Case: 1:22-cv-01919 Document #: 1 Filed: 04/14/22 Page 1 of 16 PageID #:1
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
`
`FEDERAL TRADE COMMISSION,
`
`Case No. 1:22-cv-1919
`
`COMPLAINT FOR PERMANENT
`INJUNCTION, MONETARY
`RELIEF, AND OTHER RELIEF
`
`Plaintiff,
`
`v.
`
`Human Resource Development Services, Inc., a
`corporation, also d/b/a Saint James School of
`Medicine and HRDS,
`
`Delta Financial Solutions, Inc., a corporation, and
`
`KAUSHIK GUHA, individually and as an officer
`of Human Resource Development Services, Inc.
`also d/b/a Saint James School of Medicine,
`
`Defendants.
`
`Plaintiff, the Federal Trade Commission (“FTC”), for its Complaint alleges:
`
`1.
`
`The FTC brings this action under Sections 13(b) and 19 of the Federal Trade
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`Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b), 57b, Section 6 of the Telemarketing and
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`Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. § 6105; the Trade
`
`Regulation Rule Concerning Preservation of Consumers’ Claims and Defenses (“Holder Rule”),
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`16 C.F.R. Part 433; and the FTC’s Trade Regulation Rule Concerning Credit Practices (“Credit
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`Practices Rule”), 16 C.F.R. § 444, which authorize the FTC to seek, and the Court to order,
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`permanent injunctive relief, monetary relief, and other relief for Defendants’ acts or practices in
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`violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), the FTC’s Telemarketing Sales Rule
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`1
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`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
`
`FEDERAL TRADE COMMISSION,
`
`Case No. 1:22-cv-1919
`
`COMPLAINT FOR PERMANENT
`INJUNCTION, MONETARY
`RELIEF, AND OTHER RELIEF
`
`Plaintiff,
`
`v.
`
`Human Resource Development Services, Inc., a
`corporation, also d/b/a Saint James School of
`Medicine and HRDS,
`
`Delta Financial Solutions, Inc., a corporation, and
`
`KAUSHIK GUHA, individually and as an officer
`of Human Resource Development Services, Inc.
`also d/b/a Saint James School of Medicine,
`
`Defendants.
`
`Plaintiff, the Federal Trade Commission (“FTC”), for its Complaint alleges:
`
`1.
`
`The FTC brings this action under Sections 13(b) and 19 of the Federal Trade
`
`Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b), 57b, Section 6 of the Telemarketing and
`
`Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. § 6105; the Trade
`
`Regulation Rule Concerning Preservation of Consumers’ Claims and Defenses (“Holder Rule”),
`
`16 C.F.R. Part 433; and the FTC’s Trade Regulation Rule Concerning Credit Practices (“Credit
`
`Practices Rule”), 16 C.F.R. § 444, which authorize the FTC to seek, and the Court to order,
`
`permanent injunctive relief, monetary relief, and other relief for Defendants’ acts or practices in
`
`violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), the FTC’s Telemarketing Sales Rule
`
`1
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`(“TSR”), 16 C.F.R. Part 310, the Holder Rule, and the Credit Practices Rule, in connection with
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`their deceptive marketing and sale of educational services.
`
`SUMMARY OF CASE
`
`2.
`
`Defendants operate a for-profit medical school in the Caribbean called Saint
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`James School of Medicine (“SJSM”) from their offices in Illinois. Defendants market
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`enrollment at their Caribbean medical schools primarily to consumers from the United States;
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`they state that 68.64% of the student body are American citizens. SJSM brochures provide a
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`demographic breakdown of the student body and state that 60% of SJSM students are African
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`American, Asian, or Hispanic or Latino.
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`3.
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`Since at least April 1, 2018, Defendants have convinced consumers to enroll in
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`SJSM with phony assurances regarding success on a standardized test and students’ job
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`prospects. Namely, Defendants lure consumers with false guarantees of student success at
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`passing a critical medical school standardized test, the USMLE Step 1 Exam (“USMLE”).
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`Defendants also make false or unsubstantiated representations regarding potential students’
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`likelihood of matching into residency programs upon graduation from SJSM.
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`4.
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`Defendants also market financing for their tuition and living expenses used for
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`attending Defendants’ classes. Defendants’ financing contracts contain language attempting to
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`waive consumers’ rights under federal law and omit legally-mandated disclosures.
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`JURISDICTION AND VENUE
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`5.
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`This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a),
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`and 1345.
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`6.
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`Venue is proper in this District under 28 U.S.C. § 1391(b)(2), (c)(1), and (c)(2),
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`and 15 U.S.C. § 53(b).
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`PLAINTIFF
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`7.
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`The FTC is an independent agency of the United States Government created by
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`the FTC Act, which authorizes the FTC to commence this district court civil action by its own
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`attorneys. 15 U.S.C. §§ 41–58. The FTC enforces Section 5(a) of the FTC Act,
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`15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce.
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`The FTC also enforces the TSR, which prohibits abusive and deceptive telemarketing acts or
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`practices, as well as the Holder Rule and Credit Practices Rule, which prohibit certain practices
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`in connection with extending credit to consumers.
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`DEFENDANTS
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`8.
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`Human Resource Development Services, Inc., also d/b/a Saint James School of
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`Medicine and HRDS (“HRDS”) is an Illinois corporation with a principal address of 1480
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`Renaissance Drive, Suite 300, Park Ridge, Illinois 60068. HRDS transacts or has transacted
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`business in this District and throughout the United States. At all times relevant to this
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`Complaint, acting alone or in concert with others, HRDS has advertised, marketed, distributed,
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`or sold education services including enrollment in medical school to consumers throughout the
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`United States.
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`9.
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`Delta Financial Solutions, Inc. (“Delta”) is an Illinois corporation with a principal
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`address of 1480 Renaissance Drive, Suite 300, Park Ridge, Illinois 60068. Delta transacts or
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`has transacted business in this District and throughout the United States. Delta provides
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`financing exclusively for Saint James Medical School students. At all times relevant to this
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`Complaint, acting alone or in concert with others, Delta has advertised, marketed, distributed, or
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`sold education services including enrollment in medical school to consumers throughout the
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`United States.
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`10.
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`Defendant Kaushik Guha is the Executive Vice President of Operations of HRDS.
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`At all times relevant to this Complaint, acting alone or in concert with others, he has formulated,
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`directed, controlled, had the authority to control, or participated in the acts and practices of
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`HRDS and Delta, set forth in this Complaint. Defendant Guha is responsible for strategic
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`direction and marketing approvals for HRDS advertising campaigns. Defendant Guha oversees
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`the daily operations of the Renaissance Drive offices and the Caribbean medical school
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`campuses. He is responsible for the school’s accreditation and finance departments. He resides
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`in this District and, in connection with the matters alleged herein, transacts or has transacted
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`business in this District and throughout the United States.
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`COMMON ENTERPRISE
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`11.
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`Defendants HRDS and Delta (collectively, “Corporate Defendants”) have
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`operated as a common enterprise while engaging in the deceptive acts and practices and other
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`violations of law alleged below. Corporate Defendants have conducted the business practices
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`described below through interrelated companies that have common ownership, officers,
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`employees, and office locations. Because these Corporate Defendants have operated as a
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`common enterprise, each of them is liable for the acts and practices alleged below.
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`COMMERCE
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`12.
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`At all times relevant to this Complaint, Defendants have maintained a substantial
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`course of trade in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act,
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`15 U.S.C. § 44.
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`DEFENDANTS’ BUSINESS ACTIVITIES
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`13.
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`Defendants operate Saint James School of Medicine (“SJSM”), a private,
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`for-profit medical school, which has two campuses in the Caribbean – one in Anguilla and one in
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`St. Vincent. Defendants describe themselves as a lower-cost alternative to American medical
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`schools: “Receive the same high-quality medical education and opportunities as US and
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`Canadian medical schools.”
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`14.
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` Defendants’ curriculum is comprised of ten trimesters over the course of four
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`years for each student. Defendants charge consumers tuition ranging from about $6,650 to
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`$9,859 per trimester (depending on campus and course study). Between 2016 and 2020,
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`Defendants have had approximately 1,300 students enrolled in their schools each year.
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`15.
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`Defendants advertise SJSM via the Internet and email marketing. They have also
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`advertised via radio and television. Defendants have purchased lead contact information for
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`consumers who have taken the MCAT examination. Defendants both respond to incoming calls
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`and place outgoing telephone calls to contact potential students and conduct a sales pitch for
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`SJSM enrollment. Defendants utilize high-pressure sales tactics to persuade consumers to pay a
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`$55 application fee, a $1,000 reservation fee, and enroll. SJSM telemarketers are instructed to
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`try to collect the reservation fee during the telemarketing call itself, even telling consumers that
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`they have 48 hours to pay the fee or risk losing their spot at the school. SJSM telemarketers are
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`compensated based on the number of consumers they convince to pay reservation fees for SJSM,
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`and those that ultimately enroll. Defendants also hold open houses at hotels around the United
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`States to induce enrollment.
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`16.
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`Prior to enrollment, SJSM telemarketers inform consumers that they can finance
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`their tuition and living expenses through Defendant Delta. SJSM telemarketers do not disclose
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`that Delta is affiliated with SJSM, nor do they disclose that the entities are owned by the same
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`person.
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`17.
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`Defendants make false and unsubstantiated representations in their marketing
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`about SJSM and a student’s likelihood of success and use credit contracts that violate the law.
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`Medical License Exam Pass Rate Misrepresentations
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`18.
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`The U.S. Medical License Exam (“USMLE”) is a standard medical school
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`examination that has three parts or “Steps.” Medical students are eligible to take the USMLE
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`Step 1 exam after they complete their basic science courses, typically after five semesters. There
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`is no prerequisite test required to take the USMLE Step 1 exam. At U.S. and Canadian medical
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`schools, 98% of first time USMLE Step 1 test takers in 2020 passed the exam.1
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`19.
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`In their sales calls, presentations, and marketing materials, Defendants represent
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`that the first time USMLE Step 1 pass rate for SJSM students is very high. For example,
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`Defendants distribute a brochure at their open houses that states: “96.77% FIRST TIME USMLE
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`STEP 1 PASS RATE” and “ST JAMES IS THE FIRST AND ONLY MEDICAL SCHOOL TO
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`OFFER A USMLE STEP 1 PASS GUARANTEE.” During an open house, the presenter
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`echoed this claim by stating that SJSM had a “USMLE Step 1 pass rate of 97%” in the preceding
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`1 See https://www.usmle.org/performance-data/default.aspx#2020_step-1.
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`year and “96% pass rate for the USMLE Step 2.” HRDS admissions staff have claimed to
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`consumers that SJSM has a “94% first time pass rate.” PowerPoint slides from Defendants’
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`open house presentation also refer to the “USMLE Step 1 Guarantee.”
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`20.
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`In fact, the USMLE pass rate is lower than touted, and lower than that reported by
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`U.S. and Canadian medical schools. Since 2017, only 35% of Saint James students who have
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`completed the necessary coursework to take the USMLE Step 1 exam passed the test.
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`Defendants allow only students that first pass a National Board of Medical Examiners
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`(“NBME”) practice exam, and meet other criteria, to take the USMLE Step 1 exam. They
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`disclose this fact in inconspicuous places on their website and in the middle of a student
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`handbook provided only after payment of reservation fees, but do not mention it when touting
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`the purported high USMLE Step 1 exam rate or otherwise bring it to consumers’ attention.
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`Even when limiting the pool to those who meet Defendants’ undisclosed or inadequately
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`disclosed criteria, the rate is lower than advertised. Defendants are unable to provide a
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`reasonable basis for the statement that the first time USMLE Step 1 pass rate for SJSM students
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`is 94% or higher.
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`21.
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`The first time USMLE Step 1 pass rate is a material fact for consumers.
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`Consumers routinely questioned HRDS admissions staff about the first time USMLE Step 1 pass
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`rates for SJSM students. If consumers knew that the pass rate for SJSM students was lower than
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`advertised, then it would likely affect their conduct, including whether to attend SJSM.
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`Residency Match Rate Misrepresentations
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`22. Medical schools typically participate in a program that matches medical school
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`seniors with residency programs in the United States. The matching is conducted by an
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`organization called the “National Resident Matching Program” (“NRMP”). NRMP describes
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`the residency matching program as beginning for students “in the fall during the final year of
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`medical school, when they apply to the residency programs of their choice. Throughout the fall
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`and early winter, applicants interview with programs. From mid-January to late February,
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`applicants and program directors rank each other in order of preference and submit the
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`preference lists to NRMP, which processes them using a computerized mathematical algorithm
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`to match applicants with programs.”2 For example, the NRMP website has reports on historic
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`and 2020 residency match rates: “For U.S. MD seniors, the match rate was 93.9, within the
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`historical 92-94 percent match rate.”3
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`23.
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`In their sales calls, presentations, and marketing materials, Defendants tout
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`SJSM students’ residency match rates and advertise the SJSM educational opportunities as “the
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`same” as American medical schools. For example, Defendants’ telemarketers are instructed to
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`tell consumers the match rate for SJSM students is 85-90%. Defendants’ advertising brochure
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`promotes a “high match rate” and their slides include a photograph of apparent students posing
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`with signs that read “I MATCHED” and a slide listing more than thirty hospitals across the
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`United States under the heading “WHERE WILL YOU GO? YOU CHOOSE.” Defendants
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`have stated on their website that the residency match rate for SJSM students is 83%.
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`24.
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`In fact, the match rate for SJSM students is lower than touted, and lower than that
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`reported by U.S. medical schools. Since 2018, Defendants’ average match rate has been 63%.
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`2 See https://www.nrmp.org/2021-press-release-delivers-strong-residency-match-2/.
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`3 See
`https://www.nrmp.org/press-release-mrm-results-and-data-2020/#:~:text=The%20PGY%2D1%2
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`Defendants are unable to provide a reasonable basis for the statement that the residency match
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`rate for SJSM students is 83% or higher.
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`25.
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`Residency match rates are material to consumers who, during the admissions
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`process, routinely ask questions about residency matching. Defendants include match rate
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`representations on their “FAQs” website, indicating this information is relevant to consumers’
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`selection of a school. If consumers knew that the residency match rate was lower than
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`advertised, or that Defendants’ residency match rate included people who graduated years
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`beforehand, it would likely affect their conduct, including whether to attend SJSM.
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`Use of Illegal Credit Contracts
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`26.
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`Defendants do not provide a legally mandated Holder Rule notice in their credit
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`agreements or Credit Practices Rule disclosure in connection with their credit agreements.
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`27.
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`The Holder Rule requires any seller that receives the proceeds of a purchase
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`money loan to include, in the underlying credit contract, a specific notice informing the
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`consumer of their right to assert claims against any holder of the credit contract. Defendants fail
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`to do so. Instead, they include a notice in the application, which differs from the language
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`required by the Holder Rule and is prefaced by this qualifier: “If the school is considered to be a
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`business subject to the Federal Trade Commission rules, then the following notice applies.”
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`28.
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`Defendants not only fail to include the required notice in their credit agreements,
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`but attempt to waive consumers’ legal rights by including the following language in the credit
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`agreement: “ALL PARTIES, INCLDING BOTH STUDENT BORROWER AND COSIGNER .
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`0match%20rate,1.77%2C%20the%20highest%20since%201976.
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`. . WAIVE ANY CLAIM OR CAUSE OF ACTION OF ANY KIND WHATSOEVER THAT
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`THEY MAY HAVE WITH RESPECT TO SAINT JAMES SCHOOL . . . ”
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`29.
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`Separately, the Credit Practices Rule requires that every creditor that extends
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`credit to consumers must inform cosigners of their liability prior to obligating the cosigner, in a
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`separate document using specific language.
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`30.
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`Defendants’ credit agreement contains a cosigner notice not in a separate
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`document, but in the middle of a contract. Further, Defendants’ notice fails to include the
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`specific language required by the Credit Practices Rule.
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`31.
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`Based on the facts and violations of law alleged in this Complaint, the FTC has
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`reason to believe that Defendants are violating or are about to violate laws enforced by the
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`Commission because their business is ongoing and their websites and telemarketing lines appear
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`active as of the date of filing this Complaint.
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`VIOLATIONS OF THE FTC ACT
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`32.
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`Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits “unfair or deceptive acts
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`or practices in or affecting commerce.”
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`33. Misrepresentations or deceptive omissions of material fact constitute deceptive
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`acts or practices prohibited by Section 5(a) of the FTC Act.
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`Count I
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`34.
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`In numerous instances in connection with the advertising, marketing, promotion,
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`offering for sale, or sale of educational services, including through the means described in
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`Paragraphs 15–31, Defendants represent, directly or indirectly, expressly or by implication, that:
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`A.
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`SJSM students have a first time pass rate of greater than 93% for the
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`USMLE Step 1 Exam; and
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`B.
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`More than 83% of SJSM students are matched with a medical residency
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`program.
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`35.
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`The representations set forth in Paragraph 34 are false or misleading or were not
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`substantiated at the time the representations were made.
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`36.
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`Therefore, the making of the representations as set forth in Paragraph 34
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`constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C.
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`§45(a).
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`VIOLATIONS OF THE TELEMARKETING SALES RULE
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`37.
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`In 1994, Congress directed the FTC to prescribe rules prohibiting abusive and
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`deceptive telemarketing acts or practices pursuant to the Telemarketing Act, 15 U.S.C. §§
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`6101–6108. The FTC adopted the original TSR in 1995, extensively amended it in 2003, and
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`amended certain sections thereafter.
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`38.
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`Defendants are “seller[s]” or “telemarketer[s]” engaged in “telemarketing” as
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`defined by the TSR, 16 C.F.R. § 310.2(dd), (ff), and (gg).
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`39.
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`It is a deceptive telemarketing act or practice and a violation of the TSR for any
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`seller or telemarketer to misrepresent, directly or by implication, in the sale of goods or services,
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`any material aspect of the performance, efficacy, nature, or central characteristics of goods or
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`services that are the subject of a sales offer. 16 C.F.R. § 310.3(a)(2)(iii).
`
`40.
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`Pursuant to Section 3(c) of the Telemarketing Act, 15 U.S.C. § 6102(c), and
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`Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), a violation of the TSR constitutes an
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`unfair or deceptive act or practice in or affecting commerce, in violation of Section 5(a) of the
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`FTC Act, 15 U.S.C. § 45(a).
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`Count II
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`41.
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`In numerous instances, in connection with the telemarketing of educational
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`services, Defendants have misrepresented, directly or indirectly, expressly or by implication,
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`material aspects of the performance, efficacy, nature, or central characteristics of their services,
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`including, but not limited to that:
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`A.
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`SJSM students have a first time pass rate of greater than 93% for the
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`USMLE Step 1 Exam; and
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`B.
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`More than 83% of SJSM students upon graduation are matched with a
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`medical residency program.
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`42.
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`Therefore, Defendants’ acts or practices as set forth in Paragraph 41 violate
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`Section 3103(a)(2)(iii) of the TSR. 16 C.F.R. § 310.3(a)(2)(iii).
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`VIOLATIONS OF THE HOLDER RULE
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`43.
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`The Holder Rule, promulgated by the Commission under Section 18 of the FTC
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`Act, 15 U.S.C. § 57a, became effective in its entirety on May 14, 1976, and since that date has
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`remained in full force and effect.
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`44.
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`“Creditor” means a person who, in the ordinary course of business, lends purchase
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`money or finances the sale of goods or services to consumers on a deferred payment basis;
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`provided, such person is not acting, for the purposes of a particular transaction, in the capacity of
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`a credit card issuer. 16 C.F.R. § 433.1(c). Defendant Delta is a “creditor” as defined in the
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`Holder Rule because it lends purchase money or finances the sale of goods or services to
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`consumers on a deferred payment basis in the ordinary course of business.
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`45.
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`“Seller” means a person who, in the ordinary course of business, sells or leases
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`goods or services to consumers. 16 C.F.R. § 433.1(j). Defendant HRDS is a “seller” as
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`defined in the Holder Rule because it sells goods or services to consumers in the ordinary course
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`of business.
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`46.
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`“Purchase money loan” means a cash advance which is received by a consumer in
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`return for a “Finance Charge” within the meaning of the Truth in Lending Act and Regulation Z,
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`which is applied, in whole or substantial part, to a purchase of goods or services from a seller
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`who (1) refers consumers to the creditor or (2) is affiliated with the creditor by common control,
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`contract, or business arrangement. 16 C.F.R. § 433.1(d). Defendant Delta offers purchase
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`money loans to consumers, the proceeds of which consumers use to purchase goods or services
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`from Defendant HRDS. Defendant HRDS refers consumers to Defendant Delta and is affiliated
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`with Defendant Delta by common control, contract, or business arrangement
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`47.
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`The Holder Rule prohibits sellers from accepting, as full or partial payment for
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`such sale or lease, the proceeds of any purchase money loan, unless the consumer credit contract
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`made in connection with such purchase money loan contains the following provision in at least
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`ten point, bold face type:
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`NOTICE
`ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO
`ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT
`AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED WITH THE
`PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR
`SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.
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`16 C.F.R. § 433.2(b).
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`48.
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`Pursuant to Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), a violation of
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`the Holder Rule constitutes an unfair or deceptive act or practice in violation of Section 5(a)(1)
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`of the FTC Act, 15 U.S.C. § 45(a)(1).
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`Count III
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`49.
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`In numerous instances, in connection with the selling or offering for sale of goods
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`services to consumers in or affecting commerce, as “commerce” is defined in Section 4 of the
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`FTC Act, 15 U.S.C. § 44, Defendants have violated the Holder Rule by accepting the proceeds of
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`purchase money loans, without the consumer credit contracts made in connection with such
`
`purchase money loans containing the Notice set forth in Paragraph 49, as required by 16 C.F.R. §
`
`433.2(a).
`
`VIOLATIONS OF THE CREDIT PRACTICES RULE
`
`50.
`
`The Credit Practices Rule promulgated by the FTC under Section 18 of the FTC
`
`Act, 15 U.S.C. § 57a, became effective on March 1, 1985, and has remained in full force and
`
`effect since that date.
`
`51.
`
`Defendants are “lender[s]” as that term is defined in the Credit Practices Rule, 16
`
`C.F.R. § 444.1(a).
`
`52.
`
`The Credit Practices Rule prohibits lenders, in connection with the extension of
`
`credit to consumers, from obligating a cosigner unless the cosigner is informed prior to
`
`becoming obligated of the nature of his or her liability as cosigner. 16 C.F.R. § 444.3(a)(2).
`
`53.
`
`Section 444.3 of the Credit Practices Rule requires that every lender that extends
`
`credit to consumers must inform cosigners of their liability prior to obligating the cosigner. 16
`
`C.F.R. § 444.3(a)(2). This disclosure must be presented in a separate document and contain the
`
`following statement and no other, as detailed in 16 C.F.R. § 444.3(c):
`
`NOTICE TO COSIGNER
`
`14
`
`
`
`Case: 1:22-cv-01919 Document #: 1 Filed: 04/14/22 Page 15 of 16 PageID #:15
`
`You are being asked to guarantee this debt. Think carefully before you do. If the
`borrower doesn't pay the debt, you will have to. Be sure you can afford to pay if
`you have to, and that you want to accept this responsibility.
`You may have to pay up to the full amount of the debt if the borrower does not
`pay. You may also have to pay late fees or collection costs, which increase this
`amount.
`The creditor can collect this debt from you without first trying to collect from the
`borrower. The creditor can use the same collection methods against you that can
`be used against the borrower, such as suing you, garnishing your wages, etc. If
`this debt is ever in default, that fact may become a part of your credit record.
`This notice is not the contract that makes you liable for the debt.
`
`54.
`
`Pursuant to Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), a violation of
`
`the Credit Practices Rule constitutes an unfair or deceptive act or practice in or affecting
`
`commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
`
`Count IV
`
`55.
`
`In numerous instances, in connection with the extension of credit to consumers,
`
`Defendants have failed to present cosigners with a separate document that contains the disclosure
`
`statement detailed in 16 C.F.R. § 444.3(c).
`
`56.
`
`Under 16 C.F.R. § 444.3(a)(2), the acts and practices alleged in Paragraph 57
`
`constitute unfair acts and practices in violation of the FTC Act.
`
`CONSUMER INJURY
`
`57.
`
`Consumers are suffering, have suffered, and will continue to suffer substantial
`
`injury as a result of Defendants’ violations of the FTC Act, the TSR, the Holder Rule, and the
`
`Credit Practices Rule. Absent injunctive relief by this Court, Defendants are likely to continue
`
`to injure consumers and harm the public interest.
`
`PRAYER FOR RELIEF
`
`Wherefore, Plaintiff requests that the Court:
`
`15
`
`
`
`Case: 1:22-cv-01919 Document #: 1 Filed: 04/14/22 Page 16 of 16 PageID #:16
`
`A.
`
`Enter a permanent injunction to prevent future violations of the FTC Act, the
`
`TSR, the Holder Rule, and the Credit Practices Rule;
`
`B.
`
`Award Plaintiff such preliminary injunctive and ancillary relief as may be
`
`necessary to avert the likelihood of consumer injury during the pendency of this action and to
`
`preserve the possibility of effective final relief;
`
`C.
`
`D.
`
`Award monetary and other relief within the Court’s power to grant; and
`
`Award any additional relief as the Court may determine to be just and proper.
`
`Dated:
`
`April 14, 2022
`
`Respectfully submitted,
`
`QUINN MARTIN
`K. MICHELLE GRAJALES
`Federal Trade Commission
`600 Pennsylvania Ave., NW
`Mail Stop: CC-10232
`Washington, DC 20580
`(202) 326-2080, 3172
`
`JAMES DAVIS, Local Counsel
`Federal Trade Commission
`Midwest Region
`230 South Dearborn Street, Room
`3030 Chicago, IL 60604
`jdavis@ftc.gov
`(312) 960-5596
`
`Attorneys for Plaintiff
`FEDERAL TRADE COMMISSION
`
`16
`
`
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