CFPB fines student loan holder, debt collector

Markets Associated Press

The federal government has fined two groups it says illegally attempted to collect student loan debt and prohibited them from further action on recovering payments until audits on all its accounts are completed.

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The Consumer Financial Protection Bureau said Monday National Collegiate Student Loan Trusts, which owns more than 800,000 student loans, and their debt collector, Transworld Systems, sued borrowers for student loans "they couldn't prove were owed and filed false and misleading affidavits in courts across the country."

The CFPB is ordering the trusts to pay at least $19.1 million and Transworld $2.5 million in civil penalties.

Transworld Systems of Lake Forest, Illinois, said it was "disappointed" and disagreed with the CFPB's "characterizations," but is settling in order to focus on its customers.