CFPB Fines and Bars Leading Firm Over Debt Settlement Fees
The Consumer Financial Protection Bureau today fined one of the country’s largest debt settlement payment processing companies $1.376 million for allegedly helping other firms collect millions of dollars from consumers in illegal upfront fees.
Meracord LLC and its CEO, Linda Remsberg, are also prohibited from processing payments for debt-settlement companies in the future.
During the past three years, Meracord apparently processed millions of dollars of unlawful fees from over 11,000 consumers. According to the CFPB, almost 5,000 of these accounts were closed without any debts being settled.
Consumers who have credit card debt are sometimes approached by debt settlement companies with an offer to reduce their debt by negotiating settlements with creditors. There are rules, such as the Telemarketing Sales Rule, that prohibit these debt settlement companies from collecting any fees before any of the debts are settled. The CFPB charged Meracord with violating this rule.
“Today we are taking action against Meracord, a company that made it possible for debt-settlement companies across the country to charge consumers illegal fees,” said CFPB Director Richard Cordray. “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.”