Heartland Campus Solutions still fighting CFPB probe after Pittsburgh judge's ruling

By John Revak | May 29, 2018

PHILADELPHIA — A stay pending appeal was recently granted to the defendant in a case involving the Consumer Financial Protection Bureau (CFPB).


Judge Cathy Bissoon   pawd.uscourts.gov

PHILADELPHIA — A stay pending appeal was recently granted to the defendant in a case involving the Consumer Financial Protection Bureau (CFPB).

The stay comes after the U.S. District Court for the Western District of Pennsylvania approved the civil investigation demand (CID) that the CFPB issued to the defendant, Heartland Campus Solutions. The CID was a highly contentious matter between the parties. The stay was issued in the U.S. Court of Appeals for the Third Circuit on May 4.

A civil investigation demand requires the party under investigation to be notified of the investigation and the activities that are being looked into. The CID also requests that the served party turn over documents related to the investigation.

Now that the stay has been issued, the CFPB cannot enforce the CID until the appeals process has been completed. This means that it cannot demand documents and other materials from Heartland that it would normally have access to under normal investigative procedures.


Heartland took issue with the wording of the CID and challenged its legitimacy, arguing that its language was too vague. The CFPB moved to enforce its order before the district court earlier this year. U.S. District Judge Cathy Bissoon presided over the matter. 

Heartland argued that the CID didn’t properly convey notice of the investigation because the language it used was so vague. The CID listed processing payments, charging fees, transferring loans, maintaining accounts and credit reporting as the activities it was investigating.

“[The] respondent argues that the... CID's list of five activities under investigation... fails to provide sufficient notice... because it 'merely categorize[s] all aspects of a student loan servicing operation,'” Bissoon stated in her memorandum.

Heartland cited Consumer Fin. Prot. Bureau v. Accrediting Council for Indep. Colls. & Schs. as relevant legal precedent. The company claimed that the language used in that case, which was rejected by the court, was similar to the language in the CID that it was issued.

The CFPB countered by distinguishing the case in two ways. The CID issued in this case, it argued, described the conduct under investigation with much more specificity and it involves student loan servicing as opposed to accreditation. The CFPB further argued that part of the reason why the court was quick to deny the CID in the case that Heartland cited was because of the bureau's inability to investigate accreditation.

The lower court sided with the CFPB after determining that Heartland’s argument was unconvincing. According the decision, the CFPB does not have to only investigate a subset of an organizations practices as long as there are legitimate grounds to investigate all of a company’s business practices. Any argument otherwise has no support in the law.

Additionally, Bissoon ruled that Heartland's argument was further diminished by the fact that the CFPB, as an administrative agency, has considerable freedom to shape an investigation as it sees fit.

“[The] respondent cites to no authority—and the court finds none—holding that the CFPB is barred from investigating the totality of a company’s business operations, rather than a mere subset of its operations, when it has a legitimate reason to believe that violations have occurred,” Bissoon wrote in the decision.

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Consumer Financial Protection Bureau U.S. Court of Appeals for the Third Circuit U.S. District Court for the Western District of Pennsylvania

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