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R op e r s Ma j e ski K ohn & B en t l ey

A Professional Corporation

Redwood City 

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TODD A. ROBERTS (SBN 129722)

NICOLE S. HEALY (SBN 157417)

ROPERS, MAJESKI, KOHN & BENTLEY 

1001 Marshall Street, Suite 500 

Redwood City, CA 94063-2052

Telephone: (650) 364-8200 

Facsimile: (650) 780-1701 

Email: todd.roberts@rmkb.com 

nicole.healy@rmkb.com 

NOSSAMAN LLP 

JAMES H. VORHIS (SBN 245034)

jvorhis@nossaman.com

JILL N. JAFFE (SBN 286625)

jjaffe@nossaman.com

50 California Street, 34th Floor 

San Francisco, CA 94111 

Telephone: (415) 398-3600 

Facsimile: (415) 398-2438 

Attorneys for Defendants

AMERICAN FINANCIAL BENEFITS CENTER, 

AMERITECH FINANCIAL, FINANCIAL EDUCATION 

BENEFITS CENTER, and BRANDON DEMOND FRERE 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

FEDERAL TRADE COMMISSION, 

Plaintiff, 

v. 

AMERICAN FINANCIAL BENEFITS 

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

AF STUDENT SERVICES; et al., 

Defendants. 

Case No. 18-cv-00806-SBA 

D E FE N D A N TS A M E RIC A N FIN A N C IA L 

B E N E FITS C E N TE R,A M E RITE C H 

FIN A N C IA L ,FIN A N C IA L E D UC A TIO N 

B E N E FITS C E N TE R A N D B RA N D O N 

D E M O N D FRE RE ’S A N S W E R TO 

FE D E RA L TRA D E C O M M IS S IO N ’S 

C O M P L A IN T FO R P E RM A N E N T 

INJUN C TIO N A N D O TH E R E Q UITA B L E 

RE L IE F 

C omplaintfiled Febru ary7 ,2018 

Defendants American Financial Benefits Center, Ameritech Financial, and Financial 

Education Benefits Center (“Corporate Defendants”) and Brandon Demond Frere (“Frere,” and 

collectively with the Companies, “Defendants”) hereby answer the Complaint filed by Plaintiff 

Federal Trade Commission (“Plaintiff”), as follows: 

4821-0314-6353.1 FTC V AFBC, ANSWER 

NO. 18-CV-00806-SBA 

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Redwood City 

Defendants generally deny each and every allegation of Plaintiff’s Complaint, except 

those allegations expressly admitted below. Defendants further deny that Plaintiff is entitled to 

relief of any sort as against Defendants. 

1. Answering paragraph 1 of the Complaint, Defendants admit that Plaintiff has filed 

the instant suit against them alleging violations of Section 13(b) of the Federal Trade Commission 

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

Abuse Act (“Telemarketing Act”), 15 U.S.C. §§ 6101-6108, and the Telemarketing Sales Rule 

(“TSR”) promulgated thereunder. Defendants further admit that Plaintiff seeks preliminary and 

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

monies paid, disgorgement of allegedly ill-gotten monies, and other equitable relief for 

Defendants’ acts or practices which Plaintiff contends are in violation of Section 5(a) of the FTC 

Act, 15 U.S.C. § 45(a), and the TSR. Defendants deny the remaining allegations of paragraph 1. 

2. Answering paragraph 2 of the Complaint, Defendants admit that this Court has 

subject matter jurisdiction over the claims alleged in Plaintiff’s Complaint. 

3. Answering paragraph 3 of the Complaint, Defendants admit that venue lies in this 

judicial district. 

4. Answering paragraph 4 of the Complaint, Defendants admit that FTC is an 

independent agency of the United States Government and states that 15 U.S.C. § 45(a) and 16 

C.F.R. Part 310 speak for themselves. Paragraph 4 states legal conclusions and argument to 

which no answer is required. To the extent that any answer is required, Defendants deny such 

legal conclusions and argument. 

5. Answering paragraph 5 of the Complaint, Defendants state that 15 U.S.C. §§ 

53(b), 56(a)(2)(A), and 61002(c) speak for themselves. Paragraph 5 states legal conclusions to 

which no answer is required. To the extent that any answer is required, Defendants deny such 

legal conclusions and argument. 

6. Answering paragraph 6 of the Complaint, Defendants admit that American 

Financial Benefits Center (“AFBC”) was incorporated in the State of California in 2011, and is 

and has transacted business in the State of California since its incorporation. Defendants further 

FTC V. AFBC, ANSWER 4821-0314-6353.1 - 2 - No. 18-CV-00806-SBA 

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Redwood City 

admit that AFBC has done business at 311 Professional Center Drive, Suite 200, Rohnert Park, 

CA 94928 and 1900 Powell Street, Suite 600, Emeryville, CA 94608, and that AFBC transacts or 

has transacted business in this judicial district and in various other locations in the United States. 

Defendants deny the remaining allegations of paragraph 6. Defendants deny the remaining 

allegations of paragraph 6. 

7. Answering paragraph 7 of the Complaint, Defendants admit Ameritech Financial 

(“Ameritech”) was incorporated in the State California in October 2015, and has transacted 

business in the State of California since its incorporation. Defendants further admit that 

Ameritech has done business at 1101 Investment Boulevard, Suite 290, El Dorado Hills, CA 

95762 and 5789 State Farm Drive, Suite 265, Rohnert Park CA 94928, and that Ameritech 

transacts or has transacted business in this judicial district and in various other locations in the 

United States. Defendants deny the remaining allegations of paragraph 7. 

8. Answering paragraph 8 of the Complaint, Defendants admit that Financial 

Education Benefits Center (“FEBC”) was incorporated in California in October 2015, has its 

executive offices at 2010 Crow Canyon Road, Suite 100, San Ramon, CA 94583, and has 

transacted business in the State of California since its incorporation. Defendants admit that FEBC 

transacts or has transacted business in this judicial district and in various other locations in the 

United States. Defendants deny the remaining allegations of paragraph 8. 

9. Answering paragraph 9 of the Complaint, Defendants admit that Brandon Demond 

Frere (“Frere”) founded AFBC, Ameritech, FEBC and is the majority owner of the Corporate 

Defendants and serves as CEO of the Corporate Defendants. Defendants further admit that Frere 

resides in this judicial district and transacts or has transacted business in this judicial district and 

in various other locations in the United States. 

10. Answering paragraph 10 of the Complaint, Defendants admit that AFBC, 

Ameritech, and FEBC share common ownership, officers, managers, and certain employees. 

Ameritech’s application to the BBB speaks for itself. Defendants further admit that Ameritech 

and FEBC offer their services to consumers during the same initial telephone enrollment 

conversations, and each company offers a separate contract to consumers that agree to proceed 

FTC V. AFBC, ANSWER 4821-0314-6353.1 - 3 - No. 18-CV-00806-SBA 

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A Professional Corporation

Redwood City 

with either of their services during those conversations. Paragraph 10 states legal conclusions and 

argument to which no answer is required. To the extent that any answer is required, Defendants 

deny such legal conclusions and argument. Defendants deny the remaining allegations of 

paragraph 10. 

11. Answering paragraph 11 of the Complaint, Defendants state that 15 U.S.C. § 44 

speaks for itself. Paragraph 11 states legal conclusions to which no answer is required. To the 

extent that any answer is required, Defendants deny such legal conclusions. 

12. Answering paragraph 12 of the Complaint, Defendants state that the Corporate 

Defendants have sent mailers to consumers. Defendants further state that the content of any 

mailers speak for themselves. Defendants admit that they charge fees of $600-$800 to assist 

consumers to apply for federal student loan repayment programs. Defendants lack knowledge or 

information sufficient to form a belief as to the truth of the allegations regarding consumers’ loan 

balances, and on that basis deny them. Defendants deny the remaining allegations of paragraph 

12. 

13. Answering paragraph 13 of the Complaint, Defendants admit that Defendants 

AFBC and FEBC charge monthly fees to their clients for a membership service that includes 

financial education resources, among other services. Defendants further admit that consumers 

have collectively paid over $28 million for the services offered by Corporate Defendants over the 

last six years, which amount is significantly less than the amount of savings consumers have 

realized over that same time period by virtue of their enrollment in federal student loan 

forgiveness or income reduction plans. Defendants lack knowledge or information sufficient to 

form a belief as to the truth of the allegations regarding consumers’ beliefs regarding the 

application of the monthly fees, and on that basis deny them. Defendants deny the remaining 

allegations of paragraph 13. 

14. Answering paragraph 14 of the Complaint, Defendants admit that student loan 

debt is a substantial class of consumer debt, the second largest class of consumer debt in the 

United States. Defendants lack knowledge or information sufficient to form a belief as to the 

truth of the remaining allegations in paragraph 14, and on that basis deny them. 

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R op e r s Ma j e ski K ohn & B en t l ey

A Professional Corporation

Redwood City 

15. Answering paragraph 15 of the Complaint, Defendants state that the Department 

of Education (“ED”) administers various federal student loan forgiveness and discharge 

programs, with various eligibility requirements, including the Borrower Defense to Repayment 

(“BDR”) program, which terms of such programs speak for themselves. Defendants lack 

knowledge or information sufficient to form a belief as to the truth of the remaining allegations in 

paragraph 15, and on that basis deny them. 

16. Answering paragraph 16 of the Complaint, Defendants state that the ED 

administers Teacher Loan Forgiveness and the Public Service Loan Forgiveness programs. 

Defendants state that the terms of such programs speak for themselves. Defendants lack 

knowledge or information sufficient to form a belief as to the truth of the remaining allegations in 

paragraph 15, and on that basis deny them. 

17. Answering paragraph 17 of the Complaint, Defendants state that the ED offers 

income-driven repayment (“IDR”) programs. Defendants state that the terms of those programs 

speak for themselves. Defendants admit that IDR programs may allow borrowers to limit their 

monthly payments for certain federal student loan programs based on the borrower’s income 

level, and that borrowers in those programs are required to provide annual re-certifications to 

remain in those programs. Defendants lack knowledge or information sufficient to form a belief 

as to truth of the remaining allegations in paragraph 17, and on that basis deny them. 

18. Answering paragraph 18 of the Complaint, Defendants admit that a borrower’s 

income affects the monthly payments due under an IDR program. Defendants also state that the 

terms of any IDR programs speak for themselves. Defendants lack knowledge or information 

sufficient to form a belief as to the truth of the remaining allegations in paragraph 18, and on that 

basis deny them. 

19. Answering paragraph 19 of the Complaint, Defendants state that the ED’s student 

loan repayment and/or forgiveness programs speak for themselves. Defendants admit that the ED 

does not require consumers to use the assistance of a third party to apply for its federal student 

loan repayment and/or forgiveness programs nor does it charge application fees. 

20. Answering paragraph 20 of the Complaint, Defendants state that the ED’s student 

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Redwood City 

loan repayment and/or forgiveness programs speak for themselves. Defendants admit that at 

times the ED will grant forbearance and that a loan in forbearance will continue to accrue interest. 

Defendants lack knowledge or information sufficient to form a belief as to the truth of the 

remaining allegations in paragraph 20 and on that basis deny them. 

21. Answering paragraph 21 of the Complaint, Defendants admit that the ED permits 

the consolidation of federal student loans. Defendants state that the ED’s programs speak for 

themselves. Defendants lack knowledge or information sufficient to form a belief as to the truth 

of the remaining allegations in paragraph 21 and on that basis deny them. 

22. Answering paragraph 22 of the Complaint, Defendants admit that since 2014 one 

or more of the Corporate Defendants have disseminated or caused to be disseminated mailers to 

consumers within the United States at various times. Defendants state that the mailers speak for 

themselves. Answering paragraph 22(a)-(e) of the Complaint, Defendants state that the exhibits 

speak for themselves, and that the FTC cites only a limited sample of the content from those 

mailers. 

23. Answering paragraph 23 of the Complaint, Defendants state that the mailers and 

exhibits attached as Exhibits A-E speak for themselves. 

24. Answering paragraph 24 of the Complaint, Defendants state that the language 

included in the mailers attached as Exhibits B, C and D-1 speak for themselves. Defendants deny 

the remaining allegations of paragraph 24. 

25. Answering paragraph 25 of the Complaint, Defendants state that the language in 

the mailers speak for themselves. Defendants also state that numerous mailers include one or 

more of Corporate Defendants’ names. 

26. Answering paragraph 26 of the Complaint, Defendants state that the language in 

the mailers speak for themselves, but that the mailers list a toll-free phone number. Defendants 

admit that when consumers call Ameritech or AFBC, they are connected with an account 

specialist. Defendants state that any pre-recorded messages speak for themselves. 

27. Answering paragraph 27 of the Complaint, Defendants deny the allegations 

therein. 

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A Professional Corporation

Redwood City 

28. Answering paragraph 28 of the Complaint, Defendants state that any recorded 

conversation speaks for itself. Defendants deny the remaining allegations in paragraph 28. 

29. Answering paragraph 29 of the Complaint, Defendants state that the language in 

34 C.F.R. § 682.215(a)(3) speaks for itself. Defendants further state that the definition of family 

size contained on the federal IDR application is the definition incorporated into Corporate 

Defendants’ scripts. Defendants further state that paragraph 29 states legal conclusions to which 

no answer is required. To the extent that any answer is required, Defendants deny such legal 

conclusions. 

30. Answering paragraph 30 of the Complaint, Defendants admit that the family size 

listed by a consumer will impact his or her eligibility in an IDR program. Defendants deny 

making misrepresentations to consumers or otherwise about family-size requirements. 

Defendants further state that paragraph 30 states legal conclusions and argument to which no 

answer is required. To the extent that any answer is required, Defendants deny such legal 

conclusions and argument. 

31. Answering paragraph 31 of the Complaint, Defendants deny making false or 

unsubstantiated representations about being able to procure a permanent reduction in consumers’ 

monthly payments. Defendants admit that monthly IDR program payments are based on a 

borrowers’ income and that the program requires annual recertification, and state that the terms of 

the ED’s federal student loan repayment programs speak for themselves. Defendants further state 

that paragraph 31 states legal conclusions and argument to which no answer is required. To the 

extent that any answer is required, Defendants deny such legal conclusions and argument. 

Defendants lack knowledge or information sufficient to form a belief as to the truth of the 

allegations that “in many cases consumers’ incomes will rise over the years-long repayment 

period, and as consumer’ incomes rise so will their monthly payments,” and on that basis deny 

them. 

32. Answering paragraph 32 of the Complaint, Defendants admit that once consumers 

decide to apply to a federal loan repayment program, and supply the necessary information, 

Defendants email the consumer links to contracts to be signed electronically, and further that after 

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A Professional Corporation

Redwood City 

completing their discussion with the account specialist, the consumer is transferred to the 

verification department. Defendants state that the account specialist scripts and any recorded 

conversations speak for themselves. Defendants deny the remaining allegations of paragraph 32. 

33. Answering paragraph 33 of the Complaint, Defendants admit charging certain 

consumers fees of $600-$800 for federal student loan repayment or forgiveness program 

document preparation services, which may be paid in installments. Defendants deny the 

remaining allegations of paragraph 33. 

34. Answering paragraph 34 of the Complaint, Defendants admit charging consumers 

a monthly fee for membership in AFBC and/or FEBC which fee may range from $49 to $99. 

Defendants state that any recorded conversations with consumers speak for themselves. 

Defendants state that Exhibit F speaks for itself. Defendants deny the remaining allegations of 

paragraph 34. 

35. Answering paragraph 35 of the Complaint, Defendants admit charging consumers 

a monthly fee for membership in AFBC and/or FEBC. Defendants state that the recorded 

conversations with consumers speak for themselves. Defendants state that Exhibits G and H 

speak for themselves. Defendants lack knowledge or information sufficient to form a belief as to 

the truth of the allegations as to what “many consumers believe,” and on that basis deny them. 

Defendants deny the remaining allegations of paragraph 35. 

36. Answering paragraph 36 of the Complaint, Defendants state that Exhibit I speaks 

for itself. Defendants deny the remaining allegations of paragraph 36. 

37. Answering paragraph 37 of the Complaint, Defendants admit that based on the 

terms of contracts executed by the client the Corporate Defendants have occasionally declined to 

provide a refund to certain consumers, or have paid a refund to a consumer that is less than the 

total amount paid by that consumer. Defendants deny that it is appropriate to characterize it as 

happening often. Defendants deny the remaining allegations of paragraph 37. 

38. Answering paragraph 38 of the Complaint, Defendants state that paragraph 38 

states legal conclusions and argument to which no answer is required. To the extent that any 

answer is required, Defendants deny such legal conclusions and argument. 

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A Professional Corporation

Redwood City 

39. Answering paragraph 39 of the Complaint, Defendants Frere and AFBC admit that 

Frere is the majority owner of AFBC. Frere and AFBC admit that Frere incorporated AFBC in 

2011 and has served as the company’s CEO, Secretary, CFO, and sole Director since that time. 

Frere and AFBC further admit that Frere has signed contracts with consumers on behalf of AFBC 

as a “Managing Director” of the company. Paragraph 39 states legal conclusions and argument to 

which no answer is required. To the extent that any answer is required, Defendants deny such 

legal conclusions and argument. Defendants Ameritech and FEBC lack knowledge or 

information sufficient to form a belief as to the truth of the allegations in paragraph 39, and on 

that basis deny them. 

40. Answering paragraph 40 of the Complaint, Defendants Frere and Ameritech admit 

that Frere is the majority owner of Ameritech. Frere and Ameritech admit that Frere incorporated 

Ameritech in 2015 and has served as the company’s CEO, Secretary, CFO, and sole Director 

since that time. Paragraph 40 states legal conclusions and argument to which no answer is 

required. To the extent that any answer is required, Defendants deny such legal conclusions and 

argument. Defendants AFBC and FEBC lack knowledge or information sufficient to form a 

belief as to the truth of the allegations in paragraph 40, and on that basis deny them. 

41. Answering paragraph 41 of the Complaint, Defendants Frere and FEBC admit that 

Frere is the majority owner of FEBC. Frere and FEBC admit that Frere incorporated FEBC in 

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

Paragraph 41 states legal conclusions and argument to which no answer is required. To the extent 

that any answer is required, Defendants deny such legal conclusions and argument. Defendants 

AFBC and Ameritech lack knowledge or information sufficient to form a belief as to the truth of 

the allegations in paragraph 41, and on that basis deny them. 

42. Answering paragraph 42 of the Complaint, Defendants Frere, AFBC and 

Ameritech admit that Frere has been a signatory on AFBC’s and Ameritech’s depository bank 

accounts. Paragraph 42 states legal conclusions and argument to which no answer is required. To 

the extent that any answer is required, Defendants deny such legal conclusions and argument. 

43. Answering paragraph 43 of the Complaint, Defendant Frere admits that in or about 

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late 2015he submitted an application to the Better Business Bureau serving Northern California 

(“BBB”) seeking accreditation for Ameritech. Defendant Frere further admits that in or about 

June 2016 the BBB sent a letter to Frere concerning Ameritech, which letter speaks for itself, and 

which was just one of dozens of communications Defendants have had with the BBB. Frere 

lacks knowledge or information sufficient to form a belief as to the truth of the allegations that the 

BBB “continue[d] to express concerns about Ameritech’s business practices in 2016,” and on that 

basis deny them. Defendants AFBC, Ameritech, and FEBC lack knowledge or information 

sufficient to form a belief as to the truth of the allegations in paragraph 43, and on that basis deny 

them. 

44. Answering paragraph 44 of the Complaint, Defendants Frere admits that he is the 

owner and a “high-ranking corporate officer” of the Corporate Defendants who participates in 

their daily activities. Defendants deny the remaining allegations of paragraph 44. 

45. Answering paragraph 45 of the Complaint, Defendants state that the FTC Act, 15 

U.S.C. § 45(a) speaks for itself. 

46. Answering paragraph 46 of the Complaint, Defendants state that Section 5(a) of 

the FTC Act speaks for itself. 

C ou ntI 

47. Answering paragraph 47 of the Complaint, and each of its subparts, Defendants 

deny the allegations therein. Paragraph 47 states legal conclusions and argument to which no 

answer is required. To the extent that any answer is required, Defendants deny such legal 

conclusions and argument. 

48. Answering paragraph 48 of the Complaint, Defendants deny the allegations 

therein. 

49. Answering paragraph 49 of the Complaint, Defendants deny violating any 

provision of the FTC Act at any time, including but not limited to Section 5(a) of the FTC Act, 15 

U.S.C. § 45(a). Paragraph 49 states legal conclusions and argument to which no answer is 

required. To the extent that any answer is required, Defendants deny such legal conclusions and 

argument. 

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50. Answering paragraph 50 of the Complaint, Defendants state that the 

Telemarketing Act, 15 U.S.C. §§ 6101-6108, and the TSR, 16 C.F.R. Part 310, speak for 

themselves. 

51. Answering paragraph 51 of the Complaint, Defendants state that the TSR, 16 

C.F.R. Part 310 (dd), (ff), (gg), speaks for itself. Defendants further state that paragraph 51 states 

legal conclusions and argument to which no answer is required. To the extent that any answer is 

required, Defendants deny such legal conclusions and argument. 

52. Answering paragraph 52 of the Complaint, Defendants deny that they are sellers or 

telemarketers of debt relief services as defined in the TSR. Answering paragraph 52 of the 

Complaint, Defendants state that the TSR, including 16 C.F.R. Part 310.2(o), speaks for itself. 

53. Answering paragraph 53 of the Complaint, and each of its subparts, Defendants 

state that the TSR speaks for itself. 

54. Answering paragraph 54 of the Complaint, Defendants state that the TSR, 

including 16 C.F.R. Part 310.3(a)(2)(x), speaks for itself. 

55. Answering paragraph 55 of the Complaint, Defendants state that Section 3(c) of 

the Telemarketing Act, 15 U.S.C. 6102(c), Section 18(d)(3) of the FTC Act, 15 U.S.C. § 

57a(d)(3) and Section 5(a) of the FTC Act, 15 U.S.C. § 45(a) speak for themselves. 

C ou ntII 

56. Answering paragraph 56 of the Complaint and each of its subparts, Defendants 

deny the allegations therein. Paragraph 56 states legal conclusions and argument to which no 

answer is required. To the extent that any answer is required, Defendants deny such legal 

conclusions and argument. 

57. Answering paragraph 57 of the Complaint, Defendants deny violating any 

provision of the TSR at any time, including but not limited to Section 310.4(a)(5)(i), 16 C.F.R. § 

310.4(a)(5)(i). Paragraph 57 states legal conclusions and argument to which no answer is 

required. To the extent that any answer is required, Defendants deny such legal conclusions and 

argument. 

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C ou ntIII 

58. Answering paragraph 58 of the Complaint and each of its subparts, Defendants 

deny the allegations therein. Paragraph 58 states legal conclusions and argument to which no 

answer is required. To the extent that any answer is required, Defendants deny such legal 

conclusions and argument. 

59. Answering paragraph 59 of the Complaint, Defendants deny violating any 

provision of the TSR at any time, including but not limited to Section 310.3(a)(2)(x), 16 C.F.R. § 

310.3(a)(2)(x). Paragraph 59 states legal conclusions and argument to which no 

answer is required. To the extent that any answer is required, Defendants deny such legal 

conclusions and argument. 

60. Answering paragraph 60 of the Complaint, Defendants deny the allegations 

therein. Paragraph 60 states legal conclusions and argument to which no answer is required. To 

the extent that any answer is required, Defendants deny such legal conclusions and argument. 

61. Answering paragraph 61 of the Complaint, Defendants state that the FTC Act, 15 

U.S.C. § 53(b) speaks for itself. Paragraph 61 states legal conclusions and argument to which no 

answer is required. To the extent that any answer is required, Defendants deny such legal 

conclusions and argument. 

62. Answering paragraph 62 of the Complaint, Defendants state that Section 6(b) of 

the Telemarketing Act, 15 U.S.C. § 6105(b), speaks for itself. Paragraph 62 states legal 

conclusions and argument to which no answer is required. To the extent that any answer is 

required, Defendants deny such legal conclusions and argument. 

P RA Y E R FO R RE L IE F 

63. Defendants deny that Plaintiff is entitled to the relief it seeks in its Prayer for 

Relief. 

A FFIRM A TIV E D E FE N S E S 

A llegations C ommon to allA ffirmative D efenses 

64. When Frere founded AFBC, it provided a membership service that provided both 

student loan document preparation assistance and services that assist consumers with their 

FTC V. AFBC, ANSWER 4821-0314-6353.1 - 12 - No. 18-CV-00806-SBA 

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Case 4:18-cv-00806-SBA Document 162 Filed 08/29/18 Page 13 of 23 

R op e r s Ma j e ski K ohn & B en t l ey

A Professional Corporation

Redwood City 

finances, health and well-being. In late 2015, Frere formed two separate companies — Ameritech 

and FEBC — to provide the services that AFBC had been providing to its customers. 

65. Beginning in early 2016, Ameritech has provided consumers with student loan 

document preparation services, and FEBC has offered monthly membership services offering 

consumers tools, products, and services to assist with their finances, health, and well-being. 

66. Until this lawsuit, the Companies were accredited by the Oakland BBB and held 

ratings of A (FEBC and AFBC) and B+ (Ameritech). 

67. When consumers visit Ameritech’s website, they are greeted with a popup window 

and cannot proceed without acknowledging a set of prominent disclosures, including that “We are 

not a government agency, the Department of Education, or your loan servicer;” and “We do not 

make loan payments on your behalf and loans remain in your name;” and that borrowers can “Do 

it yourself without a fee – all programs are freely available for enrollment through the Department 

of Education.” AFBC’s website contains similar disclosures. 

68. When consumers call Ameritech, and formerly AFBC, the sales personnel 

(“Account Specialists”) are required to strictly follow scripts that have been reviewed and 

approved by outside regulatory counsel. The Account Specialists are provided detailed guideline 

checklists, a list of “Bad” statements which they are prohibited from saying, and a “Dos and 

Don’ts” policy for when complex situations arise. The Account Specialist’s conformity with 

these standards is monitored by the Compliance Department, as described further below. 

69. Ameritech’s scripts require the Account Specialists to disclose that Ameritech is 

not affiliated with the ED; that the consumer may apply for a loan repayment or forgiveness 

program on their own for free; that Ameritech is not a loan servicer, will not pay the borrower’s 

loans, charges for its document preparation services, and places the customer’s funds in a third 

party escrow account to be released only after the company has successfully performed its work. 

The Account Specialist is also required to read — verbatim — a definition of “family size” to the 

callers that is found in the application for enrollment in the IBR/IDR programs. The Account 

Specialist asks whether the caller has federal student loans; whether the loans are current or in 

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A Professional Corporation

Redwood City 

default; the amount outstanding; the caller’s approximate annual income; their self-reported 

family size; and other background information. 

70. During the call, representatives are required to expressly disclose to consumers 

that FEBC’s monthly membership services are separate from the document preparation services, 

and that FEBC charges separately, each month, for its services. This separation is reinforced by 

the fact that there are separate contracts for the services to be provided by Ameritech Financial 

and FEBC, and by separate payment authorization forms. 

71. After the consumer’s information has been collected, the Ameritech representative 

turns the call over to the verification department. Every call is recorded, and Ameritech’s 

Compliance Department monitors enrollment calls and subsequent calls with consumers. Every 

Account Specialist is monitored weekly, and their compensation is tied to their compliance with 

company policy. 

72. During enrollment calls, Account Specialists provide consumers with the written 

contracts they will need to complete in order to apply for federal student loan relief programs. 

Ameritech’s Document Preparation and Service Agreement (“Ameritech Agreement”) includes 

key disclosures that require consumers to acknowledge, among other things, that they “HAVE 

NOT BEEN ADVISED BY AMERITECH FINANCIAL, . . . TO FOREGO A STUDENT 

LOAN PAYMENT.” 

73. Not every caller becomes an Ameritech customer. If the caller’s responses 

indicate that they are not eligible for a student loan repayment program, or are not interested in 

working with Ameritech, the call terminates. Once it appears that the consumer may be eligible 

and expresses interest in working with Ameritech, however, a dedicated third party escrow 

account is set up to receive the prepaid document preparation fees, as disclosed in the Ameritech 

Agreement. The funds are not released to Ameritech from the escrow account until the borrower 

has been accepted into a loan repayment program and has made their first payment under that 

program. The account is managed by a third party, which deposits the funds into a trust account 

at an FDIC-insured depository institution. 

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Case 4:18-cv-00806-SBA Document 162 Filed 08/29/18 Page 15 of 23 

R op e r s Ma j e ski K ohn & B en t l ey

A Professional Corporation

Redwood City 

74. Not every consumer who calls AFBC or Ameritech enrolls in FEBC. Further, the 

FEBC membership agreements describe the services offered, and explain that FEBC is a separate 

company from Ameritech, and is not affiliated with the government. Members are informed that 

they “may cancel this contract within thirty (30) days of signing and receive a full refund for all 

sums paid to FEBC” or at any time on ten days’ written notice. FEBC emails its clients every two 

weeks to highlight the services and discounts provided, and a vast majority of FEBC clients 

return to the website after their initial orientation. 

A FFIRM A TIV E D E FE N S E S 

75. By setting forth the following affirmative defenses, Defendants do not assume the 

burden of proving any fact, issue, or element of any of Plaintiff’s claims for relief whether such 

burden properly and solely belongs to the Plaintiff. Moreover, nothing stated herein is intended 

to be construed as an acknowledgement that any particular issue or subject matter is relevant to 

Plaintiff’s allegations. Nor shall anything stated or unstated constitute an admission of any kind. 

FIRS T A FFIRM A TIV E D E FE N S E 

(N o D ebtRelief S ervices) 

76. Defendants reallege and incorporate by reference the allegations of paragraphs 1-

75 of this Answer and Affirmative Defenses as though fully set forth herein. 

77. As a separate and affirmative defense to the Complaint, Defendants are informed 

and believe and therefore allege that they are not liable for any violations of the TSR in 

connection with their provision of document preparation services as alleged in the Complaint 

because they do not provide debt relief services. 

78. In 1994, Congress enacted the Telemarketing Consumer Fraud and Abuse 

Prevention Act, 15 U.S.C. § 6101, et seq. (“Telemarketing Act”). The Telemarketing Act 

authorized the FTC to regulate deceptive and abusive commercial telemarketing acts and 

practices intended to induce the purchase of goods or services. 15 U.S.C. § 6102(a)(3)(C). The 

Act further directed the FTC to promulgate regulations to “prohibit deceptive telemarketing acts 

or practices and other abusive telemarketing acts or practices.” 15 U.S.C. § 6102(a)(1). 

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Case 4:18-cv-00806-SBA Document 162 Filed 08/29/18 Page 16 of 23 

R op e r s Ma j e ski K ohn & B en t l ey

A Professional Corporation

Redwood City 

79. The Telemarketing Act defines “abusive telemarketing acts or practices” as (1) a 

pattern of unsolicited telephone calls which the reasonable consumer would consider coercive or 

abusive to his or her right to privacy; (2) unsolicited calls to consumers during specific hours; and 

(3) failure to deliver prompt and clear disclosures that the purpose of the call is to sell goods or 

services and other such disclosures as the FTC deems appropriate. 15 U.S.C. § 6102(a)(3)(A)-

(C). 

80. The FTC promulgated rules implementing the Telemarketing Act in 1995, which 

was codified at 16 C.F.R. § 310, called the Telemarketing Sales Rule (“TSR”). The FTC 

subsequently amended the TSR in 2003, 2008, and 2010. 

81. In 2010, the FTC amended its TSR to regulate debt relief service providers. One 

provision of that regulation pertained to debt relief services. As amended, the TSR defines a 

“debt relief service” as a program that claims or implies that it can renegotiate, settle, or in some 

way change the terms of a person’s debt to an unsecured creditor or debt collector. 16 C.F.R. § 

310.2(m). 

82. Defendants assist consumers to identify student loan repayment and forgiveness 

programs for which they may be eligible and to complete the necessary paperwork. Defendants 

do not negotiate the terms of the student loans with borrowers’ loan servicers or the ED. Nor do 

they state or imply that they can change the terms of the borrowers’ student loan debt. Instead, 

they assist the borrowers to navigate the process of applying for the ED’s loan repayment or 

forgiveness programs. 

83. Accordingly, because Defendants have complied with the advance fee provisions 

of the TSR, Plaintiff cannot recover against Defendants for providing debt relief services in 

violation of the TSR. 

S E C O N D A FFIRM A TIV E D E FE N S E 

(C ompliance withthe TS R -A d vance Fees) 

84. Defendants reallege and incorporate by reference the allegations of paragraphs 1-

83 of this Answer and Affirmative Defenses as though fully set forth herein. 

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A Professional Corporation

Redwood City 

85. As a separate and affirmative defense to the Complaint, Defendants are informed 

and believe and therefore allege that they are not liable for any violation of the TSR in connection 

with accepting advance fees for their document preparation services as alleged in the Complaint 

because at all times they complied with applicable law. 

86. The TSR prohibits the collection of advance fees from customers except under 

certain specified circumstances. 

87. Defendants do not provide debt relief services to their customers. However, even 

if the Defendants did provide such services, they are in compliance with the provisions of the 

TSR. 

88. The TSR prohibits a seller or telemarketer from “[r]equesting or receiving 

payment of any fee or consideration for any debt relief service until . . . [t]he 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” and “[t]he customer has made at least one payment” 

pursuant to such agreement, plan, or contract. 16 C.F.R. § 310.4(a)(5)(i). 

89. Despite the foregoing limitations, the TSR provides that a company “may request[] 

or require[] the customer to place funds in an account to be used for the debt relief provider’s fees 

and for payments to creditors or debt collectors in connection with the renegotiation, settlement, 

reduction, or other alteration of the terms of payment or other terms of a debt,” provided that the 

following criteria are satisfied. 

a. The funds are held in an account at an insured financial institution; 

b. The customer owns the funds held in the account and is paid 

accrued interest on the account, if any; 

c. The entity administering the account is not owned or controlled by, 

or in any way affiliated with, the debt relief service; 

d. The entity administering the account does not give or accept any 

money or other compensation in exchange for referrals of business 

involving the debt relief service; and 

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A Professional Corporation

Redwood City 

e. The customer may withdraw from the debt relief service at any 

time without penalty, and must receive all funds in the account, 

other than funds earned by the debt relief service in compliance 

with § 310.4(a)(5)(i)(A) through (C), within seven (7) business 

days of the customer’s request. 

TSR, 16 C.F.R. § 310.4(5)(ii). 

90. Defendants allege that they understood and believed that the funds collected for 

the document preparation services complied with the TSR because: 

a. Ameritech arranged for each customer who signed up and prepaid 

for the document preparation services to have a dedicated account 

maintained by a third-party provider at an FDIC-insured financial 

institution into which the customer’s fees would be deposited; 

b. The accounts belonged to the customers; 

c. The escrow agent was an independent third party, unaffiliated 

with Ameritech and the account is not owned or controlled by, or 

in any way affiliated with, Ameritech; and 

d. Customers can withdraw the funds in the account at any time. 

91. Finally, Ameritech did not seek to withdraw any fees from the dedicated escrow 

accounts until the customer’s student loan had been accepted into an IDR, IBR or other ED 

student loan repayment program. 

92. Accordingly, because Defendants have complied with the advance fee provisions 

of the TSR, Plaintiff cannot recover against Defendants for violating the advance fee provisions 

of the TSR. 

TH IRD A FFIRM A TIV E D E FE N S E 

(D isclosu re to C onsu mer) 

93. Defendants reallege and incorporate by reference the allegations of paragraphs 1-

92 of this Answer and Affirmative Defenses as though fully set forth herein. 

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Case 4:18-cv-00806-SBA Document 162 Filed 08/29/18 Page 19 of 23 

R op e r s Ma j e ski K ohn & B en t l ey

A Professional Corporation

Redwood City 

94. As a separate and affirmative defense to the Complaint, Defendants allege that at 

all times material to this Answer and Affirmative Defenses they have disclosed to consumers 

information regarding the services that they are performing including that: Defendants are not 

affiliated with the ED or the loan servicers; payments to Defendants are not forwarded to loan 

servicers; borrowers are required to continue paying their loans to the loan servicers; FEBC’s 

monthly membership program is offered in addition to the document preparation services; and the 

customers can terminate their relationship with Defendants. 

FO URTH A FFIRM A TIV E D E FE N S E 

(Good Faith) 

95. Defendants reallege and incorporate by reference the allegations of paragraphs 1-

94 of this Answer and Affirmative Defenses as though fully set forth herein. 

96. As a separate and affirmative defense to the Complaint, Defendants allege that at 

all times, the acts and statements Defendants have made were fair and reasonable, and performed 

in good faith based on all relevant facts known to Defendants. Defendants acted with a good faith 

belief that they had good cause and/or legitimate business reasons to act as they did and did not 

directly or indirectly perform any acts that would constitute a violation of consumers’ rights. As 

a consequence, Plaintiff is not entitled to the relief it seeks. 

97. Among other things, Defendants have taken steps to educate themselves and their 

staff about the ED’s student loan repayment and forgiveness programs. 

98. Defendants have modified their written communications with consumers to ensure 

compliance with the FTC Act and the TSR. 

99. Defendants have undertaken substantial efforts to develop a robust and effective 

compliance program. As part of that program, Ameritech has trained its customer service 

personnel to provide complete and truthful information to consumers regarding the ED’s student 

loan repayment programs, the services offered by Ameritech and FEBC, and to explain the terms, 

conditions, and details of Ameritech’s student loan document preparation program and FEBC’s 

monthly membership program. 

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Case 4:18-cv-00806-SBA Document 162 Filed 08/29/18 Page 20 of 23 

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A Professional Corporation

Redwood City 

100. Defendants record their conversations with consumers to avoid any confusion or 

uncertainty, for training purposes, and to permit the Compliance Department and management to 

review such calls for compliance with company policies and legal and regulatory requirements. 

101. Ameritech has also developed a fully-staffed Compliance Department to review 

and monitor recorded communications with consumers and take necessary disciplinary action. 

102. Violations of the Companies’ rules are grounds for progressive discipline up to 

and including termination. Defendants have in fact disciplined employees for violating the 

Companies’ requirements to follow the approved scripts as well as other rules and policies. 

103. Defendants developed their compliance program and created, staffed, funded, and 

operate the Compliance Department to ensure that only truthful and complete information is 

provided to consumers. 

104. The foregoing actions and others were taken in good faith and with the intent to 

comply with applicable laws and regulations. 

FIFTH A FFIRM A TIV E D E FE N S E 

(S tatu te of L imitations) 

105. Defendants reallege and incorporate by reference the allegations of paragraphs 1-

104 of this Answer and Affirmative Defenses as though fully set forth herein. 

106. As a separate and affirmative defense, Plaintiff’s claims are barred in whole or in 

part by the applicable statutes of limitations. Specifically, Plaintiff’s claims are barred in part or 

in whole by the 3-year statute of limitations under 15 U.S.C. § 57(d), or alternatively by the 4-

year statute of limitations under 28 U.S.C. § 1658. 

S IX TH A FFIRM A TIV E D E FE N S E 

(L aches) 

107. Defendants reallege and incorporate by reference the allegations of paragraphs 1-

106 of this Answer and Affirmative Defenses as though fully set forth herein. 

108. As a separate and affirmative defense, Plaintiff’s claims are barred in part or in 

whole by the doctrine of laches because Plaintiff delayed bringing any action despite having full 

knowledge of the corporate actions of Defendants for over a year before bringing this lawsuit. 

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Case 4:18-cv-00806-SBA Document 162 Filed 08/29/18 Page 21 of 23 

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A Professional Corporation

Redwood City 

Specifically, Plaintiff refused to respond to a letter sent by corporate Defendants on December 30, 

2016 to the Chairwoman of Plaintiff, Edith Ramirez, in which the Corporate Defendants sought 

guidance from the FTC regarding their standard business practices, and provided samples of their 

mailers and the scripts used by Account Specialists. Plaintiff understood that it would be 

important to respond to the letter because they had already opened an investigation into Corporate 

Defendants. Despite that, Plaintiff sat silently and did not respond to the letter at all. In addition, 

Plaintiff refused to file its lawsuit promptly after Defendants first filed a lawsuit against Plaintiff 

on August 18, 2017 for declaratory relief. Plaintiff was considering the filing of a lawsuit, as it 

sent a draft complaint to Defendants on October 3, 2017, yet waited over four months to file its 

Complaint in this action. Furthermore, Plaintiff engaged in an indiscriminate industry “sweep” 

that it described as “Game of Loans,” and only decided to sue Defendants after gross delay, 

prejudice to Defendants and in response to Defendants’ suit for declaratory relief. In short, it 

would be inequitable for Plaintiff to seek equitable relief, including an injunction and the 

appointment of a receiver, when it had full knowledge of Corporate Defendants business practices 

yet refused to provide any guidance about what it thought the Corporate Defendants were doing 

wrong or how such actions could be corrected, and refused to file any lawsuit. 

S E V E N TH A FFIRM A TIV E D E FE N S E 

(E stoppel) 

109. Defendants reallege and incorporate by reference the allegations of paragraphs 1-

108 of this Answer and Affirmative Defenses as though fully set forth herein. 

110. As a separate and affirmative defense, Plaintiff’s claims are barred in part or in 

whole by the doctrine of estoppel because Plaintiff delayed bringing any action despite having 

full knowledge of the corporate actions of Defendants for over a year before bringing this lawsuit. 

Specifically, Plaintiff refused to respond to a letter sent by corporate Defendants on December 30, 

2016 to the Chairwoman of Plaintiff, Edith Ramirez, in which the Corporate Defendants sought 

guidance from the FTC regarding their standard business practices, and provided samples of their 

mailers and the scripts used by Account Specialists. Plaintiff understood that it would be 

important to respond to the letter because they had already opened an investigation into Corporate 

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Case 4:18-cv-00806-SBA Document 162 Filed 08/29/18 Page 22 of 23 

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A Professional Corporation

Redwood City 

Defendants. Despite that, Plaintiff sat silently and did not respond to the letter at all. In addition, 

Plaintiff refused to file its lawsuit promptly after Defendants first filed a lawsuit against Plaintiff 

on August 18, 2017 for declaratory relief. Plaintiff was considering the filing of a lawsuit, as it 

sent a draft complaint to Defendants on October 3, 2017, yet waited over four months to file its 

Complaint in this action. Furthermore, Plaintiff engaged in an indiscriminate industry “sweep” 

that it described as “Game of Loans,” and only decided to sue Defendants after gross delay, 

prejudice to Defendants and in response to Defendants’ suit for declaratory relief. In short, it 

would be inequitable for Plaintiff to seek equitable relief, including an injunction and the 

appointment of a receiver, when it had full knowledge of Corporate Defendants business practices 

yet refused to provide any guidance about what it thought the Corporate Defendants were doing 

wrong or how such actions could be corrected, and refused to file any lawsuit. 

E IGH TH A FFIRM A TIV E D E FE N S E 

(O ffset) 

111. Defendants reallege and incorporate by reference the allegations of paragraphs 1-

110 of this Answer and Affirmative Defenses as though fully set forth herein. 

112. As a separate and affirmative defense to the Complaint, Defendants allege that any 

monetary relief — whether by rescission, restitution, refund, disgorgement, or otherwise — that 

the FTC might receive is subject to offset by the benefits received by customers, and/or 

chargebacks or refunds paid to customers. 

113. By assisting with identifying student loan programs for which they are eligible, 

preparing necessary documentation, walking them through the process, and assisting with 

recertifications, AFBC and Ameritech have assisted tens of thousands of customers to obtain 

reduced monthly payments for their student loans. 

114. In the aggregate, AFBC and Ameritech have assisted customers to save tens of 

millions of dollars in student loan payments. 

115. If this Court were to find the Defendants liable for any of the alleged violations, 

they would be entitled to an offset to reflect the benefit to customers, as well as any refunds or 

chargebacks. 

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Case 4:18-cv-00806-SBA Document 162 Filed 08/29/18 Page 23 of 23 

R op e r s Ma j e ski K ohn & B en t l ey

A Professional Corporation

Redwood City 

RE S E RV A TIO N O F FURTH E R A FFIRM A TIV E D E FE N S E S 

Defendants lack sufficient information of all facts and evidence surrounding Plaintiff’s 

investigation, and regarding Corporate Defendants’ business practices in light of the claims raised 

by Plaintiff, and therefore are unable to ascertain at this time all affirmative defenses potentially 

available to them. Thus, Defendants hereby give notice that they intend to rely upon such other 

and further affirmative defenses as may become available during discovery proceedings in this 

case, and Defendants hereby reserve their right to seek the Court’s permission to amend their 

Answer to assert such affirmative defenses. 

P RA Y E R FO R RE L IE F 

WHEREFORE, having responded to Plaintiff’s Complaint and having stated their 

affirmative defenses, Defendants pray that: 

1. Judgment be entered against Plaintiff and in favor of Defendants and that Plaintiff 

take nothing by its Complaint; 

2. The Court award Defendants their reasonable costs, expenses, and attorneys’ fees 

as permitted by law including, but not limited to, pursuant to the Equal Access to Justice Act (5 

U.S.C. § 504); and 

3. The Court award Defendants such further and other relief as the Court may deem 

just and proper. 

Dated: August 29, 2018 ROPERS, MAJESKI, KOHN & BENTLEY 

By: /s/ Nicole S. Healy 

TODD A. ROBERTS 

NICOLE S. HEALY 

NOSSAMAN LLP 

By: /s/ James H. Vorhis 

JAMES H. VORHIS 

JILL N. JAFFE 

Attorneys for Defendants AMERICAN

FINANCIAL BENEFITS CENTER, 

AMERITECH FINANCIAL, FINANCIAL 

EDUCATION BENEFITS CENTER, and 

BRANDON DEMOND FRERE 

FTC V. AFBC, ANSWER 4821-0314-6353.1 - 23 - No. 18-CV-00806-SBA 

56602396.v1