Lexington Law and CreditRepair.com repeatedly broke federal law, harmed consumers
Lexington Law and CreditRepair.com, the nation's largest credit repair brands, are now facing a $2.7 billion penalty as a result of an enforcement action by the Consumer Financial Protection Bureau (CFPB).
“Americans across the country looking to improve their credit scores have turned to companies like CreditRepair.com and Lexington Law. These credit repair giants used fake real estate and rent-to-own opportunities to illegally bait people and pad their pockets with billions in fees,” said CFPB Director Rohit Chopra. “This scam is another sign that we must do more to fix the credit reporting and scoring system in our country.”
The CFPB suit against the credit repair giants notes the companies collected illegal advance fees for credit repair services in violation of the Telemarketing Sales Rule. Several million customers were victims of the scheme perpetuated by these companies.
The Telemarketing Sales Rule provides a range of protections for consumers related to telemarketing and sets payment restrictions for certain goods and services. It requires credit repair companies to wait until six months after they provide the consumer with documentation reflecting that the promised results were achieved, before they request or receive payment from the consumer.
The $2.7 billion penalty represents money illegally collected by these credit repair companies. In addition, the enforcement action assesses a $64 million civil money penalty against the affiliated firms.