for Plaintiff 

FEDERAL TRADE COMMISSION 

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