U.S. Goes After 'Millions' in Illegal Fees
LOS ANGELES (CN) - Oklahoma-based Global Client Solutions took "tens of millions of dollars in unlawful advance fees" for its so-called debt-relief services, the Consumer Financial Protection Bureau claims in court.
The CFPB sued Global Client Solutions, Global Holdings, Chairman of the Board Robert Merrick, and CEO Michael Hendrix, on Monday in Federal Court.
Global has processed payments for more than 236,000 consumers involved in debt-relief programs, since Oct. 27, 2010, the bureau says.
However, since that date, the Telemarketing Sales Rule has prohibited debt-relief service providers (DSRPs) from requesting or taking fees for debt relief services until it has actually renegotiated the terms of at least one, and the consumer has made at least one of the renegotiated payments.
The bureau claims Global has "processed payments for tens of thousands of consumers who were charged tens of millions of dollars in unlawful advance fees for debt-relief services. More consumers were charged an unlawful advance fee in California than in any other state.
"For each consumer who was charged an unlawful advance fee, Global was responsible for actually transmitting, and did transmit, the fees from a consumer's custodial account to his or her DRSP.
"At the time Global transmitted these fees, it knew, based on its own account records, that it had not yet transmitted any funds from the consumer's custodial account to a creditor. Global thus knew that it was transmitting fees to DRSPs that had not yet settled consumers' debts, and that the DRSPs were not entitled to an advance fee."
Global has received "hundreds of complaints" about these advance fees, but it keeps charging them, and Merrick and Hendrix have personally profited from it, the bureau says.
It seeks an injunction, restitution, disgorgement, penalties and an injunction.
Congress created the CFPB, rather grudgingly, as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, then took 3 years before it agreed to appoint a director.