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Attorney General Bondi and FTC Crack Down on Debt Relief Schemes

TALLAHASSEE, Fla.—Attorney General Pam Bondi and the Federal Trade Commission today announced two joint actions against alleged unlawful debt relief operations targeting student loan holders.

 In the first action, the enforcement agencies filed a joint action against Chasity Valdes and her companies, Consumer Assistance LLC, Consumer Assistance Project Corp. and Palermo Global LLC, alleging that the defendants took illegal up-front fees in return for their purported debt relief and credit repair services that they falsely claimed would reduce consumers’ student loan debt and repair the consumers’ credit. The defendants allegedly charged illegal up-front fees for their purported debt relief and credit repair services, typically $250 at signup, with recurring fees of up to $303 per month for as long as 36 months. The complaint alleges that Valdes and her companies violated the Florida Deceptive and Unfair Trade Practices Act, the FTC Act, the Telemarketing Sales Rule and the Credit Repair Organizations Act. The complaint also seeks consumer refunds and a permanent stop to the alleged illegal practices. 

According to the complaint, the defendants led consumers to believe they qualified for government student loan forgiveness programs that would result in a reduction of their student loan debt, even though the programs have strict requirements that the consumers were likely not to meet. The complaint also alleges defendants misrepresented they would audit consumers’ loans for errors that would invalidate the loans or reduce the balance, when in reality, at most, defendants merely sent worthless form dispute letters.

“The Federal Trade Commission has been a steadfast partner in our consumer protection enforcement efforts,” said Attorney General Bondi. “These latest joint actions will help protect Floridians, as well as many across the country, from these companies’ unscrupulous debt relief operations and ensure that those responsible will be held accountable.”

“The FTC is not going to stand on the sidelines when it uncovers evidence of fraudsters targeting students,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Consumers should be wary of any company that claims it can eliminate or greatly reduce debt, especially if they ask for money in advance.”

In the second action, the Attorney General’s Office and the FTC sued Student Aid Center Inc., Damien Alvarez and Ramiro Fernandez-Moris for alleged violations of the Florida Deceptive and Unfair Trade Practices Act, the FTC Act and the Telemarketing Sales Rule. According to the complaint, the defendants allegedly lured consumers into paying illegal upfront fees, typically three to five monthly payments of $199 or more, with false promises that they were approved or pre-approved for loan forgiveness or lower monthly payments. The complaint also alleges the defendants’ website falsely represented that consumers could be qualified for student loan forgiveness and/or consolidation in less than five minutes.

Student Aid Center allegedly promised a 100 percent money-back guarantee, but consumers who sought refunds often got a much lower amount or obtained refunds only after complaining to the Better Business Bureau or a state or federal regulatory authority. Additional complaints allege that instead of issuing refunds after consumers canceled enrollment, the defendants threatened to send consumers’ accounts to collection.

Attorney General Bondi’s Office and the FTC filed both complaints in the U.S. District Court for the Southern District of Florida. Attorney General partners in Washington and the District of Columbia filed separate actions against Student Aid Center in their own jurisdictions.

To view the motion for preliminary injunction against Chastity Valdes and her companies, click here, and for the complaint, click here

To view the complaint filed against Student Aid Center Inc., Damien Alvarez and Ramiro Fernandez-Moris, clickhere.

To help consumers better protect themselves from fraudulent debt relief services, the FTC is providing the following new consumer education materials:

· Advice for consumers about student loan debt relief, in both English and Spanish;


· The latest in a series of graphic novels aimed at raising awareness about scams targeting Latino communities, Maria and Rafael Learn the Signs of a Debt Relief Scam; and


· A list of every company and individual ever banned from providing debt relief services, including mortgage foreclosure relief, by an FTC order.


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