When you couple that the Consumer Financial Protection Bureau is making its largest-ever distribution from its Victims Relief Fund, and that it will be sending $1.8 billion to more than 4 million consumers, with the fact that those consumers were victims of bait-and-switch advertising undertaken by Lexington Law and CreditRepair.com, it’s worth mentioning.
The Consumer Financial Protection Bureau (CFPB) is set to distribute $1.8 billion to 4.3 million consumers who were subjected to illegal advance fees or allegedly deceptive bait-and-switch advertising by credit repair companies including Lexington Law and CreditRepair.com. This payout marks the largest distribution ever made from the CFPB’s Victims Relief Fund, underscoring the severity of the violations committed. The fund itself is sourced from civil penalties paid by companies that breach consumer protection laws.
According to CFPB Director Rohit Chopra, “Lexington Law and CreditRepair.com exploited vulnerable consumers who were trying to rebuild their credit, charging them illegal junk fees for results they hadn’t delivered.” This historic $1.8 billion distribution reflects the CFPB’s commitment to ensuring consumers are made whole, even in cases where the violating companies shut down or file for bankruptcy.
In August 2023, a district court ruled that Lexington Law, CreditRepair.com, and their affiliates violated the Telemarketing Sales Rule’s advance fee prohibition, leading to the legal judgment against them. Federal law stipulates that credit repair companies engaged in telemarketing cannot collect fees until they have delivered promised results for consumers, backed by documentation at least six months after the results are achieved. Following the court ruling, these companies filed for Chapter 11 bankruptcy protection, effectively closing around 80% of their business operations, including telemarketing call centers.
Consumers eligible for relief in this distribution will receive payments in the coming weeks.
