b'Virginia AG Settles with Equitable AcceptanceLooking Ahead to 2022CorporationIn March 2021, then-Virginia Attorney General MarkIn 2022, we expect that the student lending space will Herring obtained a settlement against the studentcontinue to be an active area for federal and state su-debt relief company Equitable Acceptance Corporationpervision and enforcement as student lenders attempt (Equitable) to resolve allegations that the companyto navigate the challenges posed by 32 million federal misled students into purchasing debt relief servicesstudent loan borrowers returning to repayment, while that were already available to them at no cost. Inalso transferring approximately half of those borrowers particular, from February 2015 through August 2018,to a new servicer. We expect the CFPB in particular to the Virginia AG alleged that Equitable: (1) misled nearlybe more active in student lending given the agencys 2,200 students into purchasing student debt reliefrecent proclamations and the fact that student lending services that were either already available to them;was one of Director Chopras primary issues when he (2) made promises that it would enroll students intowas previously with the CFPB and the FTC. Additionally, programs that they were not eligible for; and (3) madethe Bureau recently announced that Seth Frotman, a loans that had interest rates above the states usuryformer CFPB Student Loan Ombudsman, is returning cap of 12% APR. Under the settlement, Equitableto the CFPB to serve as Acting General Counsel and must pay $40,000 in restitution, forgive $51,657.92 inSenior Advisorfurther signaling that student lending student loans, and pay $10,000 in enforcement costs.is likely to be at or near the forefront of the agencys If Equitable fails to comply with the settlement, a $5.5prospective supervision and enforcement priorities. million civil money penalty will be assessed.We also expect to see an increase in state enforcement Virginia has been active in the consumer protectionactions in the coming year. Last year, numerous states space in recent years, but this may change given Markpassed student borrower protection laws that many Herrings recent defeat by Republican Jason Miyares.state agencies and attorneys general may be eager If Miyares acts similarly to other Republican Attorneysto enforce. Additionally, this year the U.S. Department general, we anticipate seeing a decline in Virginiaof Education furthered that effort by issuing guidance actions in the next four yearsalthough perhaps not inclarifying that, though federal law preempts state regu-the student lending space. lation in certain narrow areas, states may regulate stu-dent loan servicing in many other ways without being CFPB Enters into Consent Order with Better Futurepreempted by the federal Higher Education Act (HEA). Forward, Inc. Finally, in May 2021, the FSA announced a change in its In September 2021, the CFPB entered into a consentinformation-sharing policy that should make it easier for order with Better Future Forward, Inc. and its affiliatestate attorneys general to obtain information from FSA companies. The order resolves allegations that theregarding loan servicers that are suspected of violating company falsely mischaracterized the income sharethe law. agreements (ISA) it provided to consumers as neither credit nor private education loan. In particular, the CFPB alleged that Better Future Forward violated theWhat to WatchConsumer Financial Protection Act (CFPA), RegulationThe challenges and potential pitfalls facing student Z (Reg Z), and the Truth in Lending Act (TILA) byloan servicers, especially federal student loan failing to provide borrowers with required disclosuresservicers, will likely be at or near an all-time high under Reg Z and imposing unlawful prepaymentin 2022, so servicers should be sure to review and penalties in violation of TILA. Under the consent order,take efforts to strengthen their compliance controls Better Future Forward is enjoined from engaging inin preparation for the inevitable scrutiny and super-the alleged misrepresentations and must providevision to come.consumers with required disclosures. The CFPB noted that it did not impose any financial penalties against the company considering its responsible conduct, namely that it demonstrated good faith and substantial cooperation beyond that required by law.48'