Credit Repair Firms Face $3 Billion in Fines

Consumer bureau taking action against Lexington Law, CreditRepair.com

The Consumer Financial Protection Bureau (CFPB) is seeking a total of $3.1 billion in fines against a pair of firms purporting to offer credit repair services. The fines would impact Lexington Law and the website/firm CreditRepair.com.

In a motion in federal court, the CFPB asked for more than $2.7 billion in redress for consumers who paid for Lexington Law's credit repair services, more than $366.7 million for consumers who paid for CreditRepair.com's credit repair services, and a combined penalty of nearly $53 million.

"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 said. "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."

The CFPB noted that action against the connected firms is urgently necessary.

"For every additional month that defendants continue their unlawful billing practices after March 2023, Lexington Law customers will pay an estimated $32,119,130 and CreditRepair.com customers will pay an estimated $3,888,758 in credit repair fees (Service and Initiation)," the CFPB said.

Existing law prevents credit repair firms from charging advance fees and requires them to demonstrate results before assessing a fee to consumers.

By contrast, Lexington Law and CreditRepair.com were in the habit of charging a $15 up front fee and monthly fees every 30 days thereafter whether or not the firms demonstrated any results to consumers.

In short, the firms were charging for services either not provided or charging for services that had not yet yielded results - both in violation of the law.

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