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The Consumer Financial Protection Bureau took action Monday against Performant Recovery Inc. for unlawful debt collection practices against defaulted student loan borrowers, charging the company a $700,000 fine and prohibiting it from servicing or collecting any student loan debt.
Headquartered in Florida, Performant collected debt from borrowers who had defaulted on a Federal Family Education Loan program loan or failed to make a payment within 270 days.
Borrowers who have defaulted on this type of loan legally have one chance to bring their payment back into good standing without additional cost by entering into an agreement within 65 days and then making a series of affordable payments.
But the CFPB said that between 2015 and 2020, Performant abused its control over the rehabilitation process, encouraging employees to delay borrowers from filing their agreements through such measures as forcing them to complete the agreement by mail instead of by phone. As a result, borrowers missed the 65-day window to file and were charged fees that generated profit for the collection company itself.
“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.”
