The Consumer Financial Protection Bureau fined Conduent Education Services $3.9 million for failing to provide accurate account balances on more than 200,000 student loans that resulted in many borrowers paying off the wrong amounts.
The bureau did not publicly state how much Conduent paid back to consumers as part of a three-year remediation plan that began in 2015. The failures happened when the company was known as ACS Education Services and was owned by Xerox, which spun off its business processing services unit in late 2016 with the public company renamed Conduent.
From 2005 to 2015, Conduent failed to accurately adjust student loan balances when borrowers asked for a deferment, forbearance or income-based repayment plan. Though the company adjusted borrowers’ monthly billed amounts, it was not able to process all adjustments in a timely manner, resulting in inaccurate balances on hundreds of thousands of student loans, the CFPB said.
Conduent “was not able to process all its manual adjustments in a timely manner and the company used a system of electronic 'queues' to hold loans for later processing,” the CFPB said in a
The company said it is pleased to put the "legacy issues behind it." The company neither admitted nor denied liability.
“We have entered into a settlement agreement with the CFPB stemming from investigations initiated in 2014 and 2015, prior to Conduent’s separation from Xerox Corporation," Conduent said in a statement. "The investigation centered on loan servicing activities going back into the 2000s."
The company self-reported the issues to the CFPB in 2014, but transferred many loans with the wrong balances to other servicers even though it knew some balances were incorrect, the CFPB said. The company also failed in many instances to provide the correct payoff information to thousands of borrowers even after it began the remediation process, the CFPB said.
The order says Conduent “was aware that the amounts paid [by borrowers] might be incorrect, but failed to inform those Affected Borrowers or correct the balances of those Affected Loans.”
Conduent also has been in the cross-hairs of state regulators.
In January, the company agreed to pay $9 million to settle claims that it steered borrowers away from less expensive loan repayment plans in favor of more expensive ones, according to a settlement with New York’s Attorney General Letitia James and New York's Department of Financial Services.
In that case, borrowers are expected to receive between $100 and $450 in restitution.
As part of that
