The Consumer Financial Protection Bureau on Monday reached an approximately $7 million settlement in California federal court with an Oklahoma-based debt-settlement payment processor that the bureau says charged tens of millions of dollars in illegal upfront fees to consumers.
The CFPB alleged that Tulsa, Oklahoma-based Global Client Solutions allowed companies that it served to charge hundreds of thousands of consumers with tens of millions of dollars worth of illegal upfront fees.
Debt settlement firms typically offer to help consumers lower or eliminate existing debts by engaging in negotiations with creditors, and instruct their clients to stop making payments on those debts while the firm works to lower or eliminate the amounts owed. While Global Client Solutions — which processes payments for such firms — did not itself charge those illegal fees to consumers, it did allow for those fees to be passed on to consumers, the CFPB said.
“Global Client Solutions made it possible for debt-settlement companies across the country to charge consumers illegal fees,” CFPB Director Richard Cordray said in a statement. “Consumers struggling to pay off a debt are among the most at risk and deserve better.”
Representatives for Global Client Solutions could not immediately be reached for comment. Both the company’s co-founder and chairman, Robert Merrick, and its CEO Michael Hendrix were named in the CFPB’s complaint, which was filed in federal district court in Los Angeles.
Global Client Solutions agreed to pay more than $6 million in relief to consumers and a $1 million civil penalty.
The CFPB’s settlement with Global Client Solutions is the second that the bureau has reached with debt-settlement payment processors in the last year. In October, the CFPB hit Meracord LLC with a nearly $1.4 million penalty for similar violations.
The CFPB’s complaint alleges that Global Client Solutions has processed payments for more than 236,000 consumers enrolled in debt-relief programs offered by more than 800 different debt settlement firms.
More of those consumers reside in California than in any other state, the CFPB said.
Many of the debt settlement firms that contracted with Global Client Solutions claimed to be exempt from the Telemarketing and Consumer Fraud and Abuse Prevention Act’s Telemarketing Sales Rule due to the rule’s interstate exemption, the CFPB said.
Global Client Solutions accepted those incorrect assertions, the CFPB said.
As a result of the company’s actions, tens of thousands of customers were charged with tens of millions of dollars of improper fees, the CFPB said.
The CFPB is represented by enforcement attorneys Crystal R. Sumner and Erin Mary Kelly.
Counsel information for Global Client Solutions was not immediately available.
The case is Consumer Financial Protection Bureau v. Global Client Solutions LLC, case number 2:14-cv-06643, in the U.S. District Court for the Central District of California.
— this was reported by Law360 today.
You recently received a notice about monies being with Global Client Solutions — call and demand your fees back under this settlement