Feb 25 (Reuters) - Credit card company Discover Financial Services said it was being probed by the U.S. consumer financial watchdog over its unit’s student loan servicing practices.
The Consumer Financial Protection Bureau (CFPB) has issued a civil investigative demand to Discover Bank seeking information regarding certain student loan servicing practices, Discover said in its annual filing on Tuesday. ()
The unit, Discover Bank, is one of the major private student lenders that continue to issue student loans in the United States despite facing increasing competition from the government, which now issues most student loans.
The CFPB had said in December it would start supervising the seven largest student loan servicers to ensure fair treatment to borrowers. The watchdog had pegged the student loan debt at $1.2 trillion.
The company also disclosed that the Federal Deposit Insurance Corp (FDIC) has notified it of “potential deficiencies” in Discover Bank’s anti-money laundering program.
The Bank Secrecy Act requires companies to assist government agencies detect and prevent money laundering.
Discover Bank is cooperating with the agencies and enforcement action from either could include demands for civil money penalties, the company said.
Discover Financial shares closed down about a little less than 1 percent at $56.96 on Tuesday on the New York Stock Exchange.