The Consumer Financial Protection Bureau (CFPB) has fined Meracord, one of the country's largest payment-processing companies, $1.3 million for helping debt-relief firms levy illegal upfront fees on struggling consumers. According to the regulator, Meracord processed at least $11 million in illicit fees from October 2010 to July of this year. Of more than 11,000 consumers who paid the upfront charges, almost 5,000 of them did not have any of their debts resolved.
The CFPB intends to compensate affected consumers using its civil penalty fund. The enforcement action against Meracord is part of a sweeping crackdown on companies that take advantage of people trying to get rid of debt. The CFPB is not only going after the firms themselves but also the companies that facilitate withdrawal of funds from consumers' accounts. "If a business is enabling bad actions that hurt consumers, then we will use our authority to stop them," declared CFPB deputy director Steven Antonakes. "We are making the point here, and it applies to all companies that do business with consumer financial providers."