“If a business is enabling bad actions that hurt consumers, then we will use our authority to stop them. We are making the point here and it applies to all companies that do business with consumer financial providers.”
When consumers have debt trouble, they can go to a debt settlement company that refers them to make monthly payments to a firm like Meracord to settle the balance. The Washington state-based business, however, processed thousands of upfront payments to those settlement companies before consumers’ debt was ever resolved, according to the CFPB's charges, which violated federal rules.
In nearly 5,000 cases, the agency reported, consumers’ debt was never settled.
“Although Meracord itself is not a debt-settlement company, we believe that it directly facilitated illegal conduct on the part of debt-settlement companies by processing illegal upfront fees,” Antonakes said.
The CFPB is asking a federal court to impose a $1.3 million fine on the company and its owner, Linda Remsberg.
Remsberg and the company have agreed to stop processing payments for debt settlement companies and to submit to CFPB monitoring.