CFPB issues consent order against Performant Recovery, Inc.

The CFPB has announced it has issued a consent order against Performant Recovery, Inc., a California corporation headquartered in Plantation, Florida, that collected on student loan debt, including from borrowers who had defaulted on Federal Family Education Loan Program (FFELP) loans.

FFELP borrowers who have defaulted have a one-time right to rehabilitate their loans and bring them back into good standing by entering into an agreement and making a series of reasonable and affordable payments. If borrowers entered into loan rehabilitation agreements within 65 days of default, the loan holders did not charge the borrowers collection costs for the rehabilitations and also did not typically pay debt collection agencies any fees for these rehabilitations. However, the Bureau found that, between 2015-2020, Performant used its control over the rehabilitation process to delay borrowers’ loan rehabilitations beyond 65 days so that these borrowers would incur collection costs and Performant would generate fees for itself.

The Bureau found that, when borrowers called Performant with 65 days of default, the company routed these borrowers to specialized agents, who were told by managers that “the objective is to delay as much as possible without getting Performant in trouble.” Instead of filling out rehabilitation forms over the phone as they did with other borrowers, agents told these borrowers that they would need to receive blank forms by postal mail, and typically did not use email, fax, or other methods. Performant agents held up these borrowers’ rehabilitations at every stage. As a manager explained to agents, “[W]e want them to mail all documents. Remember the whole objective is to DELAY, DELAY, DELAY.”

The CFPB's order requires Performant to:

• Stop servicing and collecting on student loans
• Pay a $700,000 penalty to the CFPB’s victims relief fund. The payment will make it possible for the CFPB to potentially use the fund to fully redress borrowers harmed by Performant’s illegal conduct.