In a consent order issued August 20, 2016, Wells Fargo agreed to pay over $4 million to settle a CFPB action alleging the bank unfairly penalized private student loan borrowers. The consent order also requires the bank to improve its student loan servicing practices, correct errors on consumer credit reports, and to provide enhanced disclosures to borrowers.
The CFPB brought an action against Wells Fargo alleging numerous deficiencies in the bank’s practices, including: failing to provide important payment information to consumers, charging consumers illegal fees, and failing to update inaccurate credit report information. The CFPB alleged that the servicing breakdowns constituted a violation of the Dodd-Frank Act’s prohibition on unfair and deceptive practices, in addition to similar violations of the Consumer Protection Act and separate violations of the Fair Credit Reporting Act. In a statement by CFPB Director Richard Cordray, he explained: “Wells Fargo hit borrowers with illegal fees and deprived others of critical information needed to effectively manage their student loan accounts. Consumers should be able to rely on their servicer to process and credit payments correctly and to provide accurate and timely information and we will continue our work to improve the student loan servicing market.”
The CFPB has focused on student loan enforcement efforts recently in response to a report it released last year outlining widespread servicing failures. The report was conducted in response to borrower complaints regarding both federal and private student loan servicing practices.
Consent Order available at: http://files.consumerfinance.gov/f/documents/2016-CFPB-0013Wells_Fargo_Bank_N.A.–_Consent_Order.pdf.
CFPB Student Loan Report available at: http://files.consumerfinance.gov/f/201509_cfpb_student-loan-servicing-report.pdf.