The cost to attend college has skyrocketed, and Wells Fargo Bank, N.A. (“Wells Fargo” or the “Bank”) intended to profit from the situation. In order to generate even more revenue from servicing its student loan portfolio, Wells Fargo instituted practices that allowed it to increase fees and expenses to its student loan borrowers – all the while reporting false credit information.
For example, Wells Fargo would apply payments that were not sufficient to cover all student loans that a borrower might have, by spreading a payment across all of the student’s loans with the Bank. This practice would allow the bank to generate even more late fees for the borrower’s loans when it could have applied the amount to fully pay some of the loans for the period, thereby minimizing the number of late loan payments, and related fees that may accrue. Also, Wells Fargo was charging illegal late fees to certain student even though timely payments were made. Further, Wells Fargo was representing false payment due dates to borrowers who had multiple loans that were being serviced by the Bank. Wells Fargo would create the appearance that there was a single due date for each of the loans – when in reality – there were different due dates for each of the loans. Only a single due date was provided on the billing statements sent to consumers. This created significant confusion on the part of the borrower, and resulted in improper late fees.
Making matters worse, Wells Fargo would use these illicit practices as a basis to report incorrect credit information. Moreover, the Bank was also failing to update or rectify false credit information for student loan borrowers related to the student loans, all in violation of the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq.
The Consumer Financial Protection Bureau (CFPB) instituted an investigation into Wells Fargo’s practices, and on August 22, 2016, the Bank and CFPB entered into a Consent Order fining the Bank approximately $3.6 million in penalties.
If you have had confusing/deceptive fees assessed by a student loan servicer, or improper credit reporting by a student loan servicer, it is vital to obtain the advice of an experienced consumer/FCRA attorney who can help protect your rights. Please contact The Kim Law Firm, LLC by calling 855-996-6342 and we will help set-up a consultation with one of our dedicated attorneys.