A large Oklahoma-based payment processor will pay $7 million to settle charges that it helped collect illegal fees charged to consumers by debt-settlement companies, American Banker reported.
The Consumer Financial Protection Bureau (CFPB) charged Global Client Solutions with collecting “tens of millions of dollars” in upfront fees from consumers on behalf of roughly 800 debt-relief settlement companies, starting in October 2010. The CFPB said that after consumers enrolled in a debt-relief program, they were directed to stop making payments to the debt and instead make monthly payments to Global Client to act as a deposit in a “custodial account” which included the upfront fees.
It is illegal for debt-settlement companies to take upfront fees before settling any of the consumer’s debt.
Under the settlement, Global Client’s two principals, Robert Merrick and Michael Hendrix, will pay $6 million in relief to affected consumers, most of whom are in California, and a $1 million civil penalty. The consent order is pending approval in federal district court.
The CFPB has also cited five debt-relief companies and five mortgage-relief providers on similar charges of collecting illegal upfront fees.
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