Alexander J. Douglas, Esq. | Attorney | (585) 703-9783 |

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Federal Government Sues Navient for Collection Violations

Recently, the Consumer Financial Protection Bureau (CFPB), the main federal regulator of debt collectors and financial organizations, sued Navient in federal court for extensive mistakes and violations relating to its debt collection behavior. The CFPB also sued one of Navient’s largest debt collection companies, Pioneer Credit Recovery, Inc. The attorneys general in Washington and Illinois joined the lawsuit.

Some people might not recognize the name Navient, but they almost definitely have heard of Sallie Mae. Sallie Mae spun off Navient several years ago to operate as its debt collection arm of the company. Navient oversees the collection of billions of dollars’ worth of student loans, both federally insured and private.

If you fall behind on your federally insured student loans, federal law guarantees you the right to enter into an “income-based repayment” (IBR) program, where you can make monthly payments on your loans for a small percentage of your income.

According to the lawsuit, Navient employees steered consumers away from entering into these beneficial programs.  In addition to steering borrowers away from these plans, the CFPB also accused Navient of neglecting to inform borrowers of the deadlines for their IBR plans, forcing millions of their borrowers to fail to renew their plans on time. As a result, their loans went back into traditional payment in full, where some consumers had to pay several thousand dollars a month.

Also, the CFPB accused Navient of applying consumers’ payments incorrectly, sometimes applying the payments to student loans which were accruing a lower rate of interest, and leaving the accounts with the higher rate untouched.

These are just some of the accusations leveled against Navient by CFPB. Navient has been a huge player in the student loan field for several years now.

We here at Gesund & Pailet stand ready to help consumers who are having problems with their student loan collectors.

Federal Trade Commission enforcement of Phantom Debt Collection

This week, the Consumer Financial Protection Bureau (CFPB) released its annual 2017 report to Congress about the Fair Debt Collection Practices Act (FDCPA). The CFPB reported that the Federal Trade Commission (FTC), who also helps to enforce the FDCPA, brought or settled 12 different lawsuits against debt collectors in 2016, which focused mainly on phantom debt collection and unlawful text messages.

Phantom debt collection refers to debt collectors attempting to collect debt that does not actually exist. Thousands of consumers are impacted by this unlawful practice annually.

In 2016, the CFPB obtained $39 million in restitution for consumers, with debt collectors paying an additional $20 million in civil penalties relating to FDCPA violations.

Debt collectors may also violate the Telephone Consumer Protection Act (TCPA) by sending text messages to the cell phones of consumers where they do not have the consent to do so. If a court finds that this law is violated, the debt collector could be liable for up to $1,500 per unlawful text message.

In 2017, the CFPB released two different studies on the debt collection industry, including a white paper about online debt sales, and a report on Consumer Experiences with Debt Collection, based on the CFPB’s reviews of consumer views on debt collection.

The CFPB also noted that consumer debt has continued to increase since 2013, and is approaching the peak that it once held in 2008. (Consumer debt includes debt for family and household purposes, including credit cards, student loans, and medical bills.)

As a consumer, you  should know that you have rights under the FDCPA to prevent debt collectors from using any harassing, abusive, or misleading communications when they are collecting debt. Consumers may be entitled to up to $1,000 for such violations, plus attorneys’ fees and costs required to bring the case. Because the law provides for attorneys’ fees, I can usually take these type of cases on contingency.

Large Debt Collector Pays $700K in Settlement

GC Services Limited Partnership, a large Texas-based debt collector, is paying $700,000 to settle a civil lawsuit brought by the Federal Trade Commission (FTC) for illegal debt collection practices.  The authorities announced the settlement on the same day that a U.S. Attorney sued GC for violating the Fair Debt Collection Practices Act (FDCPA).

According to the U.S. Attorney, GC was accused of repeatedly calling consumers after the person answering the phone stated that they didn’t know the consumer that GC was looking for, nor did they know where the consumer might be. The U.S. Attorney also accused GC for disclosing information about a debt to unauthorized third parties, which is a violation of the FDCPA.

In the lawsuit, the FTC stated that GC collected $1.2 billion from consumers in 2014, making them a large market participant. The company has more than 7,600 employees, including more than 1,400 employees who work exclusively in debt collection.

As we’ve reported on this blog earlier, the FTC released its debt collection press release for 2016 which states that the regulatory agency settled 12 cases against 61 defendants in that year. The FTC also banned 44 companies from continuing to collect debt from consumers.

Despite this setback of having to settle such a high value suit, GC is still doing pretty well. Last December, the Department of Education announced that it selected GC as one of seven debt collectors who were authorized to collect on federally insured student loans. The other collectors selected by the DOE include Financial Management Systems Investment Corp., Premiere Credit of North America, the CBE Group, Transworld Systems, Value Recovery Holding and Windham Professionals.

Under the FDCPA, debt collectors are prohibited from misrepresenting facts about your debt, harassing you, or using unfair practices to collect debt. A plaintiff can sue under this law and can receive upwards of $1,000 plus attorneys’ fees. As consumers continue to complain about debt collection, these lawsuits are becoming more and more common.

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