WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) is distributing $1.8 billion to 4.3 million shoppers charged unlawful advance charges or subjected to allegedly misleading bait-and-switch promoting by a gaggle of credit score restore corporations together with Lexington Law and CreditRepair.com. Together, the funds represent the largest-ever distribution from the CFPB’s victims reduction fund, which is funded by civil penalties paid by corporations that violate client safety legal guidelines.
“Lexington Law and CreditRepair.com exploited susceptible shoppers who had been attempting to rebuild their credit score, charging them unlawful junk charges for outcomes they hadn’t delivered,” stated CFPB Director Rohit Chopra. “This historic distribution of $1.8 billion demonstrates the CFPB’s dedication to creating shoppers entire, even when the businesses that hurt them shut down or declare chapter.”
In August 2023, the CFPB secured a authorized judgment towards the credit score restore conglomerate, after a district courtroom dominated that the businesses had violated the Telemarketing Sales Rule’s advance price prohibition. Under federal regulation, credit score restore corporations that interact in telemarketing can not gather charges till they supply documentation displaying they’ve achieved the promised outcomes for shoppers, no less than six months after the outcomes had been achieved.
Following the district courtroom’s ruling, the businesses filed for Chapter 11 chapter safety, shuttering roughly 80 % of their enterprise operations, together with their telemarketing name facilities. The CFPB’s $1.8 billion distribution to shoppers harmed by the credit score restore corporations is a results of the company’s enforcement motion.
About the CFPB’s Victims Relief Fund
Congress created the CFPB’s victims reduction fund within the Dodd-Frank Wall Street Reform and Consumer Protection Act. The victims reduction fund is financed completely via civil penalty funds made by corporations and people that violate client monetary safety legal guidelines. When the CFPB takes enforcement motion towards corporations that break the regulation, any civil penalties they pay go into this devoted fund, which is then used to offer reduction to shoppers harmed by illegal practices. These distributions don’t use any taxpayer {dollars}.
Since opening its doorways in 2011, the CFPB has distributed greater than $3.3 billion via the victims reduction fund. The distributed funds have gone to shoppers harmed in instances involving a variety of unlawful practices, like pupil mortgage and mortgage reduction scams, predatory lending, and unlawful debt assortment. The fund allows the CFPB to offer monetary reduction in instances the place direct compensation from the violating firm isn’t potential.
Distribution Details
Eligible shoppers harmed by Lexington Law, CreditRepair.com, and their dad or mum corporations will probably be despatched a fee within the coming weeks. Details concerning the distribution can be found at cfpb.gov/funds/lexlaw. The CFPB has contracted JND Legal Administration to manage funds for this case and reply shoppers’ questions.
Eligible shoppers don’t must take any motion to obtain a fee. Checks are being mailed between December and January. Consumers who imagine they’re eligible however who haven’t obtained a fee by mid-January can contact JND at www.cfpb-lexlaw.org .
Consumers can submit complaints about monetary services or products by visiting the CFPB’s web site or by calling (855) 411-CFPB (2372).
The Consumer Financial Protection Bureau is a twenty first century company that implements and enforces Federal client monetary regulation and ensures that markets for client monetary merchandise are honest, clear, and aggressive. For extra info, go to www.consumerfinance.gov.
