WASHINGTON: The U.S. Consumer Financial Protection Bureau (CFPB) announced in July that Discover Bank and two affiliates would pay $18.5 million in consumer refunds and fines for using illegal practices while servicing private student loans.
Citibank (C) is under investigation for its student loan servicing practices, the New York based bank disclosed. The bank said it’s cooperating with the investigation, but warned that regulators may order it to provide financial relief to customers and could decide to impose additional financial penalties. Citibank shares ended down fractionally at $58.44 following the disclosure.
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The bank’s disclosure of the investigation in a Securities and Exchange Commission filing did not identify the regulator. However, the bank said similar student loan servicing practices have been the subject of an enforcement action against at least one other financial institution.
