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Deputy Director Steve Antonakes Remarks at Meracord Enforcement Press Call

Prepared Remarks of Steve Antonakes
Deputy Director of the Consumer Financial Protection Bureau
Meracord Enforcement Press Call
October 3, 2013

Today the Consumer Financial Protection Bureau is taking action against Meracord LLC, a leading debt-settlement payment processor, for helping debt-settlement companies collect illegal fees from consumers. Once approved by a federal district judge, our proposed court order against Meracord and its owner, Linda Remsberg, will halt these unlawful activities. The court order will also require the defendants to pay a $1.376 million civil penalty.

Based out of the State of Washington, Meracord has been one of the country’s largest payment processors for the debt-settlement industry. Many debt-settlement companies could not operate their business without a payment processor like Meracord. And in this instance, Meracord helped many of them 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. The Bureau is working to ensure federal consumer laws are being followed at every stage of the process, including taking action against those who unlawfully facilitate the illegal conduct of others.

According to the Telemarketing Sales Rule, enforceable by the Bureau, 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. And as we allege in our complaint, we believe Meracord processed such payments for more than 11,000 consumers.

The proposed order is being filed in federal district court in the Western District of Washington today. The proposed order would require Meracord and Ms. Remsberg to pay a $1.376 million civil penalty. In addition, the order would: ban Meracord and Ms. Remsberg from processing payments of any kind for debt relief or mortgage assistance relief providers; and require Meracord and Ms. Remsberg to be subject to monitoring by the Bureau and to make reports to the Bureau in order to ensure their compliance with the provisions of the order.

For consumers, dealing with debt-settlement companies can be risky. Some promise more than they can deliver. They can charge expensive fees. They sometimes claim that a consumer can erase their debt for pennies on the dollar, when, in many cases, they cannot. 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.

Pursuing this action against Meracord as a centralized chokepoint represents an effective and efficient strategy for the Bureau that allows us to protect consumers who are being charged illegal fees by a broad array of debt-settlement companies that rely on Meracord’s services. Debt relief service providers charged at least $11 million in alleged unlawful fees from October 2010 to July 2013 in transactions in which Meracord acted as a payment processor.

Indeed, this case is part of the Bureau’s broader efforts to address illegal activity in the debt-settlement industry. Leading up to today’s consent order, we have been pursuing actions against several debt-settlement companies that charged consumers illegal upfront fees, including companies whose unlawful conduct was facilitated by Meracord. This includes our actions against Payday Loan Debt Solution and American Debt Settlement Solutions, both of which were resolved with consent orders being entered against the companies. The Bureau has also filed a complaint against four other debt-settlement companies that we allege are charging illegal fees: Mission Settlement Agency; the Law Office of Michael Levitis; Premier Consulting Group, LLC; and the Law Office of Michael Lupolover.

We believe it is important to hold primary violators of the law, like the debt-settlement companies I just mentioned, accountable. But, through these cases, we also have been building our action against Meracord, whose assistance made their violations possible.

The message we are sending today reinforces a point we have made before: we are working to ensure federal consumer laws are being followed at every stage of the process, including by those who unlawfully facilitate illegal conduct by others. 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.

Debt-settlement companies have been a particular concern in the wake of the recent financial crisis. Millions of people have experienced deep financial problems after losing their jobs and much of their savings. Many of these consumers were targeted – and taken advantage of – by debt-settlement companies promising to help them get out of debt. Our job is to stand up for consumers by making sure these companies are obeying the law, and we will continue to do that.

Thank you.

The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit