Sept. 13 CFPB Recent Updates

The Consumer Financial Protection Bureau (CFPB) filed a proposed order against the student loan servicer Navient for its years of failures and lawbreaking. If entered by the court, the proposed order would permanently ban the company from servicing federal Direct Loans  and would forbid the company from directly servicing or acquiring most loans under the Federal Family Education Loan Program . These bans would largely remove Navient from a market where it, among other illegal actions, steered numerous student loan borrowers into costly repayment options. Navient also illegally deprived student borrowers of opportunities to enroll in more affordable income-driven repayment plans and forced them to pay much more than they should have. Under the terms of the order, Navient would have to pay a $20 million penalty and provide $100 million in redress for harmed borrowers.

The CFPB’s investigation of Navient kicked off a series of efforts by state and federal agencies to examine forbearance steering and other breakdowns in the income-driven repayment program. Those efforts have resulted in more than $50 billion  in debt relief for more than 1 million borrowers who were wrongly steered into forbearance, as well as those who had payments miscounted. Today’s order complements actions already taken by the Department of Education and state attorneys general to provide redress to borrowers harmed by Navient.

The CFPB sued Navient for failing borrowers at every stage of repayment. The lawsuit alleges that Navient steered borrowers who may have qualified for income-driven repayment plans into forbearance instead. This practice was cheaper and simpler for Navient, but detrimental to borrowers. By steering struggling borrowers into forbearance – where interest continues to accrue and capitalize – Navient’s illegal actions led numerous borrowers to pay additional interest charges.

Consumer reports, including credit reports, employment screening reports, tenant screening reports, and other background reports, are used by financial institutions, employers, and landlords, among others, to decide whether to extend credit, housing, or employment to a consumer. The inaccurate information shared by TD Bank related to credit card and bank deposit accounts, including accounts TD Bank knew or suspected were fraudulently opened. After the bank realized it was botching its reporting to consumer reporting companies, it took far too long to correct many of its errors.

TD Bank, N.A. is a national bank headquartered in Cherry Hill, New Jersey. It is one of many subsidiaries of Toronto-based Toronto-Dominion Bank (NYSE: TD). Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group. TD Bank Group reported $1.97 trillion in assets as of the third quarter of 2024. The U.S.-based TD Bank is the tenth-largest commercial bank in the country with more than 1,200 branches. As of June 30, 2024, TD Bank had $370 billion in total assets. Among the products and services offered by TD Bank are credit cards and deposit accounts. TD Bank furnishes information to credit and other consumer reporting companies about its customers related to their credit cards and deposit accounts. In February 2022, TD Bank announced that it would acquire another large financial institution, First Horizon Bank. The deal was later abandoned in 2023.