The lawsuit, filed in California Superior Court for the county of San Francisco on June 29, 2018, alleges that the company steered borrowers toward more expensive repayment plans and provided incorrect information to borrowers about their accounts. Also charged in the lawsuit are Navient subsidiaries Pioneer and General Revenue Corp. Becerra’s office said Navient had assigned “thousands” of defaulted California loans to be collected by these firms. The lawsuit charges the subsidiaries with misrepresenting the credit benefits of rehabilitating defaulted loans and providing false information on collection fees for rehabilitation.
A statement from Becerra’s office alleges that the company violated the California’s unfair competition and false advertising laws by not adequately disclosing how borrowers could be considered for income-driven repayment recertification plans that could reduce monthly payment amounts. Navient was also accused of misrepresenting the “present amount due” to borrowers who were delinquent in payments.
“Poor loan servicing is at the core of the problem for students who are in default... By taking Navient to court, we’re sending a very strong message that these practices will not be tolerated.”
California Attorney General Xavier Becerra
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