Lexington Law and CreditRepair.com paid a big penalty for illegal fees: CFPB
The Consumer Financial Protection Bureau is distributing $1.8 billion to 4.3 million consumers harmed by Credit Repair illegal fees and deceptive advertising from Lexington Law and CreditRepair.com. This is the largest payout ever from the CFPB’s victims relief fund, which is financed by penalties paid by companies that violate consumer protection laws.
In 2023, a court ruled the companies violated telemarketing laws by charging fees before delivering promised credit repair results. After the companies filed for bankruptcy and shut down most operations, the CFPB secured the funds to compensate affected consumers.
Payments will be mailed between December and January, with no action needed from eligible recipients.
Eligible consumers do not need to take any action to receive a payment. Checks are being mailed between December and January. Consumers who believe they are eligible but who have not received a payment by mid-January can contact the settlement administrator at www.cfpb-lexlaw.org
Credit Repair: About the case
“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,” said CFPB Director Rohit Chopra. “This historic distribution of $1.8 billion demonstrates the CFPB’s commitment to making consumers whole, even when the companies that harm them shut down or declare bankruptcy.”
In August 2023, the CFPB secured a legal judgment against the credit repair conglomerate, after a district court ruled that the companies had violated the Telemarketing Sales Rule’s advance fee prohibition. Under federal law, credit repair companies that engage in telemarketing cannot collect fees until they provide documentation showing they have achieved the promised results for consumers, at least six months after the results were achieved.
Following the district court’s ruling, the companies filed for Chapter 11 bankruptcy protection, shuttering approximately 80 percent of their business operations, including their telemarketing call centers.
About the Credit Repair Victims Relief Fund
Congress created the CFPB’s victims relief fund in the Dodd-Frank Wall Street Reform and Consumer Protection Act. The victims relief fund is financed entirely through civil penalty payments made by companies and individuals that violate consumer financial protection laws.
When the CFPB takes enforcement action against companies that break the law, such as Credit Repair, any civil penalties they pay go into this dedicated fund, which is then used to provide relief to consumers harmed by unlawful practices. These distributions do not use any taxpayer dollars.
Since opening its doors in 2011, the CFPB has distributed more than $3.3 billion through the victims relief fund. The distributed funds from Credit Repair have gone to consumers harmed in cases involving a wide range of illegal practices, like student loan and mortgage relief scams, predatory lending, and illegal debt collection. The fund enables the CFPB to provide financial relief in cases where direct compensation from the violating company is not possible.
