CFPB Fines $ 1 Million on Student Loan Officer for Correcting Alleged UDAAP Violations – Financial and Banking

United States: CFPB fines $ 1 million Student Loan Officer for settling alleged UDAAP violations

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On March 30, the CFPB neat with a student loan officer to resolve allegations that the server made misleading statements to student loan borrowers and misunderstood their forgiveness and repayment options, including defrauding borrowers with Public Service (PSLF). The consent order requires the service to pay a $ 1 million fine.

The Office found that the server violated the Consumer Financial Protection Act by committing misleading acts and practices and harming student loan borrowers:

  • Misleading statement that FFELP borrowers could not obtain PSLF

  • Misleading statement that FFELP borrowers made payments to PSLF prior to loan consolidation

  • Misleading statement to borrowers that some jobs were not eligible for PSLF

  • Description of forgiveness programs for FFELP borrowers without mentioning PSLF

In addition to the $ 1 million fine, the CFPB mandate requires the company to take various actions, such as: notifying them of the opportunity to participate in the PSLF Restricted Disclaimer. develop and implement a call scenario for customer service representatives to use when talking to FFELP borrowers; and review and strengthen policies, procedures and training

materials for the exact detail of the suitability requirements for PSLF.

CFPB Director Rohit Chopra issued a statement on the last order. “Millions of borrowers are paying extra fees and interest or extra payments for amounts that should have been canceled through existing cancellation schemes due to misaligned incentives from student loan and bureaucrats.” “For too long, we have asked millions of student loan borrowers to shoulder the burden of this broken system. “This must end.”

Putting it into practice: Student lending participants, and in particular servers, should review the latest CFPB order with an emphasis on reducing potentially unfair, misleading or abusive acts (UDAAP) in relation to interactions with students. This latest action is in line with a series of enforcement actions by the Bureau against post-secondary schools. The CFPB’s examination procedures manual is intended for use by Office examiners and is available as a resource to those taking the exam. These procedures should be reviewed and integrated into all student loan service policies and procedures.

The content of this article is intended to provide a general guide to the subject. Expert advice should be sought for your specific circumstances.

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