Rohit Chopra testifies before the Senate Committee on Commerce, Science, and Transportation to be a commissioner of the Federal Trade Commission on Feb. 14, 2018. Photo by Diego Radzinschi/National Law Journal


The Federal Trade Commission on Monday unanimously supported a settlement with SoFi resolving allegations that the finance company exaggerated how much borrowers could save by refinancing their student loans through its services. But for at least one FTC member, Commissioner Rohit Chopra, something was missing: A fine.

The FTC has limited power to exact fines. It is often only when a company violates the terms of an earlier settlement that the FTC has the authority to come back and assess a civil penalty. Chopra, a former student loan ombudsman at the Consumer Financial Protection Bureau, issued a statement with Monday’s settlement calling for the FTC to collaborate with his former agency and state attorneys general to effectively piggyback on their authority to seek monetary penalties.

“Our proposed resolution does not require SoFi to pay any money whatsoever for this misconduct. Ideally, SoFi would pay civil penalties for violating the law. Due to limitations in the FTC’s authority, the agency cannot seek civil penalties in matters like these. However, the Consumer Financial Protection Bureau and the state attorneys general would be able to seek penalties from SoFi under existing federal law,” Chopra said.

“In future matters where we are unable to obtain monetary remedies, we should carefully consider whether partnering with other law enforcement agencies can lead to better results for consumers and deter bad actors from violating the law.”

It was unclear whether the FTC sought out that collaboration in its case against SoFi. An FTC spokeswoman said the agency does not comment on its “investigative steps,” but said it “regularly collaborates and works with our law enforcement partners.”

Chopra and the CFPB did not immediately respond to requests for comment Monday.

SoFi, represented by Orrick, Herrington & Sutcliffe partner Anthony Kim, was accused of misleading borrowers in advertisements about the savings that could come from refinancing student loan debt through the company. The FTC said SoFi made “prominent” false statements in television, print and internet advertisements going back to at least 2016, inflating average savings by excluding consumers whose refinanced loans had longer terms than their previous loans.

“Those borrowers therefore would usually end up paying more money—thousands of dollars more, on average—over the lifetime of the loans,” the FTC said. “When SoFi did disclose these exclusions, the disclosures were often buried in fine print.”

Kim did not immediately respond to a request for comment.

Under the settlement, SoFi agreed to back up any future claims of savings with reliable evidence.

In his statement, Chopra said he voted in favor of the settlement because SoFi “significantly exaggerated” possible savings from refinancing. “These advertisements were deceptive and I agree that SoFi’s actions were unlawful, so I have voted in favor,” he said.

Chopra’s statement added to an increasingly louder call from the FTC. In recent months, other commissioners have publicly pushed for legislation granting the agency civil penalty authority at least in its efforts to police data privacy.

During a recent appearance at George Washington University, Commissioner Rebecca Slaughter said the FTC wields a “much smaller stick” in the data privacy area than European regulators, who have the power to levy fines of 20 million euros—or, alternatively, 4 percent of a company’s global annual revenue. The FTC’s limited authority to seek penalties, she said, “is genuinely a problem for encouraging compliance.”

In testimony before a House panel, FTC Chairman Joseph Simons also addressed the limits of the main statute enforced by the agency, Section 5 of the FTC Act, which does not allow for civil penalties.

“In my view, we need more authority,” Simons said, pushing for data security legislation that would give the FTC the “ability to seek civil penalties to effectively deter unlawful conduct.”