Debt Settlement Processor Told By Consumer Bureau to Pay Up
The Consumer Financial Protection Bureau (CFPB) recently took regulatory action against a prominent debt settlement payment processor for allegedly helping other companies collect millions of dollars in illegal upfront fees from consumers.
The CFPB announced a proposed settlement of an enforcement action against Global Client Solutions requiring the company and its owners to halt alleged illegal activities and to pay more than $6 million in relief to consumers as well as a $1 million civil penalty.Federal officials allege in a complaint filed in federal district court in California that Global Client Solutions and its principals violated sections of the Consumer Financial Protection Act and the Telemarketing Sales Rule.
Oklahoma-based Global Client Solutions, a subsidiary of Global Holdings, is one of the leading payment processors for the debt collection industry. Debt-settlement companies offer to help consumers reduce their credit card debt or other debt by negotiating settlements with creditors.
When consumers sign up for a debt-settlement program, the companies often tell consumers to stop paying their debts and make monthly payments to the payment processor account, while a settlement of the debts is negotiated.
The CFPB discovered that many consumers who use the services end up paying thousands of dollars in unlawful advance fees and may fall deeper into debt without getting their debts settled. That’s outrageous!
The Consumer Financial Protection Bureau alleged that Global Client Solutions and two of its principals violated the Telemarketing Sales Rule by making it feasible for debt-settlement companies to charge consumers illegal upfront fees.
According to the complaint filed in late August by the CFPB, Global Client Solutions has processed tens of millions of dollars in illegal advance fees on behalf of hundreds of debt collection companies since October 2010.
The proposed consent decree has been filed with the federal district court in California.
It’s important for the government to crack down on illegal debt collection practices. Consumers should not be charged illegal fees. But enforcement action often takes years. An experienced Florida Debt Fighters at the Disparti Law Group who advocates on behalf of consumers can often get quicker results and get the harassment stopped.
Often the tactics used by third-party debt collectors against consumers are abusive and violate the Consumer Financial Protection Act or the Fair Debt Collection Practices Act.
If you’ve been harassed by debt collectors, you may have a legal right under the Fair Debt Collection Practices Act to seek compensation from the debt collectors who have been bothering you.