The Consumer Financial Protection Bureau (CFPB) has charged Wells Fargo
with engaging in illegal practices while servicing private student loans.
Under a consent order, Wells Fargo will pay $3.6 million as a civil penalty,
refund at least $410,000 to borrowers, and make improvements to their
private student loan servicing policies.
The CFPB alleged the following illicit conduct by Wells Fargo:
Charging illegal late fees on
private student loans.
- Processing partial payments in a way that maximized late fees.
- Failing to disclose to borrowers how payments are to be allocated.
- Failing to inform borrowers that the borrower can inform the bank as to
how they want a specific payment applied.
- Misinforming borrowers about the benefits of partial payments, thereby
possibly discouraging borrowers from making partial payments which could
have potentially satisfied the required monthly payment on some of the
fix credit reporting for student loans with incomplete or inaccurate information, causing adverse
In addition to the civil penalty and refunds, Wells Fargo must improve
it's private student loan servicing practices, including:
- Applying partial payments in a way that satisfied the monthly amount due
for the most amount of loans.
- Providing enhanced disclosures within the borrowers billing statements
to explain their standard payment allocation method and instructions for
the borrower to specify their own intended allocation.
- The bank must delete adverse credit reporting information for student loans
which have been reported incorrectly.
Wells Fargo bank services approximately 1.3 million student loan borrowers.
They deny the allegations made by the CFPB, but have consented to make
changes to their policies and provide redress.
The Law Office of Simon Goldenberg PLLC provides assistance to distressed
borrowers. Learn more about
wells fargo student loans.
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