The Consumer Finance Protection Bureau (CFPB) has finalized an enforcement action against RAM Payment and Account Management Systems, two payment processors working with debt relief, over collecting debt-relief fees from consumers and lying about the specifics.
According to a CFPB press release Wednesday (May 11), Account Management Systems’ co-founders, Gregory Winters and Stephen Chaya, were also filed against.
The CFPB said the companies took fees and lied about when the fees would be paid to debt-relief companies. According to the release, they sent illegal advance fees to the companies before they were allowed, and allegedly did not return funds to consumers who canceled their student loan debt-relief agreements, which is required by law.
AMS and RAM Payment are both Tennessee-based companies and have provided account maintenance and payment processors for those in debt-relief programs. The providers of these services are intended to be independent and just hold fees until the debt-relief companies are ready for them.
Because of those allegations, the CFPB is fining the defendants over $11 million.
“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. “Our law enforcement action bans the facilitators and their ringleaders for their illegal acts.”
PYMNTS wrote that the CFPB also recently ordered Bank of America to pay $10 million for illegally processing garnishment orders against customers’ accounts.
Read more: CFPB: BoA Must Pay $10M for Illegal Garnishments
The CFPB said the bank “unlawfully froze customer accounts, charged garnishment fees, garnished funds, and sent payments to creditors based on out-of-state garnishment court orders that should have been processed under the laws and protections of the states where the consumers lived.”
The CFPB also said Bank of America broke the law by putting unfair and unenforceable language in contracts, limiting customers’ rights to challenge their accounts being frozen. In addition to the fine, the bank was ordered to refund or cancel imposed fees from the garnishments and fix its system.