American Financial Benefits Center, Ameritech Financial, and Financial Education Benefits Center (Plaintiffs) have filed suit against the Federal Trade Commission (FTC) and politely asking the FTC to backoff.
You can see my past posts about American Financial Benefits Center.
The Plaintiffs say their job is to assist consumers who are looking for solutions for “government-offered benefits programs, including student loan consolidation.” They state they are a highly rated organization, “they have received stellar ratings from the Better Business Bureau, and overwhelmingly positive comments from consumers who have publicly commented about the services Plaintiffs offer.”
This is the first suit I’ve seen of a student loan assistance company filing suit against the FTC.
The complaint makes some observations that I can certainly agree with. Federal loan servicers have not done the greatest job of providing good advice to consumers with student loan issues. And navigating those assistance options is not always clear nor easy for many consumers. The Plaintiffs say, “The[re] are helpful programs to consumers with student loan debt, but difficult for the average consumer to navigate.” To which I would agree.
The complaint says, “Plaintiffs bring this action against the FTC to seek a declaration from this Court that the debt relief provision of the TSR will not apply to Plaintiffs’ businesses, or, alternatively, that Plaintiffs are fully complying with the legal requirements outlined by the TSR [Telemarketing Sales Rule].” Looks like they are trying to make a preemptive strike to get legal clarity they can continue their program.
Where the complaint runs into a potential blackhole is when they say, “Among other services, it helps consumers with federal student loan debt by preparing documentation in connection with the identification of, and gaining approval for, one or multiple government debt relief programs. AmeriTech does not take any payment for its services until it has worked with its customers to identify the most appropriate student loan repayment program, completed and submitted the associated application forms, and the consumer receives the results of those efforts.”
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The argument of most appropriate or best program is fiduciary quicksand with subtle differences between programs like REPAYE and IBR with married couples. Many other similar examples exist as well of potential quick assistance landmines. Where many student loan assistance companies miss the mark, in my opinion, is by completing paperwork instead of looking at the larger financial situation the consumer faces. A quick program paperwork solution can do more harm than good if not viewed in the larger financial situation and then contemplating an appropriate forward looking strategy .
In what seems to be an industry standard, the complaint states “Plaintiffs sought an informal legal opinion regarding the applicability of the debt relief service provision of the amended TSR to the benefits FEBC intended to provide.” It goes on to say, “Plaintiff FEBC has fastidiously followed that advice, and offered only those distinct services for which counsel advised the TSR would not apply.”
But a single source opinion may just not be enough if the lawyer is a pro debt relief industry attorney. I’ve seen other cases where the optimistic opinion letters fell under scrutiny. A prudent course of action here is to always get a second opinion and find a version of the truth that may exist in the middle.
The complaint filed states, “In the last year, student debt relief programs have come under increasing scrutiny from the FTC, and the FTC has acted aggressively towards student debt relief companies that are not in compliance with the TSR. Because of the concerns surrounding that scrutiny, on December 29, 2016, counsel for Plaintiffs proactively wrote to the Chairwoman of the FTC to inform her of the services being offered by Plaintiffs, and to explain why the TSR did not apply to Plaintiffs’ businesses. Counsel invited the FTC to discuss Plaintiffs’ services. The FTC never responded, and as a result never provided Plaintiffs with any feedback about the FTC’s position on the applicability of the debt relief provision of the TSR to Plaintiffs’ business. Instead, Plaintiffs were left in the dark without any recourse.”
In this case the Plaintiffs know the FTC is asking questions about their business practices. The complaint states, “Recently, Plaintiffs learned that FTC representatives have been questioning Plaintiffs’ ex-employees about Plaintiffs’ businesses. Moreover, the FTC has been asking those ex-employees to sign declarations in connection with the filing of a motion for a temporary restraining order and/or preliminary injunction, in connection with the filing of a lawsuit alleging violations of the TSR.”
It certainly is an interesting move for the company to get out ahead of this. We will just have to watch and see. The company is taking bold action, “These covert actions cannot stand without court intervention. Plaintiffs have long run successful businesses with favorable BBB ratings, overwhelmingly positive consumer feedback, and helped tens of thousands of individuals navigate the difficult world of student debt relief.”
You can read the entire complaint, here.