RSSThe Consumer Financial Protection Bureau is returning $1.8 billion in “illegal junk fees” to 4.3 million Americans impacted by a large credit repair scheme, the bureau announced Dec. 5 in a press release.
The scheme included “allegedly deceptive bait-and-switch advertising by a group of credit repair companies including Lexington Law and CreditRepair.com.” The CFPB reached a $2.7 billion settlement with the firms in August 2023, after a federal court ruled they violated the Telemarketing Sales Rule requiring companies to wait six months after they provide consumers with documentation showing the promised results were achieved before requesting or receiving payment.
The settlement banned Lexington Law and CreditRepair.com from telemarketing credit repair services for 10 years. The companies filed for Chapter 11 bankruptcy protection following the district court’s ruling, closing 80 percent of their business operations, including their telemarketing call centers, according to the bureau.
According to the CFPB, the payments are the most ever from the CFPB’s victims relief fund, which is funded by civil penalties against companies that violate consumer protection laws.
“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 contribution 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.”
