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Federal Trade Commission (FTC) Acting Chairman Maureen Ohlhausen declared that "winter is coming" for student loan debt relief companies engaging in deceptive practices. On Friday, October 13, the FTC and attorneys general in 11 states and the District of Columbia announced the new consumer fraud enforcement initiative, branded "Operation Game of Loans."

As of the time of writing, the coordinated federal and state law enforcement initiative includes 36 actions against companies in the student loan industry. The targeted companies are alleged to have, among other things, charged borrowers improper or illegal fees, falsely promised to help reduce or forgive student loan debt burdens, falsely represented an affiliation with the government, and engaged in other practices deemed to be in violation of the FTC Act and Telemarketing Sales Rule. The FTC estimates that the defendants in these actions have collected more than $95 million in illegal fees from student loan borrowers.

Over the last two years, the student loan industry has come under heavy scrutiny from federal agencies. In September 2015, the CFPB, in coordination with the Department of Education and the Department of the Treasury, launched a public inquiry into student loan servicing practices. In 2016, the CFPB released a midyear report on student loan complaints and, shortly thereafter, announced an enforcement action against Wells Fargo in connection with its student loan servicing practices. And most recently, in June 2017, CFPB Director Richard Cordray spoke publicly about the need to protect student loan borrowers and ensure that loan servicers abide by the requirements under the Public Student Loan Forgiveness Program.

Leading the charge on the state level is Illinois AG Lisa Madigan, whose office has filed nine lawsuits and is currently investigating over 50 other student loan debt relief companies. AG Madigan previously testified before Congress and called for additional protections under federal law for student loan borrowers. State AGs in Colorado, Florida, Kansas, Maryland, North Carolina, North Dakota, Oregon, Pennsylvania, Texas, Washington, and the District of Columbia have also initiated investigations of and lawsuits against companies in the student loan industry.

Industry participants are encouraged to review their advertising and marketing strategies and compliance controls. Please contact Venable's Consumer Financial Services group with any questions.