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CFPB Dismisses Two Actions Against Student Loan Trusts and Subprime Auto Lender
Thursday, May 1, 2025

The CFPB recently dropped two more lawsuits it brought under the Chopra administration—one involving a student loan securitization trust and the other regarding a subprime auto finance company. Both lawsuits included allegations of unfair, deceptive, or abusive practices (UDAAPs) in violation of the Consumer Financial Protection Act. 

On April 25, the CFPB voluntarily dismissed its 2017 lawsuit against a group of pre-2008 student loan trusts. The Bureau alleged that the trusts had, via third-party contractors, engaged in unlawful debt collection litigation tactics involving private student loans. Specifically, the lawsuit alleged the student loan trusts (1) filed lawsuits without proper documentation, (2) litigated time-barred debts, and (3) engaged in deceptive collection practices. The Bureau alleged that the trusts used misleading or false legal filings to mislead consumers.

The parties had agreed to a $2.25 million settlement in January, which included obligations to adhere to compliance obligations and restrictions on future lawsuits, but in February, a group of investors filed an objection to the deal in February, arguing it was unclear whether the CFPB had authority to settle the case in light its suspension of activities. The joint stipulation filed by the Bureau and the trusts has led to its dismissal with prejudice.

On the same day, the CFPB moved to withdraw from a 2023 lawsuit it filed jointly with New York Attorney General Letitia James against a subprime auto lender. The complaint alleged that the company’s indirect lending model obscured finance charges and incentivized dealers to inflate loan amounts. Although New York did not oppose the CFPB’s exit from the lawsuit, it will continue to pursue the litigation independently. 

Putting It Into Practice: As the CFPB continues to narrow its enforcement activity by withdrawing from prior lawsuits (previously discussed herehere, and here), UDAAP violations continue to be enforced by both state and federal agencies (previously discussed here and here). Financial institutions should continue monitoring both federal and state UDAAP activity and reassess enforcement exposure in areas involving third-party practices and complex product structures. 

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