Discover’s Student Loan-Servicing Actions Investigated by CFPB

(Bloomberg) -- Discover Financial Services is being investigated by a federal regulator over student loan-servicing practices and its compliance with a 2015 consent order involving the business.

Discover is cooperating with the Consumer Financial Protection Bureau, according to its annual regulatory filing posted Wednesday. The lender said it is enhancing the compliance plan it submitted to the CFPB in response to the consent order.

Discover in 2015 agreed to refund $16 million to consumers and pay a $2.5 million fine to resolve allegations of illegal loan-servicing practices. The CFPB said at the time that the bank overstated minimum amounts due on billing statements and denied consumers information needed to obtain income tax benefits.

The latest investigation could lead to a supervisory action or fines and cause Discover to change business practices, the firm said.

To contact the reporter on this story: Jenny Surane in New York at jsurane4@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Dan Reichl, David Scheer

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