On July 10, 2018, Cook County Circuit Court Judge Kathleen Pantle rejected attempts by Navient to dismiss claims brought by the Illinois Attorney General claiming that Navient violated the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA). (Order dated 7/10/2018). Navient is one of the largest services of federal and private student loans. This blog post focuses on one aspect of the AG’s claims against Navient, namely that Navient engaged in unfair or deceptive conduct. Specifically, the AG’s Complaint alleged that Navient “[u]nfairly [made] errors, sometimes month after month, in misallocating and misapplying payments made by consumers, while failing to implement adequate processes and procedures to prevent the same errors from recurring, or to prevent the same errors from impacting other consumers.” (Order at 44, fn 30).
The Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA)
The Illinois Consumer Fraud Act is a regulatory and remedial statute designed to protect consumers, borrowers, and businessmen against fraud, unfair methods of competition, and other unfair and deceptive business practices. 815 ILCS 505/1 et seq. It is a powerful tool in combating a wide range of unfair and deceptive practices facing consumers and businesses.
In this case, the AG alleged that Navient engaged in unfair or deceptive conduct because it did not have adequate processes and procedures in place to sufficiently address errors it makes in the processing of payments received from student loan borrowers or to prevent the errors from recurring. The AG claims that these errors were more than human errors and mistakes and involved systematic errors in allocating and applying borrower payments.
The AG alleges that Navient misallocated payments even where there were written instructions on paying or dividing payments among the loans (Compl., ¶¶ 331, 333). The AG also contends that borrowers have to repeatedly fix errors by calling Navient month after month, and that even if Navient then corrects the specific error, Navient does not fix the underlying issue to prevent it from recurring. According to the AG, these payment processing errors have caused borrowers to incur improper late fees, increased interest charges, delinquencies on their accounts and the furnishing of inaccurate, negative data to credit bureaus. (Order at 45).
In denying Navient’s motion to dismiss those allegations, Judge Pantle ruled that the case can proceed because the allegations were sufficient to show that “Navient clearly knew that [the] payment and allocation system was problematic” because, for example, “each year Navient receives thousands of complaints and inquiries relating to payment misapplication or misallocation that are escalated beyond a first-level customer service representative.” (Order at 45, citing Compl. at para 332). Additionally, Judge Pantle ruled that Navient’s own representative acknowledged repeated errors that occurred month after month but offered no solutions. (Order at 45-6, citing Compl. at para 347). Yet, despite these numerous complaints, Navient has failed to put in place appropriate procedures and processes to address or prevent such issues. (Order at 46, citing Compl. at para 326). These allegations are sufficient to state a claim under the ICFA against Navient, according to Judge Pantle.
Attorney Antonio DeBlasio has been selected by Super Lawyers® for Business Litigation in 2008 and in each year from 2014 through 2020. Only 5% of attorneys receive this distinction. DeBlasio & Gower’s attorneys have over 35 years of combined experience representing businesses, individuals and estates in Illinois.
The attorneys at DeBlasio & Gower LLC have experience handling lawsuits against Navient and understand the emotional toll on consumers who have to repeatedly follow up to address errors on the student loan accounts. Contact one of our attorneys to discuss whether you have a case. You may contact us at (630) 561-1123.
This blog post was co-authored by Casey Delury; Pre-law student at Elmhurst College
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