CFPB: Profit Motive of Loan Purchaser Is Element of Novel “Abusive” Claim

A desire to make a profit by purchasing high-risk student loans is abusive according to a recent filing by the Consumer Financial Protection Bureau (“CFPB” or “Bureau”). Claiming that a loan purchaser is a “covered person” over which it has jurisdiction, on August 17, 2017, the CFPB filed a complaint and proposed settlement related to the role of Aequitas Capital Management, Inc. and certain related entities in the private student loan program of Corinthian Colleges, Inc. This appears to be the first time the CFPB has used its authority over “abusive” acts and practices against a third-party loan purchaser. This Legal Update provides details on the complaint and discusses its implications.