Contact Us

Contact Us


  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013

  • Areas & Topics

    Frquently Asked Questions

    Our Office Location

    Edelman, Combs, Latturner, & Goodwin, LLC

    20 South Clark Street
    Suite 1500
    Chicago, IL 60603
    Phone: 312-739-4200
    Fax: 312-419-0379

    E-mail Us  |  Chicago Law Office

    Edelman Combs Latturner Goodwin's facebook page   Edelman Combs Latturner Goodwin's Twitter Page   Edelman Combs Latturner Goodwin's Google Plus Page


    FTC Action: International Scammers Banned from Business Directory Business

    Tuesday, September 20th, 2016

    Overseas Defendants Targeted Small Businesses, Non-Profits in U.S.

    In an action brought by the Federal Trade Commission in 2013, a federal court has banned a Slovakia-based company and two of its executives from the business directory business, ending a scam that for years took millions of dollars from small businesses and non-profits in the United States and other countries.

    A default judgment entered against Construct Data Publishers a.s., also doing business as Fair Guide, and a stipulated final judgment and permanent injunction against Wolfgang Valvoda and Susanne Anhorn, resolve the 2013 FTC action.

    In its complaint, the FTC had alleged that, using direct mail, the defendants tricked retailers, home-based businesses, local associations and others into thinking they had a preexisting business relationship with the defendants. The defendants falsely suggested that consumers had to return a form confirming or updating their contact information for a trade show they had attended or planned to attend. Many recipients did not notice a statement, buried in fine print at the bottom of the form, that by signing and returning it they were agreeing to pay $1,717 annually to the company for a listing on its website.

    A default judgment entered earlier in this case against the defendants was vacated in December 2014. That month, the U.S. Attorney for the Southern District of Illinois indicted Valvoda on mail fraud charges. The FTC’s civil case continued until recently, when the agency reached a settlement with Valvoda and Anhorn, and Construct Data Publishers defaulted after filing bankruptcy proceedings in Slovakia.

    Under the final orders announced today, the defendants are banned from the business directory business. They also are prohibited from misrepresenting any product or service, attempting to collect payment for their business directory listings, profiting from consumers’ personal information, or failing to dispose of consumers’ personal information properly.

    The order against Construct Data Publishers imposes a $7 million default judgment, including the transfer of $344,000 to the FTC from the court’s registry. The order against Valvoda and Anhorn imposes judgments of $2.1 million and $4.5 million, respectively, which will be suspended upon payment of $200,000. The full judgments will be imposed immediately if the defendants are found to have misrepresented their financial condition.

    The Commission vote approving the proposed stipulated final order against Valvoda and Anhorn was 3-0. The U.S. District Court for the Northern District of Illinois, Eastern Division, entered the order on August 25, 2016.

    Rent A Center

    Tuesday, September 20th, 2016

    Please contact us if you have received a collection letter from Hermanek & Gara on behalf of Rent A Center/ RAC Acceptance.


    Friday, September 16th, 2016

    WASHINGTON, September 15, 2016 – The Federal Communications Commission today
    announced $11 million in fines against three related long distance carriers for “cramming”
    unauthorized charges onto consumer telephone bills, “slamming” consumers by switching their
    preferred phone carriers without authorization, deceptive marketing, and violating the FCC’s
    truth-in-billing rules. The companies, Central Telecom Long Distance, Consumer Telcom, and
    U.S. Telecom Long Distance, are run as one operation by Data Integration Systems, Inc. The
    FCC is committed to combating abusive practices that result in telephone consumers paying for
    services they never requested or received and expending significant time and effort to seek to
    reverse the unauthorized charges and services.
    “This isn’t rocket science: no consumer should be charged for phone services that they canceled
    or never requested in the first place,” said Enforcement Bureau Chief Travis LeBlanc. “Today’s
    fines make clear that we will aggressively prosecute those who ‘slam,’ ‘cram,’ or otherwise abuse
    consumers by unlawfully charging them for services they didn’t want or request.”
    During this investigation, the FCC’s Enforcement Bureau reviewed over 260 consumer
    complaints about the three California-based companies. Many of the complaints were submitted
    by or on behalf of consumers who had neither heard of the companies nor intended to sign up for
    their services.

    Operating as a single enterprise, the companies’ telemarketers falsely claimed that they were
    calling on behalf of consumers’ real telephone carriers about a change in existing service. The
    companies then misused consumers’ answers to switch their long distance carriers to one of the
    companies. When customers realized what had occurred and returned to their preferred carriers,
    these companies continued to charge consumers a recurring monthly fee. The companies also
    failed to clearly and plainly describe the charges included in their customer bills, as required by
    the FCC’s rules.


    Another Court of Appeals requires disclosure that debts are time-barred

    Tuesday, September 13th, 2016

    In Daugherty v. Convergent Outsourcing, Inc., No. 15-20392, 2016 WL 4709712 (5th Cir. Sept. 8, 2016), the federal  Fifth Circuit Court of Appeals (which covers Texas, Louisiana, and Mississippi) agreed with the Sixth and Seventh Circuits that the Fair Debt Collection Practices Act requires disclosure of the fact that a debt is beyond the statute of limitations when the debt collector is offering a settlement of the debt.  The debt collector in Daugherty sent a letter to a consumer that offered to “settle” a $32,405.91 debt for a payment of $3,240.59. The consumer sued the debt collector, arguing that the collection letter was misleading and violated the FDCPA because it did not inform her that the debt was unenforceable “and that a partial payment would revive the entire debt.”  After reviewing the varying approaches of its sister circuits, the Fifth Circuit agreed with the Seventh Circuit (covering Illinois, Wisconsin and Indiana) and the Sixth Circuit (covering Michigan, Ohio, Kentucky, and Tennessee)  that “a collection letter seeking payment on a time-barred debt (without disclosing its unenforceability) but offering a ‘settlement’ and inviting partial payment (without disclosing the possible pitfalls) could constitute a violation of the FDCPA.”   The Seventh and Sixth Circuit cases are Buchanan v. Northland Group, 776 F.3d 393 (6th Cir. 2015), and McMahon v. LVNV Funding, LLC, 744 F.3d 1010 (7th Cir. 2014).

    Daniel A. Edelman argued the Seventh and Sixth Circuit cases and filed an amicus brief in support of the consumer in the Fifth Circuit case.

    CFPB action against Bridgepoint Education

    Monday, September 12th, 2016

    September 12, 2016

    Office of Communications
    Tel: (202) 435-7170

    CFPB Orders Full Relief and Refunds for All Private Loans Made by the School

    Washington, D.C. – The Consumer Financial Protection Bureau (CFPB) today took action against for-profit college chain Bridgepoint Education, Inc. for deceiving students into taking out private student loans that cost more than advertised. The Bureau is ordering Bridgepoint to discharge all outstanding private loans the institution made to its students and to refund loan payments already made by borrowers. Loan forgiveness and refunds will total over $23.5 million in automatic consumer relief. Bridgepoint must also pay an $8 million civil penalty to the Bureau.

    “Bridgepoint deceived its students into taking out loans that cost more than advertised, and so we are ordering full relief of all loans made by the school,” said CFPB Director Richard Cordray. “Together with our state partners, we will continue to be vigilant in rooting out illegal practices facing student borrowers in the for-profit space.”

    The CFPB’s order can be found at:

    Bridgepoint Education, Inc. is a for-profit, post-secondary education company based in San Diego, Calif. that does business as Ashford University and the University of the Rockies. Over the past several years, the two for-profit colleges have enrolled hundreds of thousands of students, most of whom take courses online.

    According to the CFPB order, from 2009 until recently, Bridgepoint offered private student loans to its students to help cover the cost of tuition. The Bureau found that the school deceived its students about the total cost of the loans by telling students the wrong monthly repayment amount. As a result, students at Bridgepoint were deceived into taking out loans without knowing the true cost, and were obligated to make payments greater than what they were promised. Specifically, the CFPB found that Bridgepoint told students that borrowers normally paid off loans made by the school with monthly payments of as little as $25, an amount that was not realistic.

    Enforcement Action
    Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to take action against institutions violating consumer financial laws, including engaging in unfair, deceptive, or abusive acts or practices. To address these violations, the CFPB’s consent order requires Bridgepoint to:

    • Provide $23.5 million in relief and refunds to consumers: Bridgepoint must refund all payments made by students toward private student loans taken out from the school, including principal and interest, a total of about $5 million. Bridgepoint must also discharge all outstanding debt for its institutional student loans, a total of approximately $18.5 million. Student borrowers eligible for relief are not required to take any action.
    • Make the cost of college clear with mandatory financial aid shopping tool: Bridgepoint must require all entering students, and current students who start different programs, to use a newly created financial aid disclosure tool when they borrow money to pay for school. Students will use the new tool to access personalized financial aid offer information as well as information about graduation and loan default rates, potential salaries for their programs, and post-graduation budgeting. Bridgepoint must require that students use the tool to access this important information before enrolling. The school will be responsible for generating a personalized interactive disclosure for each student. An example of what students will see when they access the tool is available here.
    • Halt illegal practices: Bridgepoint is prohibited from making false, deceptive, or misleading statements regarding actual or typical monthly payments students are obligated to make in connection with its private student loan program.
    • Remove negative loan information from borrowers’ credit reports: Bridgepoint must remove from borrowers’ credit reports any negative information about outstanding private student loan debt owed to the school. Bridgepoint must also stop reporting information to debt collectors and credit reporting companies about private student loan debt unless it is necessary to remove negative information on a consumer credit report.
    • Pay an $8 million penalty: Bridgepoint must pay an $8 million penalty payment to the CFPB’s Civil Penalty Fund.

    The CFPB’s investigation was assisted by the California Attorney General and the Department of Education.

    The CFPB estimates that there is approximately $1.3 trillion in outstanding student loan debt, with more than 8 million Americans in default on more than $110 billion in balances. Students and their families can find help on how to tackle their student debt on the CFPB’s website. The new financial aid shopping tool Bridgepoint Education, Inc. must provide to students was developed by the CFPB and builds on the agency’s Paying for College tools that aim to help consumers find the student loan option that best fits their needs.


    FTC Action: Payday Debt Relief Operation Banned from Debt Relief Business

    Thursday, September 8th, 2016

    The owners of a debt relief operation that targeted consumers with outstanding payday loans will be banned from the debt relief business under settlements with the Federal Trade Commission.

    In February 2015, the FTC filed a complaint alleging that Jared Irby, Richard Hughes, Coastal Acquisitions LLC, and PSC Administrative LLC, who typically did business as “Payday Support Center” or “Infinity Client Solutions,” falsely promised to resolve consumers’ payday loans through their hardship program. Once enrolled, consumers stopped making payments to their lenders, but the defendants failed to provide the promised debt relief, and consumers ended up in deeper financial trouble, having paid hundreds of dollars for no reduction or settlement of their loans according to the agency.

    Under two stipulated final orders announced today, the defendants are banned from all debt relief-related activities, and they are prohibited from making misrepresentations about financial and other products and services, and from making unsubstantiated claims about any products or services. The orders also bar the defendants from profiting from consumers’ personal information and failing to dispose of it properly.

    Each order imposes a judgment of more than $23.7 million that will be partially suspended when Irby and the corporate defendants pay $149,537, and Hughes pays $8,037.26. In each case, the full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

    The Commission vote authorizing the staff to file the stipulated final orders against Irby, Coastal Acquisitions and PSC Administrative, and against Hughes, was 3-0. The U.S. District Court for the Southern District of Alabama entered the orders on September 7, 2016.

    NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.

    Learn more at Payday Loans and Coping With Debt.

    OCC and CFPB action against Wells Fargo

    Thursday, September 8th, 2016

    September 8, 2016

    Office of Communications
    Tel: (202) 435-7170

    Prepared Remarks of Richard Cordray
    Director of the Consumer Financial Protection Bureau

    Wells Fargo Enforcement Action Press Call

    Washington, D.C.
    September 8, 2016

    Thank you for joining this call. Today the Consumer Financial Protection Bureau is joining our partners at the Los Angeles City Attorney’s office and the Office of the Comptroller of the Currency in taking an enforcement action against Wells Fargo Bank. Our investigations found that employees of the bank created unauthorized deposit and credit card accounts across the country in order to collect financial bonuses for themselves. The Bureau itself is levying a fine of $100 million against Wells Fargo for this widespread practice. All told, the bank will pay $185 million in fines for the illegal actions of these employees.

    As one of the biggest and best known banks in the United States, Wells Fargo is in a position to lead by example about how every bank should treat its customers. Much bank growth these days is occurring by cross-selling customers on more products and services. This is a common approach, and it should lead banks to devote more attention and resources to strong customer service, since the easiest and best way to earn more business from existing customers is by giving them superior value and excellent service. That produces high levels of customer satisfaction, which in turn should generate repeat business from them and positive word of mouth to others.

    But what happened here instead is that Wells Fargo built an incentive-compensation program that made it possible for its employees to pursue underhanded sales practices, and it appears that the bank did not monitor the program carefully. Thousands of bank employees found ways to game the system by secretly signing up existing clients for new services that were never requested. They misused consumer names and personal information to create new checking and credit card accounts to inflate their sales figures to meet their sales targets and claim higher bonuses. Money that belonged to customers was used and moved around without their consent, and in some instances these activities generated new fees and costs.

    Unchecked incentives can lead to serious consumer harm, and that is what happened here. We are not saying that companies cannot have incentive compensation structures. They are common enough in the industry and they can motivate positive behavior. But companies need to pay very close attention to make sure they have effective monitoring in place to ensure that consumers are protected.

    Our investigation found that since at least 2011, thousands of Wells Fargo employees took part in these illegal acts to enrich themselves by enrolling consumers in a variety of products and services without their knowledge or consent. Many have since been terminated. According to the bank’s own analysis, employees opened more than two million deposit and credit card accounts that may not have been authorized by consumers. Employees funded the deposit accounts by transferring funds from existing accounts. As a result of these illegal deposit and credit card practices, many consumers were hit with annual fees, overdraft-protection charges, finance charges, late fees, and other costs.

    Wells Fargo employees also requested and activated debit cards without consumers’ knowledge or consent, going so far as to create PINs for consumers without telling them. Some employees concocted email addresses that did not belong to their customers and used those new addresses to enroll people in online-banking services without their knowledge or consent.

    It is quite clear that these are unfair and abusive practices under federal law. They are a violation of trust and an abuse of trust. In response, Wells Fargo is being ordered to refund fees and charges that were paid because of these unauthorized accounts. We currently estimate that the total amount of refunds to affected consumers will be at least $2.5 million, though the full extent of the appropriate refunds is not yet known.

    Importantly, Wells Fargo must also hire an independent consultant to conduct a thorough review of its procedures. And the Consumer Bureau’s order requires the bank to propose a process, subject to Bureau approval, for notifying consumers who were affected by the illegal practices at hand. Because of these widespread violations, Wells Fargo will pay a $100 million penalty to the Bureau’s Civil Penalty Fund. This is the largest penalty the Bureau has ever imposed for violations of federal consumer financial law. It reflects the severity of these violations, the breadth of the unfair and abusive practices, and how seriously we take them.

    Today’s action should serve notice to the entire industry. If the incentive compensation schemes or sales targets are implemented in ways that threaten harm to consumers and lead to violations of the law, then banks and other financial companies will be held accountable. We have seen the risk that such programs pose to consumers across the entire financial sector – in debt collection efforts, in the marketing of credit card add-on products, and now in the circumstances described in this action today. Any such initiatives should be carefully monitored as a basic element in a company’s compliance program, to make sure that the incentives for employees are aligned with the welfare of consumers.

    I want to thank the Los Angeles City Attorney and the Comptroller of the Currency for their close coordination with us to address these issues. We will continue to take appropriate action against those we find to be deceiving or taking advantage of consumers. Thank you.


    The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit

    CFPB Orders First National Bank of Omaha to Pay $32.25 Million for Illegal Credit Card Practices

    Tuesday, August 30th, 2016

    CFPB Orders First National Bank of Omaha to Pay $32.25 Million for Illegal Credit Card Practices

    Deceptive Marketing and Illegal Billing of Add-On Products Harmed Hundreds of Thousands of Consumers

    WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) has ordered First National Bank of Omaha to provide $27.75 million in relief to roughly 257,000 consumers harmed by illegal practices with credit card add-on products. The bank used deceptive marketing to lure consumers into debt cancellation add-on products and it charged consumers for credit monitoring services they did not receive. First National Bank of Omaha will also pay a $4.5 million civil money penalty to the CFPB.

    “First National Bank of Omaha violated the trust of its customers by illegally signing them up for credit card add-on products,” said CFPB Director Richard Cordray. “The CFPB’s track record, and this result today, shows strong and consistent action against credit card companies that dupe consumers into buying a product they do not want.”

    First National Bank of Omaha is headquartered in Omaha, Neb. As of March 31, 2016, the bank had approximately $18.4 billion in total assets. From 2002 until at least 2012, the bank offered add-on debt cancellation products with its credit card, including “Secure Credit” and “Payment Protection.” The bank promoted these products as providing a monthly payment to the cardholder’s account in the event of certain hardships like involuntary unemployment, hospitalization, or disability. Cardholders were charged a monthly fee. The bank also offered credit monitoring products, including “Privacy Guard” and “IdentitySecure” to monitor a cardholder’s credit for potential identity theft or fraud and to provide consumers with copies of their credit reports.

    Today’s order covers the bank’s unfair billing practices from 1997 to 2012, and the bank’s deceptive enrollment practices from 2010 to 2012, when the practices stopped after a CFPB supervisory exam. The Bureau found the bank deceptively marketed the debt cancellation add-on products to consumers and it found illegal billing for credit monitoring services that consumers did not receive. Specifically, the bank:

    • Disguised the fact that it was selling consumers a product: The bank forced consumers to listen to their sales pitches about debt cancellation products by implying that they had to stay on the phone while their cards were activating. In reality, the card activation process was nearly instantaneous and consumers did not have to stay on the line and listen to the pitch to have their cards activated.
    • Distracted consumers into making a purchase: The bank led some consumers to believe they would not have to pay for the debt cancellation products. For example, the bank confirmed enrollment by asking for the consumer’s city of birth, not by asking if the consumer wanted the product. In other cases, the bank did not make it clear that consumers were making a purchase. For example, they made it seem like they were receiving a benefit, updating their accounts, or that the consumer was merely agreeing to receive more information about the product.
    • Failed to disclose consumers’ ineligibility: When marketing the debt cancellation products, the bank told some consumers they were eligible for the product even when the consumers had disclosed information suggesting they would be ineligible for some product benefits, such as that they were retired, self-employed or employed for less than 30 hours a week.
    • Hindered consumers from obtaining debt cancellation product benefits: The bank maintained strict eligibility standards and administrative requirements that prevented the vast majority of consumers from obtaining several of the promised debt cancellation benefits. For example, the bank would not cover consumers if they had pre-existing health conditions, but the bank defined pre-existing as any condition diagnosed or appearing for up to six months after consumers enrolled.
    • Made cancellation of debt cancellation products difficult: The bank marketed its debt cancellation products as easy to cancel but instructed its customer representatives to make cancellation difficult. It had a sales incentive plan that awarded its customer service representatives money for a “save,” which occurred when the representative kept a consumer enrolled after attempting to cancel. Consumers were often unable to cancel unless they were willing to demand cancellation multiple times in succession.
    • Billed for credit monitoring services not provided: In many cases, cardholders did not receive the credit monitoring services for which they paid because the bank did not properly process their authorization. In other cases, some of the credit reporting companies did not process the authorizations because they could not match the cardholder’s information to their files.

    Enforcement Action

    Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to take action against institutions engaging in unfair, deceptive, or abusive practices. The CFPB’s order requires that First National Bank of Omaha:

    • Repay $27.75 million to affected consumers: First National Bank of Omaha must provide an estimated $27.75 million in refunds and additional relief to approximately 257,000 customers subjected to deceptive marketing or unfair practices.
    • End unfair billing and other illegal practices: Consumers will no longer be billed for products if they are not receiving the promised benefits. First National Bank of Omaha will also be prohibited from marketing any debt cancellation or credit monitoring add-on products until it submits a compliance plan to the CFPB. First National Bank of Omaha will review and, if necessary, improve its policies to ensure that it does not commit unlawful acts in the future.
    • Pay a $4.5 million penalty: First National Bank of Omaha will make a $4.5 million penalty payment to the CFPB’s Civil Penalty Fund .

    This enforcement action is the result of the CFPB’s investigation into First National Bank of Omaha credit card add-on products conducted in coordination with the Office of the Comptroller of the Currency (OCC). The OCC is separately ordering restitution and a $3 million civil money penalty for the unfair billing practices. This is the eighth action the Bureau has taken in coordination with another regulator to address illegal practices with respect to credit card add-on products and the 12th action the Bureau has taken in total to address these practices.

    The full text of the CFPB’s Consent Order is available at:


    CFPB Takes Action Against Wells Fargo for Illegal Student Loan Servicing Practices Wells Fargo to Pay $3.6 Million Penalty to the Bureau

    Tuesday, August 30th, 2016

    CFPB Takes Action Against Wells Fargo for Illegal Student Loan Servicing Practices

    Wells Fargo to Pay $3.6 Million Penalty to the Bureau

    Washington, D.C. – The Consumer Financial Protection Bureau (CFPB) today took action against Wells Fargo Bank for illegal private student loan servicing practices that increased costs and unfairly penalized certain student loan borrowers. The Bureau identified breakdowns throughout Wells Fargo’s servicing process including failing to provide important payment information to consumers, charging consumers illegal fees, and failing to update inaccurate credit report information. The CFPB’s order requires Wells Fargo to improve its consumer billing and student loan payment processing practices. The company must also provide $410,000 in relief to borrowers and pay a $3.6 million civil penalty to the CFPB.

    “Wells Fargo hit borrowers with illegal fees and deprived others of critical information needed to effectively manage their student loan accounts,” said CFPB Director Richard Cordray. “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’s order can be found at:–_Consent_Order.pdf

    Wells Fargo is a national bank headquartered in Sioux Falls, S.D. Education Financial Services is a division of Wells Fargo that is responsible for the bank’s student lending operations. Education Financial Services both originates and services private student loans, and currently serves approximately 1.3 million consumers in all 50 states.

    Student loans make up the nation’s second largest consumer debt market. Today there are more than 40 million federal and private student loan borrowers and collectively these consumers owe roughly $1.3 trillion. Last year, the CFPB found that more than 8 million borrowers are in default on more than $110 billion in student loans, a problem that may be driven by breakdowns in student loan servicing. Private student loans comprise approximately $100 billion of all outstanding student loans. While private student loans are a small portion of the overall market, the Bureau found that they are generally used by borrowers with high levels of debt who also have federal loans.

    According to the CFPB’s order, Wells Fargo failed to provide the level of student loan servicing that borrowers are entitled to under the law. Because of the breakdowns throughout Wells Fargo’s servicing process, thousands of student loan borrowers encountered problems with their loans or received misinformation about their payment options. The CFPB found that the company violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibitions against unfair and deceptive acts and practices, as well as the Fair Credit Reporting Act. Specifically, the CFPB found that the company:

    • Impaired consumers’ ability to minimize costs and fees: Wells Fargo processed payments in a way that maximized fees for many consumers. Specifically, if a borrower made a payment that was not enough to cover the total amount due for all loans in an account, the bank divided that payment across the loans in a way that maximized late fees rather than satisfying payments for some of the loans. The bank failed to adequately disclose to consumers how it allocated payments across multiple loans, and that consumers have the ability to provide instructions for how to allocate payments to the loans in their account. As a result, consumers were unable to effectively manage their student loan accounts and minimize costs and fees.
    • Misrepresented the value of making partial payments: Wells Fargo’s billing statements made misrepresentations to borrowers that could have led to an increase in the cost of the loan. The bank incorrectly told borrowers that paying less than the full amount due in a billing cycle would not satisfy any obligation on an account. In reality, for accounts with multiple loans, partial payments may satisfy at least one loan payment in an account. This misinformation could have deterred borrowers from making partial payments that would have satisfied at least one of the loans in their account, allowing them to avoid certain late fees or delinquency.
    • Charged illegal late fees: Wells Fargo illegally charged certain consumers late fees even though the consumers had made timely payments. Specifically, the bank charged illegal late fees to certain consumers who made payments on the last day of their grace periods. It also charged illegal late fees to certain students who elected to pay their monthly amount due through multiple partial payments instead of one single payment.
    • Failed to update and correct inaccurate information reported to credit reporting companies: Wells Fargo failed to update and correct inaccurate, negative information reported to credit reporting companies about certain borrowers who made partial payments or overpayments. These errors could damage a consumer’s ability to access credit or make borrowing more expensive.

    Enforcement Action

    Under the Dodd-Frank Act, the CFPB has the authority to take action against institutions engaging in unfair or deceptive practices. Among the terms of the consent order filed today, Wells Fargo must:

    • Pay $410,000 in consumer refunds: Wells Fargo must provide at least $410,000 to compensate consumers for illegal late fees. This includes refunding illegal fees due to the bank’s failure to disclose its payment allocation practices across multiple loans within a borrower’s account as well as the bank’s failure to inform consumers that they could instruct the bank to allocate payments in a different way. This also includes refunding illegal fees charged because of the bank’s failure to combine partial payments made in the same billing cycle, and fees improperly charged when borrowers made a payment on the last day of the grace period.
    • Improve student loan servicing practices: Wells Fargo must allocate partial payments made by a borrower in a manner that satisfies the amount due for as many of the loans as possible, unless the borrower directs otherwise. This can help reduce the number of delinquent loans in an account as well as the number of late fees. Last month, the Department of Education, in consultation with the CFPB, released new policy guidance calling for federal student loan servicers to implement a similar standard for handling partial payments.
    • Improve consumer billing disclosures: Wells Fargo must provide consumers with enhanced disclosures with their billing statements. The disclosures must explain how the bank applies and allocates payments and how borrowers can direct payments to any of the loans in their student loan account.
    • Correct errors on credit reports: Wells Fargo must remove any negative student loan information that has been inaccurately or incompletely provided to a consumer reporting company.
    • Pay $3.6 million civil penalty: Wells Fargo will pay $3.6 million to the CFPB’s Civil Penalty Fund.

    The consent order can be found at:–_Consent_Order.pdf

    This order comes as the Bureau takes steps to ensure that all student loan borrowers have access to adequate student loan servicing. Last year, the Bureau released a report outliningwidespread servicing failures reported by both federal and private student loan borrowers and published a framework for student loan servicing reforms. As part of this work, the Bureau has continually raised concerns around, as well as taken enforcement and supervisory actions against, illegal student loan servicing practices related to the handling of partial payments. Building on this, earlier this year, the Bureau called for market-wide reforms and announced that it was prioritizing taking action against companies that engage in illegal servicing practices. Today’s action is an important part of this ongoing work.

    Students and their families can find help on how to tackle their student debt on the CFPB’s website.

    Merriman Investments LLC

    Friday, August 19th, 2016

    Please contact us if debt buyer Merriman Investments LLC is trying to collect money from you.