In a Form 8-K filed with the SEC on December 27, 2013, ITT Educational Services, Inc. disclosed that it has received a CFPB “early warning” letter stating that the CFPB’s Enforcement Office is considering recommending that the CFPB take legal action against ITT. Such letters, which are sent pursuant to the CFPB’s discretionary Notice and Opportunity to Respond and Advise (NORA) process, are intended to allow the target of a CFPB investigation to respond to potential legal violations that the CFPB’s enforcement staff believes have been committed before the CFPB ultimately decides whether to bring an enforcement action. According to the 8-K filing, the NORA letter received by ITT states the CFPB’s enforcement staff expects to allege that ITT violated Section 1036 of the Dodd-Frank Act (which prohibits violations of federal consumer financial laws and unfair, deceptive or abusive acts or practices), TILA and Regulation Z.
The filing also indicates that in September 2013, ITT received a Civil Investigative Demand (CID) from the CFPB indicating that the purpose of the CFPB’s investigation was “in part, ‘to determine whether for-profit post-secondary companies, student loan origination and servicing providers, or other unnamed persons have engaged or are engaging in unlawful acts or practices relating to the advertising, marketing, or origination of private student loans.’” (The September CID replaced another CID sent to ITT in May 2012 which was withdrawn by the CFPB.) ITT states in the filing that it has provided documentation and other information to the CFPB in response to the CID.
According to the filing, ITT “intends to make a NORA submission to the CFPB, and continues to believe that its acts and practices relating to the matters under investigation are lawful.”