Rajagopalan v. NoteWorld, LLC
In July 2011, The Paynter Law Firm filed a class-action lawsuit in federal court in Washington against NoteWorld, LLC (now known as Meracord, LLC), a major player in the for-profit debt relief industry. The 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 a North Carolina consumer, alleges that NoteWorld 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 a other important facts. The complaint also alleges that NoteWorld’s actions violated Washington State law by, among other things, charging illegal fees and failing to disclose important information to consumers. The lawsuit seeks to represent all consumers who have established NoteWorld accounts related to any debt settlement program.
In October 2011, NoteWorld attempted to enforce the arbitration provisions found in the plaintiff’s agreement with his front-end debt settlement company. After the District Court refused to allow NoteWorld to enforce the agreements, NoteWorld appealed. The U.S. Court of Appeals for the Ninth Circuit rejected NoteWorld’s appeal, holding that NoteWorld did not have the right to enforce an arbitration provision to which it was not a party.
The Paynter Law Firm is co-counsel in this action with the law firm of Hagens, Berman Sobol & Shapiro LLP.