CFPB $2.7 Billion Judgement against Lexington Law and CreditRepair.com
Disclaimer: This article is as informational as it is snarky. For actual legal advice, consult someone who passed the bar exam, not the in-flight snack bar.
Believe in yourself! Have faith in your abilities! Without a humble but reasonable confidence in your own powers you cannot be successful or happy.
Hey there, Justice Moms and Dads! Buckle up because we've got a scorching hot tea to spill today. You know those credit repair giants that promise to turn your credit score from "meh" to "marvelous"? Well, the Consumer Financial Protection Bureau (CFPB) just dropped a legal anvil on them, and it's making waves, honey!
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The Lowdown
The CFPB has proposed a settlement with a whole circus of companies, including the big kahunas—Lexington Law and CreditRepair.com. Why? Because these so-called "credit saviors" were caught red-handed, collecting illegal advance fees through telemarketing. If the court gives the green light, these companies will face a jaw-dropping $2.7 billion judgment. Oh, and they'll be banned from telemarketing credit repair services for a decade. Talk about a time-out!
CFPB Director Rohit Chopra didn't mince words. He called out these companies for using fake real estate and rent-to-own schemes to bait innocent folks. "This scam is another sign that we must do more to fix the credit reporting and scoring system in our country," he said. Amen to that, Rohit!
These credit repair moguls operated through a tangled web of entities in Salt Lake City, including PGX Holdings, Progrexion Marketing, and the John C. Heath, Attorney-at-Law PC law firm. They had over 4 million customers and raked in a staggering $388 million in annual revenues in 2022 alone. Can you say, "Cha-ching"?
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The CFPB had already sued these companies to put an end to their shenanigans. And in March 2023, the district court ruled that they violated the Telemarketing Sales Rule, which is basically the rulebook for telemarketing ethics. Following the ruling, these companies filed for Chapter 11 bankruptcy and shut down about 80% of their operations, laying off around 900 employees. Karma's a you-know-what!
What's Next?
If the court approves the settlement, here's what will go down:
- 10-Year Telemarketing Ban: These companies will be banned from telemarketing credit repair services for a decade. This ban will stick even after their bankruptcy proceedings wrap up.
- Consumer Notices: They'll have to send out notices to their remaining customers, informing them about the lawsuit, the settlement, and how to cancel their services.
- $2.7 Billion in Redress: That's right, billions with a 'B'. Due to their financial insolvency, the CFPB will decide if their victims' relief fund can be used to compensate those harmed.
- Civil Penalties: Progrexion Marketing will face a $45.8 million penalty, and the Heath law firm will get slapped with an $18.4 million fine.
So there you have it, Justice Moms. The CFPB is taking a stand, and it's about time these credit repair giants face the music. Let's keep fighting the good fight and holding these exploitative institutions accountable!
Disclaimer: This post is based on a proposed settlement and is subject to court approval. Always consult with a legal advisor for personalized advice. Always consult with a legal expert for matters concerning lawsuits and settlements.