Navient and the Federal Trade Commission: What Can I Expect?

Navient and the Federal Trade Commission: What Can I Expect?

8 min read


Navient is currently under investigation by the FTC regarding student loan servicing. We have seen similar investigations in recent years where banks were accused of deceptive marketing practices and unfair business practices. In 2015, Bank of America was fined $26 million for these practices. While the fine was significantly higher at $16 billion, Bank of America agreed to refund $10 billion to current and former customers who were discriminated against by the bank’s improper actions.

The FTC looks into any type of consumer practice that may cause harm or injury to consumers. As a result, we expect some action to take place from the FTC towards Navient (or possibly other companies) if they find evidence of consumer harm.

If the FTC determines that Navient violated a law or regulation, they could issue a public statement about their findings. A public statement could include a warning letter or even a suit against Navient, but this would depend on the specific case and circumstances.

Many people complain about how long it takes for the government to act on issues. However, we cannot comment on the specifics of this particular complaint since it is still before the FTC. However, the FTC does not necessarily wait until a company has committed an illegal act before taking action. They do investigate cases where they believe there is potential for harm to consumers.

There may be additional actions taken by Navient in regards to this matter. We recommend keeping an eye out for any announcements made by the company.

Navient and the Federal Trade Commission: What Can I Expect?

If you have received a notice from Navient, they are telling you that they are investigating their actions regarding federal student loans. The investigation began around November 2014 and involved the Consumer Financial Protection Bureau (CFPB), the Department of Justice, and the District Court in Arizona. As a result of this investigation, the CFPB could potentially fine Navient $100 million. The fine would be imposed if the FTC finds evidence that Navient violated the Fair Debt Collection Practices Act, the Equal Credit Opportunity Act, the Fair Housing Act, or any other law enforced by the CFPB.

The CFPB’s findings may not affect you directly unless the FTC decides to impose its own monetary penalty. However, the FTC’s findings may influence the CFPB’s decision about whether to issue a civil penalty. Since Navient already issued a $23 million dollar fine last year for similar violations, the CFPB’s finding might lead them to conclude that this is not worth pursuing. Even if the CFPB does decide to pursue a penalty, it is unlikely that they will levy the same amount as the previous fine because the conduct was different.

You should not expect this investigation to end soon. Navient did not commit any criminal offenses, so the investigations are likely taking longer than normal. In addition, the CFPB and FTC do not release information about ongoing investigations, so even if you receive a letter from Navient asking you to sign documents, you will have no way of knowing what is going on. You may want to write back to ask what exactly they need you to sign.

According to The Wall Street Journal, Navient’s new CEO, Johnnie Moore, announced recently that he plans to resign after he completes his current term. He was put in charge at Navient after President Obama signed the Education Jobs Creation and Enhancement Act in 2010. This act gave him control over Navient and allowed him to take steps to reduce default rates. By signing the bill, Mr. Obama hoped that Navient would help get students who had problems repaying their loans out of financial trouble. Unfortunately, Navient failed to meet these goals. Over 90% of borrowers in repayment programs were late on payments or missed some payments. Instead of helping students, Navient actually increased its loan-servicing costs and fees.

What can you do? First of all, don’t panic! Navient is not trying to sue you or report you to the police. Second, make sure you understand how your account works. Do you know what happens if you miss a payment or go more than 60 days without paying? If not, then you need to find out now. Third, check your credit reports regularly. If something looks wrong, call the three major credit reporting agencies. Fourth, talk to your lender, especially if you have a problem with Navient. If you have a direct deposit, then send them copies of bills showing the date you sent money and where it went. Finally, contact your state’s Attorney General or Secretary of State. Tell them about any problems you’re having with Navient. Ask them to investigate and let you know if anything illegal is happening. Your state AG’s office will probably send Navient a letter asking about the status of your case. This is called a “demand letter.” If Navient ignores it, then you can file a complaint with a consumer protection agency. For example, if you live in Illinois, then you can visit the Illinois Attorney General’s website and file a complaint.

Navient and the Federal Trade Commission: What Can I Expect?

Navient and the Federal Trade Commision

The Federal Trade Commission (FTC) is a federal agency created by Congress to protect consumers and promote competition and fair business practices. The FTC’s mission is to safeguard consumers’ interests and promote economic justice. In order to fulfill their responsibilities, the FTC enforces laws prohibiting unfair or deceptive trade practices and consumer protection. In addition to protecting consumers, the FTC works closely with businesses to encourage competition and self-regulation while also prosecuting companies that violate antitrust law.

Protecting Consumers

In many ways, the FTC’s job is similar to that of a parent who watches over a family member, making sure he or she does not make bad choices. As a general rule, if a company advertises something as being “free,” then it must provide value in exchange. If a company offers a free trial period without providing any additional services or content after the trial period ends, then that could be considered misleading and therefore illegal. Companies may benefit financially from using advertising tactics that mislead consumers. Because of this, the FTC has a team of lawyers who investigate complaints from consumers about potentially deceptive marketing practices.

How Does the FTC Work?

The FTC uses a variety of tools to help enforce these regulations. One tool they use to determine whether a practice is deceptive or unfair is called a complaint. A person who believes that a company is violating these laws can file a complaint with the FTC. An independent administrative law judge hears the case and makes a determination about what actions need to be taken against the offending party. Complaints are filed with the FTC either by mail, phone, or online forms. The FTC receives thousands of complaints each year.

When Are Companies Liable?

If a company knowingly engages in deceptive or unfair practices, then they can face penalties. Penalties can range from a simple warning letter to fines as high as 5% of annual revenue. Most commonly, companies that fail to follow FTC guidelines will receive a fine. However, some cases have gone further than that and resulted in injunctions or court orders requiring specific changes to practices.

How Do You File a Complaint?

To file a complaint about a company’s deceptive or unfair conduct, a person first needs to identify the firm’s identity. Next, the complainant should gather information regarding the particular problem. Depending on the type of issue, the FTC website provides a link to a complaint form where people can report the alleged violation. After filing, the complaint is reviewed by an FTC staff attorney and assigned an administrative law judge. The initial decision is made by the judge based on written submissions and evidence submitted by both parties.

How Much Money Will My Case Cost Me?

Although FTC decisions are generally confidential, the FTC does release data on how much money was awarded to complainants in different types of cases. There were 16,000 violations of the FTC Act in fiscal year 2013. Of those, 12,500 were monetary penalties ranging from $100 to $12,000 per violation. Another 2,500 involved only injunctive relief. In total, the FTC collected approximately $1 billion in monetary penalties during that time.

What Happens Next?

Once a case is closed, the FTC sends notice of the outcome to the relevant parties. Generally, the FTC will send a letter informing the company that issued the penalty of its findings. The letter may specify that the company violated the FTC act or simply say that the allegations were “substantiated.” If the company disagrees with the decision, they may appeal it. The appeals process takes place before the United States Court of Appeals for the District of Columbia Circuit. If the company loses at the appellate level, then they are forced to pay the fine levied by the FTC. Otherwise, they do not have to pay the fine.

Navient and the Federal Trade Commission: What Can I Expect?

Navient’s collection practices did not comply with federal law and were unfair to students.

Students who received defaulted loans have legal rights under federal law.

Navient violated the Fair Debt Collection Practices Act (FDCPA) by sending letters threatening criminal charges unless borrowers paid money they did not owe.

Navient violated the FDCPA by misrepresenting what would happen if borrowers disputed their debt.

Navient violated the Truth in Lending Act (TILA), which requires lenders to disclose specific information about loan terms and repayment options.

Navient violated TILA by failing to provide borrowers with copies of their loan agreements until after they had been charged late fees and interest.

Navient repeatedly failed to make timely payments on student loans even though borrowers informed them that they could not afford to pay.

Navient violated the Equal Credit Opportunity Act (ECOA), which prohibits discrimination based on race, color, religion, national origin, sex, marital status, age, receipt of public assistance, or an applicant’s credit history.

Navient collected payments on behalf of private companies and then transferred those funds to themselves without adequately disclosing those arrangements and keeping track of how much money was being paid out.

Navient failed to keep accurate records of their collections activities, resulting in inaccurate reports filed with the Department of Education.

Navient engaged in deceptive trade practices by using misleading advertising and marketing materials that falsely claimed that Navient offered affordable repayment plans for federal student loans.

Navient misled consumers about its business practices and services, including that it had an obligation to protect borrowers’ privacy and maintain confidential information; that it would notify borrowers if Navient took action to collect a delinquent account; and that it would not report delinquencies to credit reporting agencies.

Navient falsely represented that it was licensed and regulated by the states where it operated.

Navient engaged in unfair billing practices by charging excessive amounts for service costs, including unauthorized late fee charges.

Navient and the Federal Trade Commission: What Can I Expect?

Navient may not have any intention of collecting student loans illegally. However, they have already broken several laws and regulations. For example, Navient failed to notify borrowers that their interest rates would increase without their consent. Additionally, they fail to provide borrowers with the option to lower their payments when their interest rate changes.

If you do find out that your loan was illegally collected, who will take responsibility?

The FTC will conduct an investigation into the matter which will determine what actions, if any, will be taken by the federal government. After the investigation is complete, the FTC will make a decision regarding possible lawsuits.

How does the FTC plan to ensure that Navient follows federal law?

The FTC is requiring Navient to put together a plan to prevent illegal collections. Once the plan is completed, they will require Navient to submit it to the agency for approval. If approved, Navient will then be given a period of time to implement the plan.

Is there anything else I need to know about my loan?

If you are still concerned about your loan, we recommend contacting Student Loan Hero, our partner in helping you recover your money.

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