(Reuters) – The U.S. consumer watchdog said on Thursday it fined payment processor Meracord for helping to collect illegal debt-settlement fees, part of a broader crackdown on companies that offer to help borrowers get rid of debt.
The Consumer Financial Protection Bureau said debt-settlement companies, which negotiate with creditors to help borrowers eliminate credit card or other debt, often use outside processing companies to collect payments from consumers.
Washington state-based Meracord helped collect upfront fees from borrowers, according to the bureau’s complaint, even though settlement firms are not allowed to charge such fees before actually eliminating or reducing consumers’ debts.
Meracord and its chief executive, Linda Remsberg, agreed to pay a $1.376 million penalty and are barred from processing payments for debt-settlement companies, the bureau said.