Meracord, one of the largest payment-processing companies, was fined $1.3 million yesterday by the Consumer Financial Protection Bureau (CFPB) after the agency said that the firm imposed illegal upfront fees on struggling consumers, the Washington Post reported today. Debt-relief companies help consumers mired in debt by negotiating settlements with creditors. When consumers sign up with these firms, they are often instructed to stop paying their debts and make monthly payments to a payment processor while the debts are negotiated. Federal law, however, bars debt-relief firms from demanding payments before settling any debts, in order to protect consumers from spending money on services that may not materialize. Steven Antonakes, deputy director of the CFPB, said that Tacoma, Wash.-based Meracord should have known that it was processing upfront payments in violation of the law. In addition to the fine, Meracord and its chief executive, Linda Remsberg, are banned for life from processing payments of any kind for providers of debt or mortgage relief. The company will have to submit reports to the bureau to ensure its compliance with the order, which is subject to court approval.
