CFPB ENFORCEMENT

Student Loans

On December 11th, the CFPB announced a Consent Order against College Education Services, its owner, and an advisor and employee for allegedly collecting illegal advance fees from consumers for debt relief services, for falsely promising consumers lower student loan payments, and for falsely claiming “quick relief” from default or garnishment. The Consent Order would permanently ban College Education Services and the named individuals from engaging in the debt relief business, as well as imposing a $25,000 civil penalty, based on the defendants’ inability to pay a greater amount. The CFPB filed the Consent Order against College Education Services jointly with the Florida Department of Legal Affairs.

The CFPB separately entered into a Consent Order against Student Loan Processing.US, “a fictitious business name of Irvine Web Works, Inc.,” and its owner for alleged unfair, deceptive, or abusive practices including falsely representing an affiliation with the U.S. Department of Education, charging illegal advance fees, and deceiving borrowers about the costs and terms of its services.

In conjunction with its announcement of the Consent Orders, the CFPB published a Consumer Advisory, warning that “student loan debt relief companies may cost you thousands of dollars and drive you further into debt.” The advisory provided warning signs to consumers that a company offering student loan debt relief may prove a “scam,” and reminded borrowers about alternative repayment programs such as the Income-Based Repayment program or the Pay As You Earn program, that are available to federal student loan borrowers at no cost.

Debt Collection

On December 4th, the CFPB filed a stipulated order against debt-settlement firm Premier Consulting Group, LLC (Premier Consulting), for alleged violations of the Federal Trade Commission’s Telemarketing Sales Rule by charging consumers illegal upfront fees for debt-settlement services they never received.  In May 2013, the CFPB filed a complaint against Premier Consulting, alleging that the debt-settlement firm “routinely charged consumers upfront fees before settling consumers’ debts,” and not providing them with debt-settlement services, causing, “consumers to fall further into debt and harm their credit history.” CFPB Director Richard Cordray stated that “[c]harging upfront fees for debt-settlement services is against the law, and today’s action is another reminder that these illegal practices will not be tolerated.” Under the terms of the Order, Premier Consulting will pay a civil penalty of $69,075, the sum of the advanced fees charged to consumers who did not have any debt settled.  In addition, affected consumers may be eligible for relief from the CFPB’s Civil Penalty Fund in the future.

CFPB SUPERVISION

Medical Debt / Credit Reporting

On December 11th, the CFPB published a report and associated materials about medical and non-medical collections and consumer credit reports. The announcements coincided with the CFPB’s field hearing in Oklahoma on medical debt collection, at which CFPB Director Richard Cordray delivered prepared remarks.

The CFPB concluded in its report that:

  • Approximately 50% of all debt tradelines is from medical debt;
  • Approximately 20% of credit reports contain medical debt tradelines;
  • Approximately 7% of consumers have medical debt and no other collection items on their reports; and
  • The average reported medical debt is $579 and the median of $207, each smaller than the respective amounts for unpaid non-medical collections items.

The CFPB announced that it will require the national credit reporting systems to provide regular reports about furnishers as part of ongoing CFPB examinations, including information about furnishers with the most overall disputes, industries with the most disputes, and furnishers with particularly high disputes relative to industry peers. The CFPB published a sample report on its website.

In a Consumer Advisory and related blog post, the CFPB provided information for consumers to “keep medical debt in check” as well as to understand “how medical debt hurts your credit report.”

CFPB OPERATIONS

Employee Survey

On December 10th, the CFPB published its annual employee survey. The survey presented results from responses to 75 questions from 83% of CFPB employees.  In its report, the CFPB categorized the survey questions into the following content areas:

  • My work experience;
  • My agency;
  • My supervisor;
  • Leadership;
  • Rewards and recognition: work unit;
  • Rewards and recognition: agency;
  • Diversity and inclusion; and
  • Overall satisfaction.

The CFPB stated that it uses tools such as the employee survey “to develop strategies to better serve employee needs,” and that it shares results “across the organization to encourage leaders to actively seek and respond to opportunities to improve the employee work experience.”

CFPB OUTREACH

Financial Education

On December 5th, Director Cordray delivered prepared remarks at the Columbus Metropolitan Library on the CFPB’s partnerships with libraries to promote financial education.  Cordray spoke about the CFPB’s national project “aimed at turning libraries into neighborhood centers for financial education.”  He stated that the project started a year ago with only nine libraries and has expanded into partnerships with more than 360 library systems in 48 states.  Additionally, “one out of four people who sign on to a library computer does so to take care of commercial needs or financial matters,” Cordray stated.  As a result, Cordray seeks to develop more library partnerships and provide libraries with more resources “to help the library become the go-to place for people to learn more about…their financial affairs.”