The Consumer Financial Protection Bureau yesterday announced the completion of an enforcement order against a pair of payment processing companies that worked with debt relief organizations — as well as the owners of the companies — ordering the defendants to pay $11 million in restitution to consumers and fines.
The companies — RAM Payment and Account Management Systems — as well as their owners, Gregory Winters and Stephen Chaya, were accused of lying to consumers about when fees would be paid to debt relief companies and sending illegal advance fees to those companies. The defendants collected fees from consumers and provided those fees to the debt relief companies before the debts in question had been renegotiated or a payment was made under the new agreement, as required by law. The defendants also paid illegal commissions to third-party marketing companies for referrals.
The CFPB’s investigation uncovered the violations of the Telemarketing Sales Rule and the Consumer Financial Protection Act.
“Too often, bad actors take advantage of student loan borrowers and others who are seeking to get out of debt,” said CFPB Director Rohit Chopra, in a statement. “Our law enforcement action bans the facilitators and their ringleaders for their illegal acts.”
Along with the violations mentioned above, Chaya and Winters were also accused of deceiving consumers by not disclosing a conflict-of-interest because they advanced funds to debt relief companies via a financing company that they owned and operated.
The defendants were ordered to refund $8.7 million back to consumers, which reflects how much they collected from unwitting consumers, pay a $3 million fine, and were banned from the debt relief and account maintenance industries for life.