ITT Educational Services, Inc. Calls CFPB Complaint Unfounded, Asks Court To Dismiss

CARMEL, Ind., May 8, 2014 /PRNewswire/ — ITT Educational Services, Inc.
(NYSE: ESI), has moved to dismiss the complaint filed by the Consumer Financial
Protection Bureau (CFPB) in U.S. District Court, because the Bureau’s
allegations are legally flawed and violate the Constitution.

ESI, a leading private college system, said in its response to the agency’s
allegations – which primarily attack private student loans issued by third
parties during a five-month period in late 2011 – that ESI “does not provide
consumer financial products, and its conduct as described in the Bureau’s
complaint falls outside the Bureau’s jurisdiction. The complaint recognizes that
the loans at issue in this case were made by third parties–not [ESI].”

ESI noted that the Bureau makes misleading use of “mystery shopper” reports that
the company uses to help ensure its activities conform to its policies and are
compliant with state and federal regulations: “The complaint provides only
out-of-context, edited quotations from select mystery shopper reports. The full
quotations reveal a starkly different picture.”

On pages 5-6 of the response, ESI cites the Bureau’s use of a mystery report
that was truncated to create a misleading impression:

For example, the complaint quotes one mystery shopper as describing
[ESI]’s insistence on following up with the prospective student as “a
bit invasive”, yet omitted the remainder of the shopper’s report
stating that she “was pleasantly overwhelmed at how willing and
excited [the school] was to help me in finding a career,” and “ha[d]
never encountered a career service office as nice and helpful as this
one.” The shopper also praised [school] staff because “[t]hey truly
seem to make it their goal to help their students succeed at making
the leap from education to career, which is great!!”

The ESI response notes: “The Bureau does not claim that [ESI] engaged in
fraudulent or deceptive conduct…Nearly every allegation in the
complaint–including the misleading and out-of-context ‘mystery shopper’
allegations–is window-dressing that has nothing to do with the third-party
loans or the causes of action the Bureau has chosen to plead.”

ESI also emphasized that the complaint violates the Constitution’s Due Process
Clause and that the Bureau itself operates in violation of the Constitution’s
separation of powers.

“This unprecedented and unfounded lawsuit should be dismissed,” ESI said. The
CFPB “has limited authority to regulate consumer finance, but wants to override
the boundaries set by Congress and extend its power.”

The brief in support of ESI’s motion to dismiss can be found at:

About ITT Educational Services, Inc.
ITT Educational Services, Inc. (NYSE: ESI) provides accredited,
technology-oriented undergraduate and graduate degree programs through its ITT
Technical Institutes and Daniel Webster College to help students develop skills
and knowledge that they can use to pursue career opportunities in a variety of
fields. It owns and operates more than 135 ITT Technical Institutes and Daniel
Webster College. ITT/ESI serves more than 55,000 students at its campuses in 39
states and online. Through the Center for Professional Development @ ITT
Technical Institute, ITT/ESI provides short-term information technology and
business learning solutions for career advancers and other professionals.
Headquartered in Carmel, IN, ITT/ESI has been actively involved in the higher
education community since 1969 and can be found online at

SOURCE ITT Educational Services, Inc.

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