CFPB Files Lawsuit Against Largest U.S. Student Loan Servicer Over Deceptive Practices

Goodwin
Contact

On January 18, 2017, the Consumer Financial Protection Bureau (CFPB) announced that it had filed a lawsuit in the U.S. District Court for the Middle District of Pennsylvania against a servicer of private and federal student loans, alleging that the servicer used deceptive practices related to borrower repayment.

The student loan servicer is the largest such servicer in the country, servicing more than 12 million borrowers and $300 billion in student loans.  The complaint alleges that the servicer violated the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Fair Credit Reporting Act, and the Fair Debt Collection Practices Act by “systematically and illegally failing borrowers at every stage of repayment” by creating obstacles to repayment.  Specifically, the CFPB alleged that, among other practices, the servicers deceived borrowers by failing to correctly process their payments, cheated certain borrowers who had a right to make lower payment amounts, and provided borrowers false information about repayment options.

The CFPB further alleged that the servicer, through a subsidiary, illegally misrepresented to borrowers in default that completion of a federal loan rehabilitation program would erase adverse information from the borrowers’ credit reports and result in forgiveness of all collection fees.

The complaint seeks (1) a permanent injunction against the company from future violations of federal consumer protection laws, (2) restitution for harmed consumers, (3) other injunctive relief, (4) disgorgement of ill-gotten revenue, (5) civil penalties, (6) rescission of any contracts where necessary to redress consumers’ injuries, and (6) enforcement costs.

 

Written by:

Goodwin
Contact
more
less

Goodwin on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.