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CFPB Takes Action against National Collegiate Student Loan Trusts, Transworld Systems
On Monday, September 18, 2017, the CFPB took action against the National Collegiate Student Loan Trusts and their debt collector, Transworld Systems, Inc., for alleged illegal student loan debt collection lawsuits. The companies sued consumers for private student loan debt the companies could not prove was owed, or debt too old to litigate. The lawsuits allegedly relied on the filing of false or misleading legal documents.
The proposed judgments will require an independent audit of all 800,000 student loans in the National Collegiate Student Loan Trusts’ portfolio, and prohibits the National Collegiate Student Loan Trusts, and any company they hire, from attempting to collect, report negative credit information, or file lawsuits on any loan the audit shows is unverified or invalid. The proposed judgment also requires the National Collegiate Student Loan Trust to pay at least $19.1 million to redress consumers as well as a civil money penalty. Under a separate consent order, Transworld is ordered to pay a $2.5 million civil money penalty.