WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) has taken decisive action against Performant Recovery, Inc. for engaging in unlawful practices involving student loan debt collections. Performant’s actions caused significant financial harm to borrowers by unjustly delaying loan rehabilitation processes, allowing the company to collect fees while burdening borrowers with additional costs.
CFPB Director Rohit Chopra condemned Performant’s conduct, stating, “Performant concocted a scheme to juice their profits by delaying student borrowers their rightful relief. The CFPB is holding Performant accountable for its unlawful debt collection practices that cost borrowers thousands of dollars.”
Performant, a debt collection company, targeted defaulted borrowers of Federal Family Education Loan Program (FFELP) loans. Borrowers in default are entitled to a one-time loan rehabilitation opportunity if they act within 65 days of default, thus avoiding collection costs. However, between 2015 and 2020, Performant intentionally delayed these rehabilitations beyond the 65-day period, forcing borrowers to incur unnecessary fees and withholding critical financial benefits such as restored student aid eligibility.
Managers at Performant instructed agents to actively delay the rehabilitation process, with tactics including requiring borrowers to use slower methods like postal mail for submitting forms. Borrowers’ collective costs included fees amounting to 16% of their loan balances, additional interest charges, and delayed access to benefits such as halting tax refund withholdings and repairing their credit records.
Under the Consumer Financial Protection Act and the Fair Debt Collection Practices Act, the CFPB determined Performant’s conduct to be both unfair and abusive. The enforcement order bans Performant from servicing or collecting student loan debt and imposes a $700,000 penalty payable to the CFPB’s victims relief fund, which may be used to compensate harmed borrowers.
This action aims to protect consumers from exploitative practices in the student loan industry.
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