On January 24, the FTC issued a press release announcing that it had resolved charges brought by the FTC and the Florida Attorney General’s Office against operators of an alleged student debt relief and credit repair scam.

The settlement resolves allegations that the operators violated the Federal Trade Commission Act (FTC Act), Telemarketing and Consumer Fraud and Abuse Prevention Act (Telemarketing Act), Telemarketing Sales Rule (TSR), Credit Repair Organizations Act (CROA), and the Florida Deceptive and Unfair Trade Practices Act (FDUTPA).

In April 2016, the FTC and the State of Florida brought legal action against Chastity Valdes and her companies , Consumer Assistance Project Corp., Consumer Assistance LLC, and Palermo Global LLC. According to the FTC, these companies “lured borrowers with false promises of ‘eliminating’ their student loan debts and repairing their credit and then charged illegal up-front fees. The FTC’s complaint alleged that the debt relief providers would pretend to evaluate consumers to determine whether they were eligible to enroll in their student loan forgiveness programs and then claim that consumers qualified and would see their debt reduced by at least 50 to 70 percent. In reality, the consumers were unlikely to meet the strict requirements to qualify for these loan forgiveness programs. Additionally, the debt relief providers allegedly posed as consumers and posted positive online reviews of their services.

In accordance with the stipulated final order, the debt relief providers are permanently barred from “misrepresenting endorsements, profiting from consumers’ personal information, and failing to dispose of it properly.” The order also imposes a judgment of $2.38 million which represents the amount of money consumers lost due to the scam. According to the order, the judgment will be suspended after they pay $4,500 to the FTC, which the FTC asserts represents virtually all of their assets.