The CFPB Has Reached A $2.75 Billion Settlement With Lexington Law And CreditRepair.com
The settlement follows a court ruling indicating companies used telemarketers to collect illegal advance fees for credit repair services.
The settlement bans companies from telemarketing credit repair services for a period of 10 years. They would also need to pay out compensation associated with a monetary settlement.
The Salt Lake City area was a hub for these credit repair services that used illegal telemarketing. The companies include PGX Holdings and Progrexion Marketing. In addition, the settlement included John C. Heath, Attorney-at-Law PC law firm.
The companies victimized more than 4 million customers using telemarketing tactics. The defendants in the case had a combined annual revenue of approximately $388 million in 2022.
The Consumer Financial Protection Bureau previously filed suit against these entities in 2019. The CFPB demanded they “halt their illegal conduct.” until the Bureau sought redress and other relief. Earlier this year, the district court ruled that the defendants violated the advance fee provision of the Telemarketing Sale Rule. The Telemarketing Sale Rule includes protective measures for consumers related to telemarketing. The rule also sets payment restrictions for certain goods and services.
That rule requires credit repair companies to wait six months after they provide the consumer with documentation reflecting that the promised results were achieved can they request to be paid. Then and only then, can they request or receive payment from the consumer.
That ruling preceded the companies filing for Chapter 11 bankruptcy protection. The companies filed Chapter 11 bankruptcy and “shut down about 80% of their business. This included their call centers. As a result, the companies laid off about 900 employees in response to the court’s ruling.
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