Yesterday The Washington Post reported that Donald Trump's pick for Secretary of Education, Betsy DeVos, has ties to the debt collection industry through her investment management firm, RDV Corporation. insideARM posted a story yesterday covering that development.
We were since contacted by Performant, and provided with the following letter to the editor that the company submitted to the Post, expressing its view that their article was unfair and misleading. As of this writing, it does not appear that the Washington Post has published the letter; We are providing it here in full.
To the Editorial Staff of the Washington Post,
I am responding to a recent article published in the Washington Post that reported on a financial connection between Performant Financial and Education Secretary Nominee Betsy DeVos, which also attempted to disparage Performant’s reputation through misleading comments that were both inaccurate and irresponsible.
I believe that it is important to be transparent, especially in a time of uncertainty and when journalistic integrity is being brought into question. However, upon reading the article I was deeply disappointed to see that the journalist largely ignored our commentary as it relates to our association with Ms. DeVos. I hold the Washington Post in high regard, which is why I attempted to provide the reporter with as much detail as possible without violating the privacy rights of our current investors.
The article contained the following inaccuracies:
- Despite communicating that Performant’s current amount of long-term debt was $55.9 million, the reporter chose to grossly overstate the amount and use the initial figure of $147 million from 2012. Furthermore, we indicated that the current lending syndicate contained over 20 lending entities and that several of these entities consist of multiple investors.
- The article also incorrectly stated that Performant was awarded 14 contracts by the Education Department in 2016 worth more than $20 million. In fact, the Company did not receive any new contracts from the Education Department in 2016, and our only contract with the Department expired in April 2016.
- The reporter referenced that the Consumer Finance Protection Bureau (CFPB) received hundreds of complaints against the Company and that the CFPB had requested information related to Performant’s debt collection practices. However, the CFPB’s own website notes that during 2016 there were only 90 complaints logged with the CFPB against Performant, related to the over 935,000 contacts made during the year, or far less than 0.01% of contacts made during the year. Furthermore, the CFPB closed its review without taking any action. However, this reporter has twisted the CFPB criticism of other collectors to make it look like the criticism applies to Performant.
Compliance is at the heart of what we do every day and the implication that Performant is not fully vested in the best interests of borrowers is not something that I take lightly. For over a quarter-century Performant Financial has worked with borrowers and helped them regain their financial independence and improve their overall credit scores allowing them to do many things that people take for granted such as open a new credit card, purchase a new vehicle or even obtain a mortgage for a new home. We are disappointed that these issues were inaccurately addressed and that Performant Financial was misrepresented in an attempt to drive a political agenda.
Board Chair and Chief Executive Officer
One other thing is worth mentioning.
The Washington Post article states, "[T]he company disclosed in 2013 that the Consumer Financial Protection Bureau had requested documents and other information related to its debt collection practices and procedures."
It should be noted that the CFPB is literally in the business of sending such requests to what it calls "larger market participants." That is the mission of the CFPB's Department of Supervision; they supervise the larger players in the market by sending requests for documents and then reviewing practices. While insideARM has no specific knowledge of this (or any) particular supervisory activity, the sheer existence of the request for and review of information should not be deemed evidence of wrongdoing.
The bureau has conducted dozens of such audits in the debt collection market over the last few years. Many do not result in enforcement actions but do identify improvement opportunities... much like the GAO has identified improvement opportunities at the CFPB.