On November 12, the CFPB filed a proposed stipulated final judgment and order against a student loan servicer (the defendant) for alleged violations of the CFPA, the FCRA and the FDCPA. As previously covered by InfoBytes, the CFPB filed a complaint against the defendant in 2017 alleging that it “systematically and illegally” created “obstacles to repayment” and “cheated” many borrowers out of their rights to lower repayments, which the Bureau alleged had borrowers paying significantly more for their student loans.
According to the proposed stipulated final judgment and order, the defendants would be required to pay $100 million in consumer redress and a $20 million civil money penalty. If entered by the court, the proposed order would also permanently ban the defendants from servicing federal Direct Loans, with limited exceptions, and would restrain the company permanently from directly or indirectly servicing most loans under the Federal Family Education Loan Program. The stipulated order also set forth extensive and detailed requirements for servicing the existing book of all federal and private student loans, including, among other things, payment allocation and payment crediting procedures, acceptance of borrower instructions for crediting and processing payments, prohibition of certain fees (such as fees for forbearance or to process payments), required information on billing statements, required written and oral communications, and mandatory training of “repayment specialists” for borrowers.
