Collector - November 2017 - 43

IAP

that purchase and securitize private
student loans, and a consent order with
Transworld Systems Inc., a nationwide
debt collection agency.
The orders resolve allegations by the
CFPB that each party violated the DoddFrank Wall Street Reform and Consumer
Protection Act by filing student loan debt
collection lawsuits that were unfair and
deceptive to consumers. The companies
agreed to pay a combined $21.6 million in
refunds and penalties, audit 800,000 student
loans in its portfolio, and stop attempting to
collect and suing consumers for debt without
proper documentation and affidavits.
Transworld said in a statement that
it had settled to avoid costly litigation,
noting that it "disagrees with the CFPB's
characterizations, and with many of the
alleged facts" in the consent order.
The CFPB said that between 2001 and
2007, Trusts acquired pools of student
loans, issued notes secured by the student
loan pools, and provided the servicing and
collection administration of such loans.
Since Trusts does not have any employees,
the bureau said it retained Transworld
to service the student loans and collect
delinquent student loan debt. The bureau
reported that Transworld's student loan debt
collection practice included completing,
signing and notarizing sworn legal
documents, which were filed in courts
across the country by a national network
of law firms Transworld hired to prosecute
collection lawsuits on behalf of Trusts.
Following an investigation, the CFPB
criticized these alleged illegal practices,
claiming the companies filed lawsuits to
collect delinquent student loan debts that were
potentially inaccurate, lacked documentation
or ...were not legally.... enforceable.
Specifically, the CFPB's orders with the
companies included findings that lawsuits
were filed on an insufficient evidentiary basis
because Trusts could not find or did not have
complete documentation about who owned
the loans or who owed the debts.
The CFPB investigation also uncovered
that the companies filed suits that allegedly
relied on improperly notarized affidavits

COLLECTOR 11.17

signed by witnesses who did not have the
requisite knowledge to affirm the validity of
the debts. And the CFPB discovered that the
companies filed student loan debt collection
lawsuits that were barred by the applicable
statute of limitations.
In addition to the monetary
enforcement action, the bureau also
directed the companies to audit all of
their student loan accounts for lack of
documentation, and stop collecting,
reporting and suing on student loan debts
unless they have proper documentation
and accurate affidavits properly notarized
to prove their claims regarding loan
ownership and obligation to pay.
As with any CFPB consent order
or consent judgment, the Trusts and
Transworld orders are only binding on
the party respondents. However, they do

contain guidance for all collection industry
participants that collect consumer debt,
including the importance of upfront due
diligence to the debt collection process.
Specifically, these consent orders make
it clear that debt collectors must have
documentation sufficient to substantiate
claims before proceeding to suit, and affiants
must have personal knowledge before
executing affidavits that affirm that validity
of the debts.
To read more about the most recent
significant judicial decisions involving
the credit and collection industry, ACA
members can always find concise case
summaries at www.acainternational.org/
industry-advancement-program.
Karen Scheibe Eliason is ACA International's
corporate counsel.

43


http://www.acainternational.org/industry-advancement-program http://www.acainternational.org/industry-advancement-program http://www.webrecon.com

Table of Contents for the Digital Edition of Collector - November 2017

Upfront
Industry News
Best Practices
FYI
Collection Tips
Making the Right Choice
Getting Your Ducks in a Row
Highlight Reel
Putting it all Together
Calendar
Honor Roll
On Call
Hire Purpose
CFPB Pursues Two Student Loan Servicers
Compliance
ACA SearchPoint
Last Word
Collector - November 2017 - Cover1
Collector - November 2017 - Cover2
Collector - November 2017 - 1
Collector - November 2017 - Upfront
Collector - November 2017 - 3
Collector - November 2017 - Industry News
Collector - November 2017 - 5
Collector - November 2017 - 6
Collector - November 2017 - 7
Collector - November 2017 - Best Practices
Collector - November 2017 - 9
Collector - November 2017 - FYI
Collector - November 2017 - 11
Collector - November 2017 - Collection Tips
Collector - November 2017 - 13
Collector - November 2017 - Making the Right Choice
Collector - November 2017 - 15
Collector - November 2017 - 16
Collector - November 2017 - 17
Collector - November 2017 - Getting Your Ducks in a Row
Collector - November 2017 - 19
Collector - November 2017 - 20
Collector - November 2017 - 21
Collector - November 2017 - 22
Collector - November 2017 - 23
Collector - November 2017 - 24
Collector - November 2017 - 25
Collector - November 2017 - Highlight Reel
Collector - November 2017 - 27
Collector - November 2017 - 28
Collector - November 2017 - 29
Collector - November 2017 - 30
Collector - November 2017 - 31
Collector - November 2017 - Putting it all Together
Collector - November 2017 - 33
Collector - November 2017 - 34
Collector - November 2017 - 35
Collector - November 2017 - Calendar
Collector - November 2017 - Honor Roll
Collector - November 2017 - On Call
Collector - November 2017 - 39
Collector - November 2017 - Hire Purpose
Collector - November 2017 - 41
Collector - November 2017 - CFPB Pursues Two Student Loan Servicers
Collector - November 2017 - 43
Collector - November 2017 - Compliance
Collector - November 2017 - 45
Collector - November 2017 - ACA SearchPoint
Collector - November 2017 - 47
Collector - November 2017 - Last Word
Collector - November 2017 - Cover3
Collector - November 2017 - Cover4
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