On December 9, the CFPB issued a consent order against a debt collector following allegations of unfair and abusive practices regarding its collection of student loan debt allegedly violating the CFPA and the FDCPA. The CFPB alleged from 2015 to 2020, the company intentionally delayed loan rehabilitation for borrowers who defaulted on Federal Family Education Loan Program loans. As described by the CFPB, the delay was designed such that borrowers would incur collection costs that would be “added to their loan balances.”
The consent order prohibited the company from servicing or collecting on student loan debt and from engaging in related activities such as consulting or providing administrative support services in connection with student loan debt. The order also prohibited the company from disclosing, using or benefiting from customer information obtained in connection with servicing or collecting on student loan debt. It also prohibited the company from attempting to collect, sell, assign or otherwise transfer any right to collect payment from consumers. The company is required to pay a $700,000 civil money penalty and adhere to compliance and reporting obligations including: (i) submitting a compliance progress report; (ii) maintaining records of consumer complaints; and (iii) cooperating with the CFPB to identify affected consumers and assess the extent of the issue’s impact. The company agreed to the terms of the consent order without admitting or denying the CFPB’s allegations.
