Information and Alerts

Government Actions

FTC v American Financial Services et al

On November 4, 2019, the U.S. Attorney’s Office filed a complaint against American Financial Support Services, US Financial Freedom Center, Inc. and owner Jay Singh in violation of the FTC Act and Telemarketers Sales Rule. Case No. 19-cv-02109-JVS-ADS.

According to the complaint, it is alleged that the defendants operated an unlawful debt relief scheme that targeted consumers with student loan debt. Consumers were promised in exchange for payment of an upfront fee and subsequent monthly fees, that defendants would reduce the consumer’s monthly student loan payments or eliminate all or a substantial portion of their federal student loan debt. Defendants failed to reduce or eliminate consumers’ loan balance or monthly loan payments. They also did not apply the monthly fee payment, ranging from $19 and $49, to the consumers’ loan or assume responsibility for servicing those loans, as they had advertised in their telemarketing call. It is also alleged the defendants charged up to $1800 in upfront fees.

In violation of the FTC Act, the defendants misrepresented to consumers that through their services they would reduce the monthly payments or have the loan balance forgiven in whole or in part, would apply the monthly fee payments to the loan, would assume responsibility for the student loan, and were affiliated with or worked directly with the Department of Education or one of the department’s authorized loan servicers. The defendants violated the Telemarketers Sales Rule, which prohibits sellers and telemarketers from requesting or receiving payment of any fees for any debt relief services until and unless: the seller or telemarketer has renegotiated, settled, reduced, or otherwise altered the terms of at least one debt, and consumer made at least one payment pursuant to agreement between consumer and creditor. Furthermore, the rule prohibits the misrepresentation of affiliation or endorsement or sponsorship by any person or government entity, and from misrepresenting any material aspect of any debt relief service, including but not limited to, the amount of money or percentage of the debt amount that a consumer may save by using the service. 

Without admitting or denying the allegations, on January 26, 2022, a settlement was reached with the FTC. In addition to the defendants be banned permanently from providing student loan debt relief products or services or from making any misrepresentations in connection with the sale of any product or service or of violating the Telemarketing Sales Rule, the defendants are ordered to pay $7,557,001.10, that will be suspended upon payment by Mr. Singh of $743,386.00.