WASHINGTON (Legal Newsline) - The Department of Education is fighting back against a class action lawsuit brought by a plaintiff who says his father took out more than $300,000 in fraudulent student loans in his name.
The DOE argues in a March 8 motion to dismiss in Washington, D.C., federal court that no one is asking Emerson Bradley to pay those loans off. His record has been corrected and the situation resolved, the DOE feels.
Bradley's father forged his signature on a loan application, and Bradley's lawsuit says the DOE does not have appropriate safeguards in place.
"At bottom, in pursuit of a class action, Plaintiff seeks to turn student loan fraud allegedly committed by his father into a Privacy Act violation," the motion says.
"Surely, Congress did not countenance this broad theory when it created the Privacy Act's narrow causes of action, cabined further by an intentional willful requirement for damages claims."
The suit says "blameless victims" have been "saddled" with fraudulent student loans due to identity theft. Bradley claims the defendant does not ensure the student loan applications are from the actual applicant or contain accurate information about identity theft victims in their systems.
The plaintiff alleges that beginning in April of 2012, his father submitted several fraudulent applications to the defendants that falsely represented he agreed to endorse a series of students loans as a cosigner.
He claims the fraudulent loans obligated him as a co-signer for more than $341,000. Bradley alleges the defendant disseminated student loan information without making sure the records were accurate, complete and timely.
But the DOE says it authorized the loan servicer, Nelnet, to removed Bradley as an endorser on his father's loans when it learned of the alleged fraud. Due to an administrative error blamed on Nelnet, this was finally done Dec. 5 - after the lawsuit was filed.
The motion to dismiss says Bradley can't make a claim for damages under the Privacy Act.
"(T)he Department had consent to disclose the Endorser Addendum information at issue here. Again, it was reasonable for the Department to believe that Plaintiff actually gave this consent based on the signed Endorser Addendums, because it did not know that they were forged until after it reported the 'records pertaining to the fraudulent loans' to consumer reporting agencies (and certainly after it reported those records to Nelnet)," the motion says.
"This reasonable belief defeats Plaintiff's claim of a willful or intentional violation."