Consumer Finance Insights
August 10, 2017

Five State Regulators Settle Claims Against Student Loan Debt Collector for $500,000

On August 10, 2017, the Massachusetts Division of Banks (DOB) announced that it had reached, together with the financial regulators of Connecticut, Idaho, Minnesota, and North Dakota, a settlement with two companies, resolving allegations that their debt collection practices failed to comply with state and federal consumer protection laws, including the Fair Debt Collection Practices Act and Consumer Financial Protection Act.  The enforcement action began with a multi-state examination of the companies’ business practices conducted concurrently with the Consumer Financial Protect Bureau’s review of one of the company’s federal student loan debt collection practices.

According to the settlement agreement, over the course of several months in 2015, one company contacted consumers at their place of employment without permission and contacted consumers on a “do not call” list.  This company also failed to promptly credit consumers’ accounts after receiving payments by check.

According to the agreement, both companies also allegedly failed to provide timely and complete access to all collection records, and failed to submit timely and complete responses to requests for information.

The companies agreed to make a payment of $500,000 that will be distributed among the states.  They also agreed to implement a compliance management system and audit program; re-train employees on the companies’ Whistleblower Policy; ensure that debt collection practices do not violate state or federal law; and promptly credit accounts.

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