CFPB seeks $3.1B judgment against credit repair companies it claims unlawfully charged consumers

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CFPB judgment overview:

• Who: The Consumer Financial Protection Bureau is seeking a $3.1 billion judgment against credit repair companies.
• Why: The CFPB says Lexington Law and CreditRepair.com wrongfully charged consumers fees for credit repair services.
• Where: The CFPB lawsuit was filed in Utah federal court.

The Consumer Financial Protection Bureau (CFPB) is asking a Utah federal judge to order credit repair companies to pay more than $3.1 billion in redress for consumers who were allegedly illegally charged for credit repair services.

On Tuesday, the CFPB filed a motion seeking a $3.1 billion CFPB judgment on behalf of consumers that the credit repair companies Lexington Law and CreditRepair.com allegedly wrongfully charged.

“Between March 8, 2016, and March 31, 2023, defendants took approximately $3.1 billion from more than four million consumers in violation of the Telemarketing Sales Rule,” the CFPB wrote in its motion.

“The time has come for defendants to return that money to the consumers they unlawfully charged, cease their illegal billing practices, and pay penalties for their misconduct.”

Credit repair companies’ billing practices violate federal law, CFPB says

The CFPB alleges the credit repair companies charge two types of fees: a $15 fee when the consumer signs up for services and recurring fees that kick in within about two weeks and recur monthly.

The CFPB’s motion notes federal law requires credit repair companies to show that they have achieved results before charging clients. The bureau says the law empowers consumers to withhold payments when credit repair is not achieved.

The defendant companies allegedly failed to comply with federal law and deprived consumers of the ability to withhold payment.

“Instead, defendants charged these consumers, many of whom were highly financially vulnerable, hundreds of dollars in illegal upfront fees,” the CFPB’s motion says.

The CFPB estimates the defendants’ customers will pay millions of dollars in credit repair fees each month the credit repair companies continue their unlawful billing practices.

If the judge grants the CFPB’s motion, the $3.1 billion judgment would be the bureau’s largest in a contested action.

Last summer, Equifax was hit with a class action lawsuit alleging it provided lenders with inaccurate credit scores for consumers who were applying for credit.

If you hired a debt-consolidation company, credit repair agency or debt settlement company that made unkept promises or charged you before performing services, you may have a legal claim.

The CFPB is represented by Maureen Mcowen, Kevin E. Friedl, Jonathan Reischl, Tracy L. Hilmer and Alicia Ferrara.

The credit repair companies lawsuit is Bureau of Consumer Financial Protection v. Progrexion Marketing, et al., Case No. 2:19-cv-00298, in the U.S. District Court for the District of Utah.

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