CFPB Accuses Credit Repair Companies Lexington Law and CreditRepair.com Of Violating Federal Consumer Laws

The CFPB has targeted two of the largest credit repair companies in the nation. CreditRepair.com and Lexington Law are accused of illegally charging customers for credit repair services. The CFPB also alleges they used deceptive advertising to trick and cheat consumers.

The CFPB filed a lawsuit against the two companies alleging they violated the Telemarketing Sales Rule. The watchdog agency alleges the companies requested and received payment of prohibited upfront fees for credit repair services.

The lawsuit also alleges the companies made false claims in its ads or by assisting others in doing so. This would be a violation of the Consumer Financial Protection Act.

The lawsuit also names sever other companies related to or associated with CreditRepair.com and Lexington Law.

The CFPB lawsuit also names PGX Holdings and subsidiaries Progrexion Marketing, Progrexion Teleservices and eFolks. The lawsuit also names John C. Heath, Attorney at Law who does business as Lexington Law.

Each subsidiary performs different operations on behalf of other companies. Progrexion conducts most of Lexington Law’s core business operations. In addition, Heath serves as the face of Lexington Law.

The CFPB’s Lawsuit Against The Nation’s Largest Credit Repair Companies

credit repairThe companies also allegedly use each other as lead-generation outlets for credit repair services. The CFPB alleges is where the issues begin:

Consumers sign up for Defendants’ credit repair services and pay hundreds of dollars in fees seeking to improve their credit scores and get better access to credit products, on better terms.

The companies allegedly use a network of marketing affiliates that advertise a variety of products and services, often related to consumer credit products. But that advertising isn’t always on the up and up. Progrexion’s marketing affiliates have used deceptive, bait advertising to generate referrals to Lexington Law’s credit repair service.

Progrexion guaranteed “ANYONE a 0-3.5% Down Home Loan no matter how bad their Credit is when we start!”

However, the CFPB alleges the affiliate did not provide any loans at all. 

Progrexion companies allegedly paid this marketing affiliate for each credit repair sale it deceptively generated.

The companies also allegedly violated the law by demanding and accepting payment upfront for certain credit repair activities.

Federal law forbids requesting or receiving payment upfront for certain telemarketed credit repair services. Specifically, if a company offers services claiming to remove derogatory information from, improve a person’s credit history or credit rating.

Federal law states that fees can only be collected after it has been demonstrated that the promised results have been achieved.

Progrexion companies partnered with companies that offer certain products such as rent-to-own housing contracts, mortgages, auto loans, or personal loans.

How Two the Largest Credit Repair Companies Marketed Themselves

Credit repairThe affiliates market their loans through inbound and outbound calls. The affiliates would identify consumers who could potentially be in need of credit repair services.

The affiliate would then transfer the caller to one of the Progrexion companies. As a result, the company would sell the consumer their credit repair services. This is called a “hot-swap” in sales.

The hot-swaps usually happen after a caller has been denied a loan.

The affiliates used advertisements that included fake real estate ads and fake rent-to-own housing opportunities. They also claimed they had relationships with lenders that didn’t exist.

The affiliates also used false and unsubstantiated statements to try to get consumers to call in. They would then lie about the consumer’s likelihood of success in obtaining mortgages or personal loans.

Progrexion’s most prodigious lead sources was a company that offered low-interest mortgages and access to rent-to-own housing. In reality, they did not provide any such products or services.

According to the CFPB, the company admitted that it simply acted as an affiliate call center that transferred people to Lexington Law. The unnamed company was responsible for sending Progrexion more than 100,000 people who signed up for credit repair services over a five-year period.

 

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