WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) has announced the distribution of $1.8 billion to 4.3 million consumers who were charged illegal advance fees and subjected to misleading advertising practices by credit repair companies Lexington Law and CreditRepair.com. This represents the largest-ever payout from the CFPB’s victims relief fund, underscoring the agency’s commitment to holding businesses accountable for deceptive practices.
The historic restitution follows a 2023 district court judgment that found Lexington Law, CreditRepair.com, and their affiliates violated the Telemarketing Sales Rule. The companies unlawfully demanded upfront fees for credit repair services, despite federal law prohibiting such charges before delivering measurable results and providing documentation six months after achieving those results.
Bankruptcy and Accountability
After the judgment, the companies filed for Chapter 11 bankruptcy and closed the majority of their operations, including their telemarketing call centers. Despite these setbacks, the CFPB pursued redress for affected consumers, leveraging its victims relief fund to disburse compensation.
CFPB Director Rohit Chopra emphasized the significance of the distribution, stating, “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.”
Role of the Victims Relief Fund
The CFPB’s victims relief fund, established under the Dodd-Frank Act, finances payments to consumers harmed by unlawful practices. The fund is sustained entirely through civil penalties paid by violators of consumer protection laws, ensuring no taxpayer dollars are used. Including the current distribution, the CFPB has provided over $3.3 billion in relief to consumers since its formation in 2011.
Consumer Relief Details
Payments to eligible consumers will be issued in the coming weeks, with no action required to claim them. The CFPB has partnered with JND Legal Administration to manage the distribution process.
This landmark action aims to ensure accountability and deliver compensation to individuals harmed by deceptive financial practices, reinforcing CFPB’s central mission of protecting consumer rights.
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