Blog Enforcement Watch May 11, 2022

CFPB Orders Debt-Relief Payment Processors to Pay $11 Million in Redress and Penalties

​On May 11, 2022, the Consumer Financial Protection Bureau (CFPB) announced that it had resolved an enforcement action against two debt-relief payment processors and one of their co-founders. The CFPB alle​ged the processors improperly collected debt relief fees from consumers, misled consumers about timing of fee payments, and sent illegal fee advancements to debt-relief companies. Together, the two processors and founders have entered into a consent order agreeing to pay $11 million in consumer redress and civil money penalties.

​According to the CFPB, the two payment processors provided account maintenance and payment-processing services for consumers enrolled in debt relief programs. The CFPB found violations of the Telemarketing Sales Rule and the Consumer Financial Protection Act whereby the processors assisted debt-relief companies by requesting and accepting advance fees for debt-relief services, among other alleged misuse of fees.  The CFPB stated that “[p]roviders of account-maintenance and payment-processing services to debt-relief companies are supposed to be independent, third-party companies that hold fees until debt-relief companies are entitled to them under the law.​”

​Under the consent order, the companies and co-found agree to pay $8.7 million to consumers who were enrolled in student-loan debt-relief services and a $3 million penalty to the CFPB.

The post CFPB Orders Debt-Relief Payment Processors to Pay $11 Million in Redress and Penalties appeared first on Consumer Finance Enforcement Watch.