Meracord Hit with $1.3M Penalty for Processing Illegal Debt-Settlement Fees

Meracord Hit with $1.3M Penalty for Processing Illegal Debt-Settlement FeesThe Consumer Financial Protection Bureau has cracked down on Meracord, a leading debt-settlement payment processor, for allegedly helping others to collect millions of dollars in illegal upfront fees from consumers.
The bureau has asked a federal district court to approve a consent order that would require Meracord and its CEO and owner, Linda Remsberg, to end illegal activities and to pay a $1.376 million civil penalty.
“By taking a stand against those who facilitate illegal activity, we can root out harmful behavior across the debt-settlement industry and better protect consumers,” said CFPB Director Richard Cordray.
Debt-settlement companies normally offer to help consumers reduce or eliminate their credit card or other debt by negotiating settlements with creditors.
In typical cases, these companies instruct consumers to stop paying their debts and to instead make monthly payments to a payment processor, such as Meracord, while the debts are negotiated.
Meracord, which is based in the state of Washington, has been one of the largest payment processors for the debt-settlement industry.
The CFPB charges that Meracord and Remsberg violated the Telemarketing Sales Rule by helping debt-settlement companies charge consumers upfront fees.
The rule prohibits debt-settlement companies from charging consumers, such fees before settling any of their debts. The rule protects consumers from the risk of spending money on services that may not materialize and then ultimately being left even deeper in debt.
According to the CFPB’s complaint, Meracord processed thousands of these illegal advance fees since October 2010. In total, the CFPB believes that Meracord helped debt-settlement companies charge millions of dollars in unlawful fees to more than 11,000 consumers in multiple states.
Nearly 5,000 of those consumers’ accounts were closed without any of their debts being settled.
This action is part of the CFPB’s effort to protect consumers in the debt-settlement industry.
In the lead up to this case, the bureau has been pursuing actions against several debt-settlement providers that charged consumers illegal advance fees with Meracord’s assistance.
The Bureau obtained judgments against two of these companies – Payday Loan Debt Solution, Inc. and American Debt Settlement Solutions, Inc. The Bureau also filed a complaint against four others – Mission Settlement Agency, the Law Office of Michael Levitis, Premier Consulting Group, LLC, and the Law Office of Michael Lupolover.

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