Comment by Lazare | Hacker News Reader

Comment by Lazare | Hacker News Reader

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> So, pardon in advance for the vulgar language, but why the fuck is this OK? From any company?

I dunno, why wouldn't it be okay? I interact with a lot of companies on a day-to-day basis; big ones (Facebook, Google), small ones (the corner shop I bought an energy drink at on my way to work), and everything in between.

Offhand I'd say that none of them have a legal expectation to work in my best interest, nor would I have expected any of them to, nor do I believe a law requiring them to would be workable.

My interest in buying an energy drink is to get the brand I wanted at the lowest possible price; the store's interest is in selling it to me at the highest possible price. If they had to work in my best interests would they be required to sell it to me at cost? Maybe I drink too many energy drinks, would they be required on pain of criminal sanctions to try and talk me into buying some fruit juice instead? The mind boggles. :)

Or do you think there's something special about this particular product that makes it different than every other good or service in the economy? Or that their very vague ads somehow set up a special relationship that's more akin to a doctor/patient relationship than the borrower/lender relationship one would expect from, you know, a loan company?

The energy drink company's interest is to minimize its cost. Years of bad behavior in this regard eventually led to pure food/drug laws, but in places with weak rule of law plenty of people are still poisoned by dodgy food.

Oh yes, absolutely. We have laws banning outright fraud, setting minimum food safety standards, a lot of rules about packaging and labelling. And that's good!

But we don't have any laws or expectation that a food vendor is going to be acting in my best interests. If I want to spend my rent money on 87 large pepperoni pizzas, nobody is going to arrest the guy who took my order because he didn't sit down and have a 30 minute session with me to ensure that my order was in my best interests, fit within my budget, and would improve my life. All we do is make sure that I 1) have the money 2) get my pizzas and 3) they aren't poisonous or mislabelled.

The difference between "you can't blatantly lie" and "you have a fiduciary duty to act in your client's best interests" is enormous.

That was a great analogy.

However the pizza restaurant also doesn't have anything about helping you make good, long-term financial decisions plastered all over it's website.

If Navient wrote "call us and we'll screw you" then that would be fine as the customer would get what exactly what they were promised.

  > However the pizza restaurant also doesn't have anything about helping you make good, long-term financial decisions plastered all over it's website.

But they are required to list nutrition facts.

It's not as simple as that.

They are a servicer, not a lender -- they are contracted by the lender to collect the money from the borrower. So the borrowers never asked to be customers of Navient. They borrowed some money from a bank or the government, who then contracted Navient to service the loans.

Now servicing loans is like owning an interest only bond -- you get a small payment every month as long as the loan is paying. When you own servicing rights, what you want to do is for payments to drag on for as long as possible -- since you don't get the principal, having the loan pay early is the second worst thing that can happen.

Now its very possible that Navient is doing things which are not in the interest of either the borrower or the lender, but are in the interest of Navient. And it's likely perfectly legal.

But again many of these loans are not just simple transactions in the marketplace, but rather subsidized social programs, where the government in promoting the program has a reasonable expectation that some part of this subsidy should fall to the borrower, and is reasonable frustrated when a provider whom they have hired tries to prevent this.

Maybe we shouldn't be mad at Navient then? Seems like the government is the root cause of the entire student loan mess. Basically unlimited amounts of unsecured debt for people that don't understand the implications and are not required to get a degree that has a ROI to pay it back in a reasonable amount of time. Setting people up for a lifetime of wage slavery...

> But again many of these loans are not just simple transactions in the marketplace, but rather subsidized social programs, where the government in promoting the program has a reasonable expectation that some part of this subsidy should fall to the borrower, and is reasonable frustrated when a provider whom they have hired tries to prevent this.

IF SO, that seems like a damning indictment of the government and the contracts they have drawn up then?

If you're trying to run some sort of soft touch social program where maximising the amount collected isn't your primary goal, then obvious the ONE thing you shouldn't do is then outsource managing it to a private company who gets paid based on their ability to maximise the account collected. Right? Given that's the one thing the government could do most likely to undermine their goals?

If you want happy borrowers, sign a contract with Navicent that pays them based on their NPS score. :)

If the food vendor straight up says in their marketing, "At Pepperoni Pizza Meister's, our priority is to help each of our 12 customers successfully manage their meals in a way that works for their individual circumstances", one might, not entirely unreasonably, argue that they should in fact have that 30 minute session with you, and are lying if they don't.

I think the outrage is because it seems to many people that "outright fraud" and "blatantly lie" are pretty apt descriptions of what happened here. It seems like the lawyers involved don't agree, but from my lay perspective it isn't easy to see why not.

Basically, people tend to think "false advertising" is fraudulent, even if that is not true from a legal perspective.

Why can't we empower good institutions and disempower shitty ones, for the sake of humanity and the betterment of our species?

Define "empower", "good" and "shitty". And then I'll tell you how it'll be gamed.

Because it's hard to care about the "betterment of our species" when most people live 55 to 75 years and a species has a evolutionary timescale.

>Or do you think there's something special about this particular product that makes it different than every other good or service in the economy?

The difference is that we have drawn a line beyond which that company cannot operate by passing a law that bans certain practices, and the CFPB is alleging Navient violated that law.

I was responding to the suggestion that it wasn't okay for any company to not have a legal duty to act in the best interests of its customers.

Navient may well have such a duty. :)

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