On July 22, 2015, the Consumer Financial Protection Bureau (“CFPB”) issued a consent order against a national bank and its affiliates for its servicing practices affecting private student loan borrowers. The order asserts that the bank violated various sections of the Consumer Financial Protection Act of 2010 (“CFPA”) and the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq. According to CFPB, the bank overstated the minimum amounts due on billing statements and failed to provide accurate interest information needed by borrowers to seek tax benefits. The order also states that the bank engaged in illegal debt collection tactics, including calling consumers early in the morning and late at night, and failing to provide consumers with information regarding the amount and source of their debt.
The order requires the bank to refund $16 million to more than 100,000 borrowers and to pay a $2.5 million penalty to the CFPB Civil Penalty Fund. It also requires that the bank make accurate representations regarding minimum periodic payments, send borrowers IRS W-9S forms, and cease making calls to consumers before 8:00 a.m. or after 9:00 p.m.
CFPB noted that its order comes as it considers steps to ensure all student loan borrowers have access to “adequate loan servicing.” CFPB also stated that it has recently been joined by the Department of Education and Department of Treasury in its public inquiry into student loan servicing practices.