The Consumer Financial Protection Bureau (CFPB) took action against Performant Recovery, Inc. today for illegal student loan debt collection practices.
It said Performant delayed borrowers' loan rehabilitation processes, adding unnecessary fees and costing borrowers thousands of dollars. The CFPB ordered the company to pay a $700,000 fine and banned it from collecting or servicing any student loans.
“Performant concocted a scheme to juice their profits by delaying student borrowers their rightful relief,” said CFPB Director Rohit Chopra. “The CFPB is holding Performant accountable for its unlawful debt collection practices that cost borrowers thousands of dollars.”
Performant, a debt collection company, delayed loan rehabilitations intentionally, the CFPB allegeed. Borrowers who acted within 65 days of default could avoid extra fees, but Performant slowed the process to ensure borrowers incurred collection costs, benefiting the company.
Performant used tactics like forcing borrowers to use slower methods, such as mailing forms, to delay the process further.
The CFPB found Performant’s actions caused borrowers to lose financial benefits, like avoiding fees, restoring student aid eligibility, and clearing defaults from credit reports. Performant’s practices were deemed unfair and abusive under federal law.
The order stops Performant from handling student loan debt and requires it to pay a $700,000 penalty to the CFPB’s victims relief fund.