May 9, 2013

Debt Settlement Industry Targeted in New Lawsuit Seeking Millions to Compensate Customers of Meracord

The Paynter Law Firm filed a class-action lawsuit in federal court against two surety companies that have issued millions of dollars in surety bonds in favor of Meracord, LLC (formerly known as NoteWorld).

Meracord is a major player in the for-profit debt relief industry--an industry that purports to help indebted consumers "negotiate" with their creditors to lower their debts, including reducing student loan or credit card debts, as well as modifying mortgages. The industry has been criticized by many consumer advocates, as well as the Federal Trade Commission, for widespread fraud and abuse.

The lawsuit--filed by consumers from California, Arkansas, Florida, and D.C.--alleges that Meracord violated federal law by conspiring with companies offering debt settlement and mortgage modification services to defraud indebted consumers through false promises of debt relief. According to the suit, consumers have paid millions in unearned fees to Meracord and its co-conspirators.

The defendants in the lawsuit are two insurance companies, Fidelity and Deposit Company of Maryland and Platte River Insurance Company, that issued surety bonds in favor of Meracord. State law permits consumers to sue these surety companies directly for harm caused by Meracord's illegal conduct.

This suit follows two similar suits filed by the firm against Meracord in the last two years: Rajagopalan v. NoteWorld, LLC, and Canada v. Meracord, LLC--both of which are ongoing.

The lead attorneys on the case for the firm are Stuart Paynter, Celeste H.G. Boyd, and Sara Willingham, and the firm is co-counsel in the action with the law firm of Hagens, Berman Sobol & Shapiro LLP.

online.wsj.com

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