Maryland Attorney General Joins Coalition Pushing Back Against Abusive Student Loan Debt Collection Practices

by Patrick Herron

Per the Maryland Office of the Attorney General: Maryland Attorney General Brian E. Frosh today joined a bipartisan coalition of 23 attorneys general in filing an amicus brief in support of the Consumer Financial Protection Bureau’s (CFPB) efforts to combat alleged illegal debt collection practices in the student loan industry. The CFPB filed a lawsuit alleging that 15 trusts purchased student loan debt, and then engaged in illegal debt collection practices to collect on that debt. The CFPB’s complaint describes how collections agencies hired by the trusts submitted false and misleading affidavits and testimony in support of nearly 100,000 debt collection actions brought by the trusts. Additionally, the
trusts are alleged to have filed hundreds of lawsuits against consumers for debt that was time barred or missing critical supporting documentation. The coalition argues that the trusts should be held liable for these misdeeds under the Consumer Financial Protection Act of 2010.

“The illegal debt collection tactics alleged by the CFPB create extreme hardship for student borrowers,” said Attorney General Frosh. “When collection actions are underpinned by fraudulent claims, they violate consumer protection laws. The perpetrators should be punished.” The attorneys general argue that CFPB oversight is crucial because the model used by the trusts incentivizes them to condone misconduct by the debt collectors they hire.

The Maryland Attorney General’s office has long been a national leader in investigating and enforcing consumer protection violations in the higher education field, including entering into a multistate settlement earlier this year with Navient Corporation, one of the nation’s largest student loan servicers, resolving allegations of unfair and deceptive student loan servicing practices and abuses in originating predatory student loans. Attorney General Frosh was joined in filing the brief by the attorneys general of California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Idaho, Illinois, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Virginia, Washington, and Wisconsin.

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