Canada v. Meracord, LLC
In July 2012, The Paynter Law Firm filed this class-action lawsuit in federal court in Washington against Meracord, LLC (formerly NoteWorld, LLC), a major player in the for-profit debt relief industry. The suit also names as a defendant Meracord CEO Linda Remsberg personally.
The debt settlement industry, which purports to help indebted consumers “negotiate” with their creditors to lower their debts, has been criticized in recent years by many consumer advocates—as well as the Federal Trade Commission and the Government Accountability Office—for widespread allegations of fraud and abuse.
The lawsuit, filed by three consumers from Pennsylvania and Illinois, alleges that Meracord violated the federal Racketeer Influenced Corrupt Organizations Act (“RICO”) by conspiring, along with scores—if not hundreds—of “front-end” debt settlement companies to defraud indebted consumers by falsely representing their services, the fees they would charge, and other important facts. The complaint also alleges that Meracord’s actions violated Washington State law by, among other things, charging illegal fees and failing to disclose important information to consumers.
The consumers in the suit lost thousands of dollars in debt settlement scams; one plaintiff lost over $12,000 in fees she paid for services that were promised but never received. The lawsuit seeks to represent all consumers who have established Meracord/NoteWorld accounts related to any debt settlement program.
In November 2012, Meracord attempted to enforce the arbitration provisions found in the plaintiffs’ agreements with their front-end debt settlement companies. After the District Court refused to allow Meracord to enforce the agreements, Meracord appealed, but dismissed its appeal following the Ninth Circuit’s decision in Rajagopalan v. NoteWorld, a related case filed by The Paynter Law Firm. In June 2013, the parties agreed to consolidate the Canada case with the Rajagopalan case.