WASHINGTON (10/4/13)--The Consumer Financial Protection Bureau Thursday took action against debt settlement payment processor Meracord LLC, alleging that the firm helped debt-settlement companies collect illegal fees from consumers.
Meracord, according to CFPB Deputy Director Steve Antonakes, helped debt settlement companies "collect money that should have gone to pay down a consumer's debt but instead went to the debt-settlement companies in the form of illegal advance fees."
Antonakes in a release noted the Telemarketing Sales Rule specifies that companies that engage in debt-settlement services cannot charge or collect a fee unless they first reduce or alter a debt. "This law protects consumers from paying upfront for services that may not materialize and that may leave them even deeper in debt. We believe that Meracord knew or should have known that it was processing illegal upfront fees charged to consumers in violation of this rule," he wrote.
The CFPB alleges that Meracord processed more than 11,000 payments.
Under the terms of a CFPB order, Meracord and company owner Linda Remsberg would pay a $1.376 million civil penalty. The company would also be required to halt all illegal activities, and Meracord and Remsberg would be banned from processing payments of any kind for debt relief or mortgage assistance relief providers.
The CFPB would monitor the company going forward to ensure compliance with the order.
The order was filed in federal district court in the Western District of Washington on Thursday, according to the CFPB.