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The Consumer Financial Protection Bureau, or CFPB, announced an enforcement action against Meracord LLC, a leading debt-settlement payment processor, for allegedly helping others to collect millions of dollars in illegal upfront fees from consumers. The CFPB has asked a federal district court to approve a consent order that would require Meracord and its CEO and owner, Linda Remsberg, to halt all illegal activities and to pay a $1.376 million civil penalty.

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.

The proposed order, which the defendants have agreed to, would bar Meracord and Remsberg from processing payments for debt-settlement companies and for members of the related mortgage-settlement industry. The defendants would be subject to monitoring by the CFPB and would be required to make reports to the CFPB to ensure their compliance. The defendants would also have to pay a civil money penalty of $1.376 million.

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