On November 21, 2017, the Consumer Financial Protection Bureau (CFPB) announced that it had entered into a consent order with a national bank, resolving allegations over the bank’s allegedly harmful student loan servicing practices and requiring it to pay millions in consumer relief and civil penalties.
According to the CFPB, the bank engaged in a number of practices that violated Sections 1031(a) and 1036(a) of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a) and 5536(a), and Sections 615(a)(2)(A)-(B) and 615(a)(3)(A)-(B) of the Fair Credit Reporting Act (FCRA). Specifically, the CFPB alleged that the bank misrepresented information concerning borrowers’ eligibility to claim tax deductions on the interest paid on their student loans; imposed interest and late fees on students who were still enrolled in school and eligible for loan deferment; misstated the minimum amount due on certain borrower accounts; and failed to provide required information to borrowers when considering a borrower’s request to release a co-signer from their student loans.
Under the terms of the consent order, the bank agreed to pay a total of $6.5 million, including $3.75 million in relief to affected consumers and $2.75 million in civil penalties. The bank must also change its allegedly unfair practices and submit to additional compliance monitoring.