The CFPB recently entered into a consent order with a student loan servicer, alleging violations of a prior consent order entered into in 2015, as well as other unfair acts and practices. The student loan servicer, which did not admit or deny the allegations, is required to pay $10 million in consumer redress and a $25 million civil money penalty.
The 2015 consent order was based on the student loan servicer’s alleged misstatement of minimum amounts due on billing statements and tax information consumers needed to receive federal income tax benefits, as well as the servicer’s allegedly illegal debt collection practices. The CFPB alleged the servicer violated the 2015 consent order by misrepresenting consumers’ minimum loan payments, the amount of interest paid, and other information, including interest rates, payments, due dates, and the availability of awards. The CFPB also alleged that the servicer did not pay all of the consumer redress required by the 2015 consent order. In addition, the CFPB alleged the servicer engaged in deceptive acts and practices by withdrawing payments from consumers’ accounts without valid authorization, and cancelling or not withdrawing payments without notifying consumers.
The CFPB made its findings after an examination of the servicer in 2017, while the servicer was migrating its student loan servicing platform to a new system. The CFPB alleged that the servicer knew issues had arisen during the migration, but did not report them to the CFPB. The CFPB further alleged that while it was performing the onsite examination, the servicer also knew of issues unrelated to the migration that the servicer did not report.