CFPB Takes Action Against Company for Processing Upfront Debt Settlement Fees

CFPB logoDebt settlement firms that require upfront payments continue to find themselves in the cross-hairs of the Consumer Financial Protection Bureau. On Thursday, the agency announced it filed a complaint against a Washington state payment processor, Meracord LLC, alleging it provides the financial structure that enables collection of illegal upfront fees from consumers drowning in debt.

Consumers who use debt settlement companies are often instructed to stop paying debtors as part of a negotiation strategy. In the meantime, they are told to make payments to a third-party firm, allegedly to build a pile of cash that can be used to make settlement offers. With fraudulent firms, consumers have complained that debts ultimately aren’t settled, and the funds they’ve paid to the third-party firms are lost to fees.

Meracord, the CFPB said, collected “millions of dollars” in such funds on behalf of debt settlement companies from 11,000 consumers since October 2010.  Nearly 5,000 of those customers got nothing for their money — none of their debts were actually settled, the agency alleges.

Read more at Credit.com

About Bob Sullivan 1344 Articles
BOB SULLIVAN is a veteran journalist and the author of four books, including the 2008 New York Times Best-Seller, Gotcha Capitalism, and the 2010 New York Times Best Seller, Stop Getting Ripped Off! His latest, The Plateau Effect, was published in 2013, and as a paperback, called Getting Unstuck in 2014. He has won the Society of Professional Journalists prestigious Public Service award, a Peabody award, and The Consumer Federation of America Betty Furness award, and been given Consumer Action’s Consumer Excellence Award.

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