FTC Acts to Stop Scheme that Bilked Millions out of Student Loan Borrowers

The Federal Trade Commission has stopped a scheme that allegedly bilked millions of dollars out of consumers burdened with student loan debt by pretending to be affiliated with the U.S. Department of Education in violation of the FTC's Impersonation Rule, collecting illegal advance fees, and making other deceptive claims.

A federal court temporarily halted the scheme and froze its assets at the request of the FTC, which seeks to end the defendants' deceptive practices.

"The defendants promised consumers student debt relief and forgiveness but gave them virtually nothing, keeping over $10 million for themselves and leaving consumers deeper in debt," said Samuel Levine, Director of the FTC's Bureau of Consumer Protection. "The FTC will continue taking decisive action against those who prey on Americans with student debt."

According to the FTC's complaint, since at least January 2023, Nevada-based Superior Servicing and its operator Dennise Merdjanian made telemarketing calls and sent personalized mailers to borrowers falsely claiming that consumers enrolled in defendants' program could obtain benefits such as loan consolidation, reduced interest rates on their student loans, reduced monthly student loan payments, or loan forgiveness. The operators collected illegal advance fees of up to $899 as an initial payment followed by monthly payments that defendants falsely represented were going towards consumers' student loan debt.

To convince borrowers that their claims were legitimate, the operators allegedly pretended to "work with" or be affiliated with the Department of Education or its approved loan servicers and, in some instances, even advised consumers to stop making payments to their existing loan servicers. The operators then falsely claimed that they would take over responsibility for servicing consumers' loans, collect monthly student loan payments for a term of up to 20 years, and said that upon completion of those monthly payments, the consumers' federal student loan debt would be forgiven.

Contrary to Superior Servicing's false promises, borrowers have reported that they never received loan consolidation, lowered payments, or loan forgiveness, according to the complaint. The FTC noted that at most, and if anything at all, the defendants filled out simple applications for debt relief that are available for free from the Department of Education.

The FTC charged that the scheme's operators violated the Impersonation Rule by claiming to be affiliated with the Department of Education, as well as the FTC Act's prohibition on deceptive practices, the Telemarketing Sales Rule, and the Gramm-Leach-Bliley Act.

The Commission vote authorizing the staff to file the complaint was 5-0. The U.S. District Court for the District of Nevada entered a temporary restraining order on November 22, 2024 and a preliminary injunction against corporate defendant Superior Servicing on December 6, 2024.

The lead staff attorneys on this matter were John O'Gorman, Luis Gallegos, and Reid Tepfer of the FTC's Bureau of Consumer Protection.

NOTE: The Commission files a complaint when it has "reason to believe" that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.