## Facts

- The Consumer Financial Protection Bureau (CFPB) sued Navient Corporation, Navient Solutions, Inc., and Pioneer Credit Recovery, Inc., alleging unlawful student-loan servicing and collection practices.
- Navient serviced and collected federal and private student loans and communicated with borrowers about repayment options.
- The complaint alleged that when borrowers struggled to pay, Navient promoted short-term forbearance and also offered income-driven repayment (IDR) plans that generally could be more affordable over time.
- The CFPB alleged that repeated forbearances increased borrowers’ balances through accrued and capitalized interest and that IDR plans were often materially better for distressed borrowers.
- The CFPB alleged Navient’s compensation and time-pressure incentives made it faster and more rewarding for employees to place borrowers into forbearance than to evaluate and complete IDR enrollment, resulting in steering borrowers toward forbearance without adequate discussion of alternatives.
- Borrowers in IDR plans had to recertify income annually; the CFPB alleged Navient’s online “notice available” alerts did not clearly convey critical recertification deadlines, causing missed deadlines and loss of IDR benefits.
- The CFPB asserted eleven counts alleging violations of the Consumer Financial Protection Act (CFPA) (including unfair and deceptive acts or practices), the Fair Debt Collection Practices Act (FDCPA), and Regulation V under the Fair Credit Reporting Act (FCRA).

## Issues

1. Whether the CFPB may bring a CFPA enforcement action alleging unfair, deceptive, or abusive acts or practices without first issuing rules defining the challenged practices.
2. Whether the CFPB’s single-Director, for-cause removal structure is unconstitutional such that the Director lacked authority to authorize the suit.
3. Whether the complaint plausibly stated claims under the CFPA, FDCPA, and Regulation V, and whether any count was so vague that a more definite statement was required.

## Decision

- The court largely denied Navient’s motion to dismiss (and request for a more definite statement), allowing the case to proceed.
- The court held the CFPB had statutory authority to pursue CFPA UDAAP enforcement without first engaging in rulemaking.
- The court rejected Navient’s structural constitutional challenge and held the CFPB’s structure did not offend the Constitution.
- The court found the complaint adequately pleaded the alleged CFPA, FDCPA, and Regulation V violations and provided sufficient detail for Navient to respond.

## Legal Principles

- The CFPA authorizes the CFPB to enforce statutory prohibitions on unfair, deceptive, and abusive acts or practices through enforcement actions; prior rulemaking is not a prerequisite to suit.
- A separation-of-powers challenge to the CFPB’s single-Director, for-cause removal structure did not warrant invalidating the agency or the Director’s authorization of enforcement at the pleading stage.
- At the motion-to-dismiss stage, well-pleaded factual allegations are accepted as true, and claims survive if they plausibly state violations under the applicable consumer-finance statutes and regulations.
- A more definite statement is not required where the complaint provides enough factual detail to permit a responsive pleading.

## Conclusion

The court permitted the CFPB’s student-loan servicing enforcement case to move forward, ruling that the Bureau could pursue UDAAP claims without prior rulemaking, that the CFPB’s structure was constitutional, and that the complaint plausibly alleged violations of the CFPA, FDCPA, and Regulation V.


Consumer Fin. Prot. Bureau v. Navient Corp., No. 3:17-CV-101, 2017 WL 3380530 (M.D. Pa. Aug. 4, 2017)