Friday, May 24, 2013

Class Action Accuses So-Called Payment Processor Of Screwing Consumers Seeking Debt Relief Services With Inflated Fees Executed Through Network Of Front-End Outfits

In San Francisco, California, Courthouse News Service reports:

  • So-called payment processor Meracord "loots" customers' accounts by taking exorbitant, fraudulent fees through a network of "front end" debt relief companies, customers claim in a RICO class action.

    Lead plaintiff Donte Cheeks sued Meracord LLC and its sureties, Fidelity and Deposit Company of Maryland and Platte River Insurance Company, in Federal Court.

    The four named plaintiffs claim that Meracord, based in Tacoma, Wash., changed its name from NoteWorld "after a number of class action lawsuits were filed against Note World. ... (M)any of the events described herein took place when the company was called 'NoteWorld,'" the complaint states.

    The Courthouse News database shows similar complaints against Meracord, including two class actions, in upstate New York, in two other California venues, and in Cleveland and Cincinnati.

    "Meracord engages and relies upon a network of 'front-end' debt relief companies ('Front DRCs') that it utilizes to recruit customers," the complaint states. "The Front DRCs offer to act as intermediaries between distressed and distraught debtors and their creditors, using inflated claims and misrepresentation about their services to sign up customers, and charging exorbitant, abusive, and often illegal fees once the mark is on the hook.
  • The class claims that Meracord changed its name from NoteWorld to try to hide from lawsuits just like this one: "By changing names, companies in the industry are able to wipe clean their online reputation virtually overnight, making it more difficult for consumers to associate the companies with lawsuits and other negative consumer feedback," the complaint states.

    The class claims that Meracord is a defendant in "numerous cases" around the country, and has settled at least two cases "that have severely depleted its available assets, including insurance policies."

    The complaint lists dozens of Front DRCs Meracord allegedly uses.

    The plaintiffs seek class certification and damages to be paid from "over $17 million" in surety bonds that Meracord allegedly carried. They are represented by Steve Berman with Hagens Berman Sobol Shapiro of Seattle.

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